Life Insurance Company Commercial Mortgages in Canada: Low Rates for Premium Assets

When most Canadians think about commercial mortgage lenders, they think of the big banks. TD, RBC, Scotiabank, BMO, and CIBC dominate the lending conversation. But some of the most competitive commercial mortgage terms in Canada come from a different type of institution entirely: life insurance companies.

Sun Life, Manulife, Canada Life (formerly Great-West Life), Desjardins Insurance, and Industrial Alliance are among the most active commercial mortgage lenders in the country. They routinely offer interest rates 25-50 basis points below what the Schedule I banks charge on equivalent deals. Their terms can stretch to 10, 15, or even 20 years. And for the right property, they provide stability and pricing that no other lender class can match.

The catch is that life insurance companies are selective. They finance premium assets with strong fundamentals, and their underwriting standards reflect the conservative, long-term orientation of their core business. Understanding how life company lending works — and whether your property qualifies — can save you significant money over the life of your mortgage.

What Life Insurance Companies Do in Canadian Commercial Lending

Life insurance companies are institutional investors with long-duration liabilities. When someone buys a life insurance policy or annuity, the insurance company collects premiums today and promises to pay claims decades from now. To meet those future obligations, insurance companies need long-term, predictable investment returns.

Commercial mortgages on stable, well-located properties are an ideal match for this liability profile. A 10-year fixed-rate mortgage on a fully occupied apartment building or a credit-anchored office tower generates exactly the kind of predictable cash flow that an insurance company needs to back its policy obligations.

This is why life companies lend differently than banks. Banks fund mortgages primarily through deposits and need to manage interest rate risk across shorter horizons. Life companies fund mortgages against multi-decade liabilities and can therefore offer longer fixed-rate terms at lower rates. The mortgage is not a transaction for them — it is a long-term investment they intend to hold to maturity.

Canadian life companies collectively hold tens of billions of dollars in commercial mortgage assets. They are among the largest institutional lenders in the country, and for qualifying borrowers, they are often the cheapest source of long-term fixed-rate commercial debt available.

Major Life Insurance Company Lenders in Canada

Sun Life Financial

Sun Life is one of the most active life company commercial mortgage lenders in Canada. Their mortgage investment team focuses on high-quality assets in primary and strong secondary markets. Sun Life typically finances multi-family residential, office, industrial, and retail properties, with a preference for institutional-quality assets in major urban centres.

Sun Life is known for competitive pricing on deals that meet their criteria and has the capacity to handle large transactions. Minimum deal sizes typically start at $5-10 million, though this can vary by market and property type.

Manulife Financial

Manulife operates one of the largest commercial mortgage portfolios among Canadian life companies. They finance a broad range of property types including multi-family, office, retail, and industrial across Canada. Manulife has been particularly active in the multi-family sector, where the predictable cash flow profile of apartment buildings aligns well with their investment objectives.

Manulife is known for offering competitive rates on larger deals and has strong appetite for well-located properties with creditworthy tenants or proven rental income histories.

Canada Life (Great-West Lifeco)

Canada Life, part of the Great-West Lifeco group, maintains a substantial commercial mortgage portfolio across Canada. They finance multi-family, commercial, and industrial properties with a focus on major markets. Canada Life has historically been competitive on longer-term fixed-rate products, reflecting their deep pool of long-duration liabilities.

Their underwriting emphasizes property quality, location, and tenant credit strength. They are selective but competitive when a deal fits their investment criteria.

Desjardins Insurance

As part of the Desjardins Group, Desjardins Insurance has a strong commercial mortgage presence, particularly in Quebec and Eastern Canada. They finance multi-family, commercial, and mixed-use properties and bring cooperative-model pricing that can be highly competitive for the right deal.

Desjardins Insurance benefits from its integration with the broader Desjardins cooperative network, which includes banking, insurance, and investment services. This can streamline the financing process for borrowers who already have a Desjardins relationship.

Industrial Alliance (iA Financial Group)

Industrial Alliance is an active commercial mortgage lender with particular strength in Quebec and Atlantic Canada, though they operate nationally. They finance multi-family, commercial, and industrial properties with competitive terms and a willingness to consider secondary market properties that some larger life companies might pass on.

Your debt ratios, income type, and property plans all affect what you qualify for — book a free strategy call with LendCity so we can map out a strategy that works for your goals.

Typical Loan Criteria

Life insurance companies underwrite commercial mortgages differently than banks. Their standards are generally more conservative on leverage but more generous on rate and term. Here is what to expect:

Loan-to-Value (LTV)

Life companies typically lend at 60-70% LTV on commercial properties. This is lower than the 75% that banks commonly offer and far below the 95% available through CMHC-insured programs. The conservative leverage reflects the life company’s priority: they want maximum downside protection on a long-duration investment.

