Commercial Mortgage Application Process Step by Step

Overview of the Commercial Mortgage Process

Applying for a **commercial mortgage** is a more involved process than its residential equivalent. There are more parties, more documentation, and more opportunities for delays. Understanding each stage before you begin allows you to prepare properly, set realistic expectations, and avoid the common pitfalls that derail applications.

This guide walks you through every step from initial enquiry to completion, based on how the process works with the majority of UK lenders. Whether you are a first-time commercial buyer or an experienced investor, our [commercial mortgage service](/services/commercial-mortgages) can guide you through the process.

Timeline: How Long Does It Take?

A commercial mortgage application typically takes 6 to 12 weeks from submission to completion. However, the actual timeline depends on several factors:

• Simple cases (single property, straightforward borrower, standard property type): 6-8 weeks
• Moderate complexity (multiple guarantors, lease negotiations, minor property issues): 8-12 weeks
• Complex cases (portfolio transactions, development elements, planning considerations): 12-20 weeks

The most common causes of delay are incomplete documentation, slow solicitor responses, and protracted lease or title issues. Being well-prepared from the outset is the single most effective way to speed up the process.

Step 1: Initial Enquiry and Assessment

The process begins with an initial conversation with a specialist commercial mortgage broker or directly with a lender. At this stage, the broker will assess:

• Your requirements: Purchase price, loan amount, property type, intended use
• The property: Location, condition, tenant situation, planning status
• Your financial position: Business accounts, personal assets, credit history
• Your experience: Track record with commercial property (if any)

A good broker will tell you within the first conversation whether your requirements are realistic and which lenders are likely to have appetite for your case.

**Key Takeaway:** Do not skip the broker assessment stage, even if you think you know which lender you want. A broker can identify issues early that might otherwise cause a declined application weeks into the process.

Step 2: Documentation Gathering

Once the broker confirms the case is viable, you will need to assemble a comprehensive documentation pack. Having this ready before submitting to lenders is critical for speed.

For Investment Property Purchases

• Last two to three years of personal tax returns (SA302s or tax calculations)
• Asset and liability statement for all guarantors
• Property details: address, description, tenure, EPC rating
• Tenancy schedule: tenant names, lease terms, rent amounts, break clauses, rent review dates
• Copies of all lease documents
• Recent rent payment history
• Details of any void units or planned works
• Proof of deposit and its source
• Photo ID and proof of address for all parties

For Owner-Occupier Purchases

All of the above, plus:

• Last two to three years of audited or certified business accounts
• Current year management accounts
• Business bank statements (last three to six months)
• Business plan or projections
• Details of existing business borrowing
• Company formation documents (if applicable)

For Company Structures

If purchasing through a limited company (which is very common for commercial property), you will also need:

• Certificate of incorporation
• Memorandum and articles of association
• Details of all directors, shareholders, and beneficial owners
• Company accounts (if the company has trading history)

**Key Takeaway:** Start gathering documentation as soon as you decide to proceed. Missing documents are the number one cause of preventable delays in commercial mortgage applications.

Step 3: Lender Selection and Submission

Your broker will identify suitable lenders based on your circumstances and submit the application with the full documentation pack. A well-prepared submission typically includes:

• A covering letter summarising the key aspects of the deal
• Full financial analysis demonstrating serviceability
• Property details and comparable evidence
• All supporting documentation

The broker may submit to one preferred lender or to several simultaneously, depending on the strategy. Submitting to multiple lenders can provide competitive tension but also means more work if each lender requests different information.

Lenders that frequently work well with our clients include **Aldermore**, **Shawbrook**, **Allica Bank**, **Hampshire Trust**, **NatWest**, **Lloyds**, and **Barclays**, though the best lender varies case by case.

Step 4: Agreement in Principle (AIP)

Within a few days of submission (sometimes hours for straightforward cases), the lender issues an Agreement in Principle. This document sets out:

• Loan amount offered
• Interest rate (indicative or confirmed)
• Term
• Key conditions (valuation, legal due diligence, credit checks)
• Arrangement fee
• Any special conditions

The AIP is not a binding offer. It confirms the lender has reviewed the headline information and is willing to proceed to full underwriting, subject to satisfactory due diligence.

Step 5: Valuation

Once you accept the AIP, the lender instructs an independent RICS-qualified surveyor to value the property. The valuation serves several purposes:

• Confirms the property is worth the stated or purchase price
• Assesses the property's suitability as security
• Identifies any issues that might affect value or lending (structural problems, contamination, planning risks)
• For investment properties, reviews the rental income against market evidence

The valuation typically takes one to three weeks and costs between £1,500 and £5,000 depending on property size and complexity. You will usually need to pay this upfront.

