Commercial Mortgages

Yes, mixed-use properties — typically buildings with commercial use on the ground floor and residential accommodation above — are a common use case for commercial mortgages. The lending approach depends on the split between commercial and residential floor space. Properties that are predominantly commercial are treated as commercial mortgages throughout. Where the residential element exceeds around 40% to 50% of the overall floor space, some lenders offer semi-commercial or hybrid products with terms that reflect the lower risk profile of the residential element. We specialise in structuring mixed-use deals and know which lenders offer the most competitive terms for different configurations.

Commercial mortgages typically offer a choice between fixed rates and variable rates. Fixed rates lock your interest rate for a period of 2 to 5 years, providing payment certainty, and are quoted as an all-in rate. Variable rates are usually expressed as a margin above Bank of England Base Rate or SONIA, meaning your payments move with the prevailing interest rate environment. Some lenders offer tracker rates with no early repayment charges, providing flexibility to exit or refinance. The rate offered depends on LTV, property type, borrower strength, and loan size — larger loans to strong borrowers on prime properties attract the most competitive pricing.

Absolutely. Refinancing an existing commercial mortgage is one of the most common reasons clients approach us. Reasons to refinance include securing a lower interest rate when your current deal expires, switching from a variable to a fixed rate for payment certainty, releasing equity that has built up through capital repayment or property value increases, consolidating multiple commercial loans, or restructuring terms to better suit your current business needs. We compare your existing terms against the whole market to ensure any refinance genuinely improves your position after accounting for all costs including any early repayment charges on your current facility.

For investment commercial mortgages, tenant quality — known as tenant covenant strength — is a critical factor in the lending decision. Lenders assess tenants on their financial standing using credit checks, filed accounts, and company reports. National and multinational tenants with strong balance sheets represent the strongest covenants. SME tenants are assessed on their profitability, track record, and sector. Lenders also consider the lease terms: longer unexpired terms (ideally 5+ years), full repairing and insuring obligations, upward-only rent reviews, and limited break clauses all strengthen the lending proposition. A property let to a government tenant on a 15-year FRI lease will attract very different terms from one let to a start-up on a 12-month rolling agreement.

Maximum LTV varies by property type and borrower strength. Investment properties typically achieve 65-70% LTV. Owner-occupied premises with strong trading accounts can reach 75-80% LTV. Specialist properties such as pubs, care homes, and hotels are usually capped at 60-65% LTV due to their limited alternative use and smaller buyer pool. Higher deposits consistently attract better interest rates.

For investment properties: tenant leases, rental history, and schedule of any other properties owned. For owner-occupied: 2-3 years filed business accounts, up-to-date management accounts if the year-end is more than 6 months old, business bank statements, and asset and liability statements for all directors and guarantors. Start-up businesses without trading history face more limited options but can sometimes secure lending where directors have strong personal financials and relevant sector experience.

Typically 6-12 weeks from application to completion for straightforward cases. Complex multi-let properties, specialist assets, or applications involving corporate group structures can take 12-16 weeks. Key factors affecting timeline: speed of commercial valuation (2-4 weeks), completeness of financial information provided, complexity of legal work on commercial leases, and lender credit committee scheduling. We recommend starting the process as early as possible.

Specialist lenders will consider adverse credit where the property income is strong and the overall deal fundamentals are sound. Expect higher rates and lower LTV limits. Recent bankruptcy or active CCJs require specialist adverse credit lenders. Demonstrating improved financial management and being transparent about credit history from the outset significantly improves your chances.

An owner-occupied commercial mortgage is for a property where your business will trade from the premises. An investment commercial mortgage is for a property you are purchasing to let to a third-party tenant. Owner-occupied loans are assessed primarily on your business's financial performance, while investment mortgages focus on rental income, tenant quality, and lease terms. Owner-occupied loans may offer slightly higher LTVs because the lender has the comfort of your business's ongoing commitment to the property.

In almost all cases, yes. Even when borrowing through a limited company or SPV, commercial mortgage lenders require personal guarantees from directors or significant shareholders. The guarantee typically covers the full loan amount and means that if the company defaults and the property sale does not cover the outstanding debt, the guarantor is personally liable for the shortfall. Some lenders may accept limited guarantees capped at a percentage of the loan.