On the strongest deals — stabilized multi-family in primary markets, for example — some life companies may stretch to 75% LTV. But the pricing advantage is typically greatest at lower leverage points, where the reduced risk allows the lender to offer their most competitive rates.

Debt Service Coverage Ratio (DSCR)

Life companies typically require a minimum DSCR of 1.25x-1.35x, which is slightly higher than what many banks require (1.20x minimum). The higher DSCR requirement creates additional cash flow cushion that protects the loan through market cycles.

This requirement is based on net operating income divided by annual debt service. Life companies may apply their own underwriting adjustments to NOI, including standardized vacancy and management fee assumptions that may differ from the property’s actual performance.

Property Quality and Location

This is where life company lending diverges most sharply from bank and alternative lending. Life companies want institutional-quality assets in proven locations. Their typical property profile includes:

• Well-maintained buildings with no significant deferred maintenance
• Primary or strong secondary market locations with demonstrated liquidity (the property could be sold or re-tenanted if needed)
• Stabilized occupancy — typically 85%+ for commercial and 90%+ for multi-family
• Professional property management in place
• Environmental cleanliness — Phase I ESA required, and any contamination issues are typically disqualifying

Tenant Quality and Lease Terms

For commercial properties (office, retail, industrial), tenant credit quality is a critical underwriting factor. Life companies prefer:

• National or regional credit tenants with strong financial covenants
• Long remaining lease terms (5+ years weighted average)
• Diversified tenant profiles (no single tenant representing more than 30-40% of income)
• Net or semi-gross lease structures that pass operating cost risk to tenants

For multi-family properties, tenant quality is assessed differently — through occupancy history, rent-to-income ratios, and market rent comparisons rather than individual tenant credit.

Rate Advantages: Why Life Companies Undercut Banks

The rate advantage that life companies offer is not a promotional tactic — it is a structural feature of their business model. Several factors contribute:

Lower Cost of Capital

Life companies fund mortgages from their general account assets, which consist primarily of policyholder premiums and investment returns. Their cost of capital is tied to the long-term returns they need to earn on those assets, which is typically lower than a bank’s blended cost of deposit and wholesale funding.

Liability Matching

When a life company originates a 10-year fixed-rate commercial mortgage, that asset is matched against a corresponding long-duration liability (life insurance policies, annuities). The match is natural and does not require the interest rate hedging that banks must perform. This eliminates hedging costs that banks build into their pricing.

Hold-to-Maturity Intent

Banks securitize some commercial mortgages and trade others. Life companies almost always originate with the intent to hold to maturity. This eliminates the liquidity premium that banks build into pricing for loans they may need to sell.

Lower Operating Costs Per Dollar Lent

Life companies focus on larger deals ($5M+), which means their operating costs per dollar of mortgage originated are lower than banks that also process smaller commercial loans. This cost efficiency is reflected in pricing.

What This Means in Practice

On a typical institutional-quality commercial mortgage, life company pricing is often 25-50 basis points below comparable bank rates. On a $10 million mortgage, 25 basis points translates to $25,000 per year in interest savings — $250,000 over a 10-year term. At 50 basis points, the savings reach $500,000.

For a comparison of commercial mortgage rates across lender types, including life companies, banks, and alternative lenders, consult with a broker who works across all channels.

Multifamily financing has different rules than residential — schedule a free strategy session with us and we’ll show you exactly what you qualify for under CMHC or conventional programs.

Term Options: The Long-Term Advantage

One of the most distinctive features of life company lending is the availability of long fixed-rate terms. While banks typically offer 5-year terms (and occasionally 7 or 10), life companies regularly offer:

• 5-year fixed — Standard offering, competitively priced
• 7-year fixed — Common and increasingly popular among borrowers seeking rate certainty
• 10-year fixed — The most popular life company term, offering a decade of rate and payment certainty
• 15-year fixed — Available from some life companies for the strongest deals
• 20-year fixed — Rare but available for premium assets with long-duration tenancies

A 10 or 15-year fixed-rate term eliminates refinancing risk for a substantial period. In a volatile rate environment, this certainty has enormous value. You know your debt service costs for the entire term, which makes cash flow projections and investment analysis far more reliable.

The trade-off is flexibility. Longer-term life company mortgages typically come with yield maintenance or similar prepayment provisions that make early repayment expensive. If you think you may sell or refinance within the first half of the term, a shorter-term bank mortgage with more flexible prepayment options may be preferable despite the higher rate.

Amortization

Life companies typically offer amortization periods of 25-30 years on commercial mortgages. Some may extend to 35 years on multi-family properties with strong cash flow profiles. This is comparable to what banks offer on conventional commercial loans but shorter than the 40-50-year amortization available through CMHC-insured programs.

