How to Improve Your Commercial Mortgage Application
The difference between a successful **commercial mortgage** application and a declined one often comes down to preparation and presentation. Lenders receive hundreds of applications, and those that are well-documented, clearly structured and professionally presented move through underwriting faster and achieve better terms.
At **Commercial Mortgages Broker**, we prepare and submit commercial mortgage applications every day. This guide shares our practical advice for maximising your chances of approval and securing the best available terms.
Why Preparation Matters
Commercial mortgage underwriting is fundamentally different from residential. There is no standardised affordability calculator or automated decision process. Each application is assessed individually by an underwriter who forms a judgement based on the information presented.
This means the quality of your application directly influences the outcome. A strong application:
- Moves faster: Complete applications avoid delays caused by information requests
- Gets better terms: Underwriters who are confident in the case may offer improved rates or higher LTV
- Has higher approval rates: Well-prepared cases are less likely to be declined
- Reduces conditions: Fewer outstanding conditions at approval stage means faster completion
Financial Preparation
Accounts and Tax Returns
Your financial history is the foundation of any commercial mortgage application. Lenders typically require:
- 2-3 years of accounts: Audited or accountant-certified for companies, SA302s for individuals
- Current year management accounts: Up-to-date figures showing current performance
- Tax calculations: Matching the periods covered by accounts
- Tax compliance: Evidence that all tax liabilities are up to date (no outstanding HMRC debts)
**Tip**: If your accounts are more than 9 months old, prepare management accounts to bridge the gap. Lenders want to see recent performance, not just historical figures.
Bank Statements
Provide 6-12 months of bank statements for:
- Personal current accounts
- Business accounts
- Any account receiving rental income
- Any account from which the deposit will be sourced
**Tip**: Review your bank statements before submitting. Unexplained large transactions, gambling debits or returned direct debits will raise questions. Be prepared to explain anything unusual.
Asset and Liability Statement
Prepare a comprehensive personal asset and liability statement showing:
- All properties owned (with current values and outstanding mortgages)
- Savings and investments
- Pension values
- Other assets of value
- All debts, loans and financial commitments
- Credit card balances
**Key Takeaway:** Lenders want a complete picture of your financial position. Omitting liabilities or overstating asset values will be discovered during underwriting and will damage your credibility.
Credit History
Check your credit report before applying. The three main credit reference agencies in the UK are **Experian**, **Equifax** and **TransUnion**.
Address any issues before applying:
- Defaults and CCJs: These are serious red flags. If they are historical and have been satisfied, prepare an explanation
- High credit utilisation: Maxed-out credit cards suggest financial stress. Pay down balances where possible
- Multiple recent applications: Too many credit searches in a short period can indicate financial difficulty
- Electoral roll: Ensure you are registered at your current address
**Tip**: If you have adverse credit history, be upfront about it. Lenders are more understanding when issues are disclosed and explained than when they discover them during checks.
Property Documentation
For Investment Properties
Prepare a complete tenancy schedule showing:
- Tenant name and company details
- Lease start date, term and expiry
- Current rent and review dates
- Break clauses and their dates
- Rent deposit held
- Any arrears or payment issues
For Owner-Occupied Properties
- Detailed description of the business operation
- How the property supports the business
- Any current lease terms (if renting before purchase)
- Planned use and any required alterations
For All Properties
- EPC certificate: Ensure the property meets current minimum energy efficiency standards (currently a minimum E rating for lettings)
- Planning confirmation: Verify the property's planning use class matches the intended use
- Building condition: Note any obvious defects or maintenance requirements. The lender's valuer will identify issues, and it is better to address them proactively
- Asbestos survey: For older commercial buildings, an asbestos management survey may be required
Presenting Your Business Plan
For owner-occupied purchases or properties requiring development or repositioning, a clear **business plan** can significantly strengthen your application.
What to Include
- Executive summary: One page outlining the proposition
- Business background: History, experience and track record of the applicant(s)
- Market analysis: Evidence of demand for the property's use in the local area
- Financial projections: Realistic revenue, cost and profit forecasts for 3-5 years
- Debt serviceability: Clear demonstration that the business or property income will comfortably service the mortgage
- SWOT analysis: Honest assessment of strengths, weaknesses, opportunities and threats
- Exit strategy: How the loan will ultimately be repaid
Common Business Plan Mistakes
- Overly optimistic projections: Lenders see through unrealistic forecasts. Be conservative and credible
- Ignoring risks: Acknowledging risks and explaining how you will mitigate them demonstrates competence
- Too much detail: A 50-page document is counterproductive. Keep it focused and relevant
- No market evidence: Claims about demand must be supported by data
The Broker Advantage
Using a specialist commercial mortgage broker is one of the most effective ways to improve your application outcome.
