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A commercial mortgage operates similarly to a residential mortgage but is secured against a commercial property: offices, retail units, warehouses, industrial premises, hotels, care homes, or any other non-residential building. Loan terms typically range from five to twenty-five years, and both fixed and variable rate options are available.
The underwriting process differs substantially from residential lending. Lenders focus on the ability of the business or the rental income to service the debt rather than personal salary. Commercial valuations are more complex, and legal due diligence encompasses title, planning use class, environmental searches, and any existing leases.
Owner-occupied commercial mortgages are for businesses buying the premises they trade from. Affordability is assessed on the trading profit of the business. Lenders typically lend up to 70% to 75% LTV and want to see at least two years of accounts showing consistent profitability.
Investment commercial mortgages are for landlords buying property to let to business tenants. Affordability is assessed on the passing rent against the loan repayments, usually requiring rental income to cover the mortgage payment by 125% to 150%. Strong tenant covenants and long unexpired lease terms can improve both LTV and rate.
| Criterion | Owner-Occupied | Investment |
|---|---|---|
| Maximum LTV | Up to 75% | Up to 75% |
| Minimum loan | From £50,000 | From £50,000 |
| Loan term | 5 to 25 years | 5 to 25 years |
| Trading history | Typically 2+ years | Not required (rental income assessed) |
| Affordability basis | Business net profit | Rental income cover (125%+) |
| Personal guarantee | Usually required | Often required for SPVs |
| Property types | Offices, retail, industrial | Offices, retail, warehouses, mixed-use |
| Rate type | Fixed or variable | Fixed or variable |
We gather details of the property, your business finances, and your objectives, then search across 50 plus lenders to identify the best fit. We present indicative terms for your review before you commit to any formal application
Once a lender is selected, a decision in principle (DIP) is sought. This establishes the lender's willingness to lend in principle before a formal valuation is instructed.
A RICS-registered commercial valuer is instructed by the lender. Valuation reports for commercial property are more detailed than residential surveys and typically take two to four weeks.
Solicitors act for both borrower and lender. Commercial legal due diligence covers title, planning use class, existing leases, service charges, business rates, and any restrictive covenants
Once all conditions are satisfied and solicitors confirm readiness, the loan is drawn down and completion takes place. The whole process typically takes eight to twelve weeks
Run the numbers, then talk to us. Our financial calculators cover mortgage repayments, how much you could borrow, stamp duty, bridging finance and rental yield. Results are estimates only and should not be relied on as financial advice.
Purchasing your own trading premises can offer long-term cost certainty compared to renting and build equity over time. We source commercial mortgages from lenders who understand your sector, from professional practices to manufacturing businesses to hospitality operators. Most lenders require a 25% to 30% deposit and two years of profitable trading.
Investment commercial mortgages are underwritten on the strength of the rental income and tenant covenant rather than your personal income. Long leases with strong tenants, such as national retailers or professional firms, attract the most competitive rates and highest LTVs. We work with lenders who will also consider shorter leases and independent tenants.
Refinancing can reduce your rate, release equity for further investment, or restructure debt that no longer fits your business. We review the current market across 50+ lenders and compare the potential saving against any early repayment charges on your existing facility.
Vacant possession and short unexpired lease terms increase perceived risk for lenders. However, specialist commercial lenders will consider these cases where the borrower has a credible business plan or tenant in place. We identify lenders who price these assets realistically.
Many investors prefer to hold commercial property in a limited company for tax efficiency. Most commercial mortgage lenders will lend to limited companies, including SPVs, though a personal guarantee from the directors is usually required. We compare lending on a personal-name versus company basis to help ensure you structure the purchase appropriately.
Speak to an adviser to discuss your circumstances and explore how bridging finance could work for you.
Clear,honest answers to the questions we hear most from clients and introducers.
Most lenders require a minimum deposit of 25% to 30%, equating to a maximum LTV of 70% to 75%. In some cases, existing equity in other commercial or residential property can be used as additional security to reduce the cash deposit required.
It is more challenging but not impossible. Some specialist lenders will consider businesses with less than two years’ trading where the directors have significant sector experience and the business plan is credible. A larger deposit and personal guarantee typically improve the prospect.
Both options are available. Fixed rates provide repayment certainty over the fixed term, which typically runs from two to ten years. Variable rates track a base rate or lender’s reference rate and may be lower initially but expose you to rate movements.
From initial application to completion, most commercial mortgage transactions take between eight and twelve weeks. Straightforward cases with clean documentation can be faster, while complex properties or multiple titles can extend the timeline.
Yes. Legal representation is required for both borrower and lender in commercial mortgage transactions. Commercial conveyancing is more involved than residential and typically costs more. We can recommend solicitors who specialise in commercial property if required.
Speak to one of our commercial mortgage advisers today for a no-obligation review of your options.