The shorter amortization means higher monthly payments but faster equity build. Over a 10-year term, a 25-year amortization builds substantially more equity than a 40-year amortization, which can matter when you refinance at maturity.

Minimum Deal Sizes

Life companies focus on larger transactions. Minimum loan amounts typically range from $5 million to $10 million, though some life companies will consider deals as low as $3 million in markets where they are actively seeking deployment.

This minimum effectively limits life company lending to mid-market and institutional-grade properties. If you are financing a $2 million apartment building or a $1.5 million retail plaza, life company financing is likely not available. For smaller commercial mortgages, banks, credit unions, and CMHC-insured programs are more appropriate.

For larger deals — $10M, $25M, $50M or more — life companies become increasingly competitive and may offer the best pricing in the market.

Property Types Life Companies Prefer

Life companies have clear preferences in their commercial mortgage portfolios:

Multi-Family Residential (Strongest Preference)

Stabilized apartment buildings in major markets are the most sought-after asset class for life company lending. The predictable cash flow, essential-service nature of housing, and historical resilience through economic cycles make multi-family the closest thing to a risk-free asset in commercial real estate. Life companies often offer their most aggressive pricing for multi-family mortgage financing on well-located apartment buildings.

Industrial

Modern industrial properties — warehouses, distribution centres, and logistics facilities — have become increasingly attractive to life companies, driven by e-commerce growth and the essential nature of supply chain infrastructure. Net-leased industrial properties with creditworthy tenants can command pricing nearly as competitive as multi-family.

Office

Life companies remain active in office lending but have become more selective following the remote work shift. Class A office buildings in central business districts with strong tenant rosters and long lease terms still attract competitive life company pricing. Suburban office and buildings with significant near-term lease rollover face more scrutiny.

Retail

Life companies are cautious with retail, focusing on grocery-anchored shopping centres and essential retail with limited fashion or discretionary exposure. Enclosed malls and non-essential retail face the most restrictive underwriting.

Specialty

Some life companies will consider specialty asset classes including seniors housing, self-storage, and hospitality, but these are evaluated on a case-by-case basis with generally more conservative terms.

Comparison Table: Life Company vs Other Lender Types

The Underwriting Process

Covenant Strength Assessment

Life companies evaluate the borrower’s overall financial strength more thoroughly than most commercial lenders. Beyond the standard credit check and net worth verification, they assess:

• Borrower experience — Track record of owning and operating similar properties
• Portfolio strength — The overall health of the borrower’s real estate portfolio
• Liquidity — Available cash reserves beyond what is required for the subject property
• Management capability — Demonstrated ability to manage institutional-quality assets

Property-Level Analysis

The property underwriting is detailed and conservative:

• Appraisal — Full narrative appraisal from a designated appraiser, often from the life company’s own approved list
• Environmental assessment — Phase I ESA required; Phase II if any issues are identified
• Building condition report — Assessment of building systems, structural elements, and capital needs
• Tenant analysis — For commercial properties, detailed review of lease terms, tenant financials, and rollover schedule
• Market analysis — Verification that the property’s location, rents, and occupancy are sustainable through market cycles

Documentation Requirements

Expect to provide:

• 3 years of property financial statements (income statement, rent roll, operating expenses)
• Borrower personal financial statements and corporate financials
• Property tax assessments
• Insurance certificates and schedules
• Lease abstracts for all commercial tenants
• Property management agreement (if third-party managed)
• Capital expenditure history and projections

The documentation requirements are comparable to bank lending but may include additional items specific to the life company’s internal investment committee requirements.

Discuss Life Company Financing With Our Team

How to Access Life Company Financing

Individual borrowers cannot typically approach life insurance companies directly for mortgage financing. Unlike banks, which have branch networks and relationship managers accessible to the public, life companies operate their commercial mortgage programs through institutional channels.

The most effective path to life company financing is through a commercial mortgage broker who maintains active relationships with life company mortgage investment teams. An experienced broker knows:

• Which life companies are actively deploying capital in your market
• What property types and deal sizes each company is currently seeking
• How to structure the application to align with life company underwriting criteria
• How to negotiate rate, term, and prepayment provisions

Without broker access, you may not even know that life company financing is available for your deal — and you may end up paying bank rates on a property that qualifies for life company pricing.