Common Valuation Issues

• Down-valuation: The surveyor values the property below the purchase price, reducing the maximum loan and requiring a larger deposit
• Retentions: The surveyor identifies works required before the property meets lending standards, with part of the loan withheld until they are completed
• Special assumptions: The valuation may be provided subject to conditions (such as a new lease being granted) that must be met before completion

Step 6: Full Underwriting and Credit Approval

With the valuation report in hand, the lender's underwriting team conducts a detailed assessment:

• Full credit checks on all borrowers and guarantors
• Verification of all financial information
• Detailed analysis of serviceability and affordability
• Anti-money laundering (AML) checks
• Assessment of any conditions or concerns raised in the valuation

This stage can take one to four weeks depending on the lender's workload and the complexity of the case. The underwriter may come back with additional questions or requests for further information.

Step 7: Formal Offer

If credit approval is granted, the lender issues a formal mortgage offer. This is a detailed legal document setting out all terms and conditions of the loan, including:

• Exact loan amount, rate, and term
• Repayment structure (capital and interest, interest only, or a combination)
• All fees payable
• Security requirements
• Covenants and ongoing obligations (such as maintaining insurance, providing annual accounts)
• Events of default

You should review the offer carefully with your solicitor. The offer typically remains valid for three to six months.

Step 8: Legal Process

Once the offer is accepted, solicitors take over. The lender will appoint their own solicitors (at your cost), and you will need your own solicitor. The legal process involves:

• Title investigation: Confirming clean title to the property
• Searches: Local authority, environmental, drainage, and other searches
• Lease review: For investment properties, the lender's solicitors review all lease documents
• Security documentation: Preparing the legal charge, debenture, and personal guarantees
• Conditions precedent: Satisfying any conditions in the mortgage offer before completion can proceed

The legal process typically takes three to six weeks but can be longer if there are title issues, lease amendments needed, or multiple parties involved.

Step 9: Completion

Once all legal work is complete and conditions satisfied:

1. You sign all loan documents and security
2. Your solicitor confirms they hold the signed documents
3. The lender releases funds to your solicitor
4. Your solicitor completes the purchase (or refinance)
5. The legal charge is registered at the Land Registry

Completion day is when you receive the keys and take ownership of the property (or, for refinances, when your existing loan is repaid and the new facility goes live).

Common Pitfalls and How to Avoid Them

Having guided hundreds of commercial mortgage applications, these are the most common issues we see:

1. Incomplete Documentation

**The problem:** Missing or outdated documents delay the underwriting process by weeks.

**The solution:** Use the documentation checklist in Step 2 and have everything ready before submission. Ensure accounts are up to date and certified.

2. Underestimating Timelines

**The problem:** Agreeing to exchange or complete by a date that does not allow enough time for the mortgage process.

**The solution:** Allow a minimum of 8-10 weeks from submission. Build contingency into any contractual deadlines.

3. Poor Communication with Solicitors

**The problem:** Solicitors who are slow to respond or unfamiliar with commercial transactions cause significant delays.

**The solution:** Use a solicitor experienced in commercial property transactions. Agree expected timelines upfront and chase regularly.

4. Not Disclosing Issues Early

**The problem:** Credit issues, property problems, or unusual circumstances that emerge late in the process can derail the application.

**The solution:** Be completely transparent with your broker from the outset. A good broker can work with issues they know about; surprises late in the process are much harder to manage.

5. Changing Circumstances

**The problem:** Material changes during the application (new borrowing, job changes, business losses) can invalidate the credit approval.

**The solution:** Avoid taking on new debt or making significant financial changes during the application process. Inform your broker immediately if circumstances change.

**Key Takeaway:** The majority of commercial mortgage application problems are preventable with proper preparation and an experienced broker managing the process.

Working with Commercial Mortgages Broker

Our process is designed to make commercial mortgage applications as smooth and efficient as possible:

1. Free initial consultation: We assess your requirements and confirm feasibility
2. Documentation support: We provide a tailored checklist and help you prepare a strong application
3. Market-wide sourcing: We approach the most suitable lenders for your specific case
4. Dedicated management: A named broker manages your application from start to completion
5. Problem resolution: We proactively manage any issues that arise during the process

[Contact us](/contact) to start your commercial mortgage application today.

*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*