Why Brokers Improve Outcomes
**Market access**: Brokers access the full range of commercial lenders, including those that do not deal directly with borrowers. Many specialist and challenger lenders only accept broker-introduced cases.
**Lender matching**: Different lenders have different appetites, criteria and strengths. A broker matches your case to the lenders most likely to approve it on the best terms. Applying to the wrong lender wastes time and leaves unnecessary credit searches on your record.
**Application packaging**: Brokers know exactly what each lender requires and how they assess applications. A broker-packaged application is presented in the format the underwriter expects, with all necessary information included from the outset.
**Negotiation**: Brokers negotiate terms on your behalf, leveraging their relationships and volume with lenders to achieve better rates, lower fees or improved conditions.
**Problem solving**: When issues arise during underwriting (and they frequently do), a broker can address them directly with the lender and propose solutions.
**Key Takeaway:** A specialist broker does not just find you a lender. They package your application to maximise approval chances, negotiate better terms and manage the process from start to finish.
Common Application Weaknesses
Insufficient Deposit
Most commercial mortgage lenders require a minimum 25-40% deposit. If your deposit is at the lower end, ensure the rest of your application is exceptionally strong.
Weak Debt Service Coverage
If the property's income barely covers the mortgage payments, lenders will be cautious. Aim for a **debt service coverage ratio** of at least 1.3x, meaning the property generates 130% of the annual mortgage payment.
Poor Property Condition
A property in poor condition increases the lender's risk. If you are purchasing a property that needs work, have a clear refurbishment plan and budget ready, and consider whether [bridging finance](/services/commercial-bridging) to complete improvements before applying for a term mortgage might be a better strategy.
Complicated Ownership Structures
Overly complex corporate structures or offshore elements add cost and reduce lender appetite. Keep the structure as simple as possible while achieving your tax and legal objectives. If an [SPV structure](/knowledge-hub/spv-limited-company-commercial-mortgages) is appropriate, ensure it is set up correctly from the start.
Gaps in Documentation
Missing documents are the single biggest cause of delays in commercial mortgage applications. Before submitting, check that every piece of required documentation is included, up to date and legible.
Timing Your Application
When to Start
- Purchases: Begin the mortgage process as soon as you have heads of terms agreed or an offer accepted. Do not wait until contracts are exchanged
- Remortgages: Start 3-6 months before your current deal expires
- Development finance: Engage a broker as early as possible, ideally while the project is still in planning
Processing Times
Typical commercial mortgage processing times:
| Stage | Timeframe |
|---|---|
| Initial broker assessment | 1-3 days |
| Lender decision in principle | 1-2 weeks |
| Formal valuation | 2-4 weeks |
| Full underwriting | 2-4 weeks |
| Legal completion | 2-6 weeks |
| Total | 8-16 weeks |
10 Quick Wins to Strengthen Your Application
- Get accounts up to date: Ensure the most recent accounts are prepared and available
- Check your credit report: Fix any errors and prepare explanations for any adverse items
- Prepare a deposit trail: Document the source of every pound of your deposit
- Organise property documentation: Have the EPC, tenancy schedule and planning details ready
- Calculate your DSCR: Ensure the numbers work before applying
- Address property issues: Fix obvious defects that could affect the valuation
- Write a clear summary: One page explaining who you are, what you are buying and why
- Gather all ID and proof of address: For all applicants, directors and guarantors
- Be honest about challenges: Proactive disclosure is always better than discovery
- Use a specialist broker: Access the full market and present your case professionally
How CMB Can Help
Our team packages and submits commercial mortgage applications daily. We know exactly what lenders need to see and how to present your case for the best possible outcome. From initial assessment through to completion, we manage every step of the process.
[Contact us](/contact) for a free initial consultation about your [commercial mortgage](/services/commercial-mortgages) requirements.
Frequently Asked Questions
Below are the most common questions we receive about improving commercial mortgage applications.
*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*