When Life Company Financing Makes Sense

Ideal Scenarios

• Stabilized apartment buildings in major Canadian cities with 90%+ occupancy and proven rental income
• Net-leased industrial or office properties with national credit tenants and 7+ years remaining on the primary lease
• Large portfolio refinances where you are consolidating multiple properties under a single institutional-quality mortgage
• Long-term hold strategies where you plan to own the property for 10+ years and want rate certainty
• Properties valued at $10M+ where the rate savings from life company pricing are substantial in absolute dollar terms

When to Look Elsewhere

• Deals under $5M — Most life companies will not underwrite at this size. Consider banks, credit unions, or CMHC programs.
• Value-add or repositioning projects — Life companies want stabilized assets, not transitional ones. Use bridge financing or bank lending during the value-add phase, then refinance into life company debt at stabilization.
• Properties with environmental issues — Even minor environmental concerns can disqualify a property from life company consideration.
• High-leverage deals — If you need 80%+ LTV, life company financing will not reach your leverage target. CMHC-insured programs or mezzanine structures may be required.
• Short-term hold strategies — If you plan to sell within 3-5 years, the yield maintenance penalty on a life company mortgage may erode your returns. Shorter-term bank or alternative financing with flexible prepayment options may be more cost-effective.

Frequently Asked Questions

Next Steps

Life insurance company financing offers the lowest rates and longest terms available for qualifying commercial properties in Canada. If you own or are acquiring a premium asset worth $5 million or more, life company financing should be part of your cost-of-capital analysis.

The first step is having an experienced commercial mortgage broker assess whether your property meets life company underwriting criteria and shop the deal across multiple life companies to identify the most competitive terms.

Book Your Strategy Call

Written by

LendCity

Published

July 11, 2026

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15 min read

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Key Terms

Alternative Lender

Alternative Lender

An alternative lender is a non-traditional financing source, such as a mortgage investment corporation (MIC), private lender, or trust company, that provides loans outside of the conventional bank lending system. For Canadian real estate investors, alternative lenders are valuable when deals don't qualify for traditional financing due to credit issues, unconventional property types, or the need for faster, more flexible lending terms.

Amortization Period

Amortization Period

The total number of years required to fully repay a mortgage through regular principal and interest payments. In Canada, standard amortization periods for residential properties are 25 years, while multifamily properties through MLI Select can extend up to 50 years. A longer amortization reduces monthly payments but increases total interest paid.

Amortization

Amortization

The period over which a mortgage is scheduled to be fully paid off through regular payments of principal and [interest](/glossary/#interest-rate). In Canada, common amortization periods are 25 or 30 years, though the mortgage term (when you renegotiate) is typically 1-5 years. A longer amortization lowers monthly payments, improving [cash flow](/glossary/#cash-flow) but increasing total interest paid.

Appraisal

Appraisal

A professional assessment of a property's market value, required by lenders to ensure the property is worth the loan amount.

Bridge Loan

Bridge Loan

A bridge loan (also called bridge financing) is a short-term financing solution that allows Canadian real estate investors to access the equity in their existing property to fund the purchase of a new property before the current one has sold. It "bridges" the gap between the closing date of a new purchase and the sale or [refinancing](/glossary/#refinancing) of an existing property, typically carrying higher interest rates and lasting from a few weeks to one year.

Cash Flow Optimization

Cash Flow Optimization

Cash flow optimization is the strategic process of maximizing the net income generated from a rental property by increasing rental revenue and minimizing operating expenses, mortgage costs, and vacancies. For Canadian real estate investors, this often involves tactics such as selecting the right financing structure, leveraging rental income from multiple units, and managing expenses like property taxes and maintenance to ensure the property generates consistent positive monthly returns.

Cash Flow

Cash Flow

The money left over after collecting rent and paying all expenses including mortgage, taxes, insurance, maintenance, and property management. Positive cash flow is the primary goal of buy-and-hold investors. See also [NOI](/glossary/#noi), [Cash-on-Cash Return](/glossary/#cash-on-cash-return), and [Vacancy Rate](/glossary/#vacancy-rate).

Cash Reserve

Cash Reserve

Liquid funds set aside by a property investor to cover unexpected expenses such as repairs, vacancy periods, or mortgage payments during tenant turnover. Lenders may require proof of cash reserves as part of mortgage qualification.

CMHC Insurance Premium

CMHC Insurance Premium

The cost of mortgage insurance provided by Canada Mortgage and Housing Corporation (CMHC), expressed as a percentage of the mortgage amount. Premium rates vary based on LTV, property type, and transaction type. For multifamily standard rental housing under the current schedule (as of July 14, 2025), term premiums range from 5.35% at ≤85% LTV to 6.15% at ≤95% LTV, with higher rates for construction financing and other housing types (student, seniors, SRO/supportive). MLI Select points tiers can reduce the premium by 10%–30%. Premiums are typically added to the mortgage balance and paid over the life of the loan.

CMHC Insurance

CMHC Insurance

Mortgage default insurance from Canada Mortgage and Housing Corporation. For 1-4 unit investment properties, investors must put 20%+ down (no insurance available). However, CMHC offers MLI Select for 5+ unit multifamily properties, and house hackers can access insured mortgages with 5-10% down.

Hover over terms to see definitions. View the full glossary for all terms.