Long-term financing for commercial property purchases and refinancing, supporting business premises and investment property acquisitions.
Commercial mortgages are secured loans used to purchase, refinance, or release equity from business and investment properties. Unlike residential mortgages, commercial property finance is assessed primarily on the property's income-generating potential and the borrower's business strength, rather than personal income alone.
The UK commercial mortgage market serves everyone from small business owners purchasing their first premises to institutional investors building property portfolios. Whether you're acquiring offices, retail units, industrial warehouses, or mixed-use buildings, commercial mortgages provide the long-term funding needed for stable property ownership.
Commercial lending requires specialist knowledge—each property type, lease structure, and borrower profile requires careful analysis to match with appropriate lenders. High street banks offer commercial mortgages but often have restrictive criteria. Specialist lenders frequently offer more competitive terms, higher leverage, and faster decisions for complex cases.
For landlords purchasing tenanted commercial property. Affordability assessed on rental income from tenants, with DSCR (Debt Service Coverage Ratio) being the key metric.
For businesses purchasing premises to trade from. Assessed on business accounts and trading history. Often better terms as lenders view owner-occupier commitment favourably.
Lenders require rental income to cover debt service by 1.25-1.40x. DSCR = Annual Rental Income ÷ Annual Debt Payments. Higher coverage provides buffer for voids and rate rises.
Understanding the right scenarios ensures you're using this finance type strategically.
Single office units, serviced offices, business centres, and multi-let office buildings.
High street shops, retail parks, convenience stores. Location and tenant quality critical.
Warehouses, distribution centres, light industrial. Strong sector with e-commerce growth.
Commercial ground floor with residential above. Popular in town centres.
| Cost Component | Typical Range | Notes |
|---|---|---|
| Interest Rate | 5.5% - 9% p.a. | Fixed or variable |
| Arrangement Fee | 1% - 2% | Paid on completion |
| Valuation Fee | £1,000 - £5,000+ | Property value dependent |
| Legal Fees | £2,000 - £5,000+ | Borrower pays lender costs |
| Broker Fee | 0.5% - 1% | If using broker |
| Exit Fee | 0% - 1% | Some lenders charge |
Share property details, accounts, and funding requirement. We assess options within 24 hours.
Receive indicative terms from suitable lenders. Compare rates, fees, and covenants.
Submit comprehensive application with accounts, property details, tenant information.
Commercial valuation and legal due diligence. 4-8 weeks typical.
Credit approval and completion. Funds released for purchase or refinance.
| Aspect | Commercial Mortgages | Alternative |
|---|---|---|
| Assessment Focus | Property income & business | Residential: personal income |
| Deposit Required | 25-35% typical | Residential BTL: 20-25% |
| Documentation | Full accounts required | Residential: simpler docs |
| Timescales | 6-12 weeks typical | Residential: 4-6 weeks |
Commercial mortgages are assessed on both the business/borrower's financial strength and the property's income-generating potential. Lenders examine business accounts, cash flow, profitability, and director/guarantor financial positions. For investment properties, rental coverage (typically 125-140% of mortgage costs) is crucial. Commercial valuations are more detailed, considering property condition, tenant quality, lease terms, and market conditions more deeply than residential valuations.
Most commercial mortgages require a minimum 25-30% deposit, meaning maximum LTVs of 70-75%. Owner-occupied businesses with strong financials might achieve 75% LTV, while investment properties or weaker businesses may be limited to 65% LTV. Certain property types (hotels, care homes, pubs) may have lower maximum LTVs of 60-65% due to their specialist nature and potentially limited resale market.
Commercial mortgages typically take longer than residential mortgages due to more detailed underwriting. From application to completion, expect 6-12 weeks for straightforward cases. Complex cases involving multiple properties, corporate structures, or specialist property types may take 3-4 months. Factors affecting timeline include valuation scheduling, legal work on commercial leases, and lender credit committee approval processes.
Yes, owner-occupied commercial mortgages are very common and often have better terms than investment commercial mortgages. Lenders view owner-occupied properties favorably as you have a vested interest in maintaining payments to protect your business premises. You'll need to demonstrate that your business is profitable and can afford the mortgage payments, typically through 2-3 years of trading accounts and management accounts.
Maximum LTV varies by property type. Investment: typically 65-70%. Owner-occupied: up to 75-80%. Specialist properties (pubs, care homes): 60-65%. Higher deposits result in better rates.
For investment: tenant leases and rental history. For owner-occupied: 2-3 years business accounts, management accounts if year-end is old, business bank statements. Start-ups need additional security or guarantees.
Typically 6-12 weeks from application to completion. Straightforward cases: 4-6 weeks. Complex multi-let or specialist properties: 12+ weeks. Key factors: valuation, legal complexity, lender credit committee.
Specialist lenders consider adverse credit if property income is strong. Expect higher rates and lower LTV limits. Recent bankruptcy or CCJs require specialist adverse credit lenders. Demonstrating improved financial management helps.
Dedicated commercial mortgages specialists with deep market knowledge.
Access to an extensive panel of specialist lenders.
Adhering to strict professional and ethical standards.
Proven track record in property finance.
Our local specialists understand the property market in your region and can provide tailored advice.
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