Commercial mortgages
Find the right commercial mortgage for your business
Find the right commercial mortgage
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Access to a wide range of major and specialist UK lenders.
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What are commercial mortgages?
A commercial mortgage helps a business buy property or land. Sometimes called a business mortgage, it works in a similar way to a residential mortgage: you pay a deposit, borrow the rest as a lump sum and repay it over an agreed term with interest.
Many commercial mortgages run for around three to 25 years, with rates typically sitting between 6% and 10%. The exact rate depends on your business, the property or premises you're buying and how much you want to borrow.
What can I use a commercial mortgage for?
You can use a commercial mortgage to:
Buy a commercial property: purchase premises for your business or as an investment.
Raise capital: release cash tied up in a property you already own.
Remortgage: switch an existing commercial mortgage to a better deal.
How do commercial mortgages work?
Commercial mortgages usually work like this:
You use the loan to buy either business premises, commercial property or land
You may need a deposit of at least 25% to 30%
The lender checks your business finances and property plans
You repay the loan over a set term - often between three and 25 years
You secure the loan against the property you buy, meaning the lender can repossess the property if you fail to keep up with repayments
Interest and repayments
Most commercial mortgages come with a variable rate, but some lenders may offer different interest and repayment options. Your lender will explain what it can offer you, but here's a brief explanation of the common options you may find:
Variable rate - your interest rate can move up or down, so your payments can change. Some lenders link variable rates to a financial benchmark, such as the Bank of England’s SONIA benchmark
Fixed rate - your interest rate stays the same for an agreed period
Repayment mortgage - you repay the loan and interest through monthly payments
Interest-only mortgage - you pay the interest each month, then repay the loan amount at the end of the term
The right option depends on your cash flow and how much certainty you want over your monthly payments.
What are the main types of commercial mortgages?
Compare commercial mortgage types to find the right deal for you:
Owner-occupied mortgages
You use an owner-occupied mortgage to buy property for your own business. You might use one to buy an office, shop, warehouse or other premises where your business trades.
Commercial investment mortgages
This kind of mortgage is for investors who want to rent out commercial property to another business, for instance a shop or office space.
Semi-commercial mortgages
This option lets you buy a property with mixed use, combining both business and residential space, such as a shop with a flat above it, or a pub with living accommodation.
Residential investment mortgages
Used by property investors or limited companies to purchase residential properties, such as buy-to-let homes or rented residential units, to let out to tenants.
How much can I borrow with a commercial mortgage?
The amount you can borrow depends on:
The property
Your business finances
Your deposit
Your answers will help the lender assess whether you can afford the mortgage and keep up with the monthly repayments.
Many lenders let you borrow between 60% and 75% of a commercial property's value, although the maximum loan-to-value (LTV) varies depending on the lender, property and your circumstances. Some lenders may offer higher LTVs, particularly for owner-occupied properties.
“If you want to buy a commercial property worth £300,000, and the lender offers a mortgage up to 70% of the property’s value, you could borrow up to £210,000. You would need to cover the remaining £90,000 yourself, either with a cash deposit or available equity.”
Commercial mortgage eligibility and criteria
Commercial mortgage applications, like residential mortgage applications, are based on strict eligibility criteria - though the specific factors that the provider considers are not quite the same.
Each lender decides if they can accept your mortgage application based on:
your business income and cash flow
your business and personal credit history
how much deposit or equity you can provide
any debts your business already has
the value and condition of the property you want to buy
What do I need to apply for a commercial mortgage?
You usually need to provide proof of ID and address, recent business accounts, bank statements and details of your income and outgoings. The lender may also ask for tax returns, financial forecasts, details of existing debts and proof of your deposit or available equity.
You’ll need to share information about the property you want to buy too, including its value and condition. If you plan to rent out the property, the income from that will be taken into account and lenders may also look at the finances of your tenants too - especially if you need their rent to cover the mortgage payments.
What fees are involved in commercial mortgages?
The lender charges an arrangement fee for setting up the mortgage. This often costs around 1% to 2% of the loan. Some lenders may charge nothing, while some charge up to 3%. You may be able to add this fee to the mortgage, but you'll pay interest on it if you do.
The lender will ask a surveyor to value the property before it decides how much to lend. Valuation fees can start from around £500 and reach upwards of £5,000 or more for larger or more complex properties. The lender may also ask for a more detailed survey too, which can increase the cost.
You usually need to pay your own solicitor and the lender’s legal costs. For smaller or straightforward cases, legal fees can start from around £1,000 - but they can rise to several thousand pounds for larger or more complex purchases. Ask for a full quote that includes VAT, searches and land registry fees to get a clear picture of what's expected.
You don't have to use a broker - but a broker can compare lenders, explain your options and manage the application for you. Some brokers charge a fixed fee, while others charge a percentage of the loan. A typical broker fee sits at around 0.5% to 1% of the loan, although some brokers may take their fee directly from the lender instead.
You can check industry bodies such as the National Association of Commercial Finance Brokers (NACFB) if you want to understand more about commercial finance brokers.
What fees are involved in commercial mortgages?
Arrangement fees
Valuation fees
Legal fees
Broker fees
5 tips to boost your commercial mortgage approval chances
Commercial mortgage lenders want to see that your business can afford the mortgage and that the purchase adds up.
Here are 5 tips to strengthen your application before you apply:
1. Save a bigger deposit if you can
Many lenders ask for a deposit of at least 25% of the property’s value. A larger deposit can make your application stronger because it lowers the lender’s risk.
A £300,000 property may need a deposit of at least £75,000 (25%) if the lender offers a 75% mortgage. But if you can put down £90,000 instead (30%), you only need to borrow 70% of the property’s value.
2. Get your accounts and bank statements ready
Lenders need to understand how your business makes and spends its money.
Before you apply, tidy up your accounts and gather:
Your business plan
Business bank statements
Tax details and submissions
Financial forecasts
Many lenders ask for at least two years of accounts, but some may consider newer businesses if your figures look strong.
3. Show that you can afford the repayments
Your lender will check whether your income can comfortably cover the mortgage payments. If your business already has loans or other regular costs it can affect how much you can borrow.
You can improve your position by reducing unnecessary personal and business debt, and showing steady income before you apply.
4. Be clear about the property and how you’ll use it
Lenders want to know what you plan to buy and why. Explain whether you’ll use the property for your own business, rent it out or use it for both.
If you plan to rent it out, lenders will look closely at the expected rental income. Some lenders may want the rent to cover 125%-145% of the mortgage payments.
5. Understand personal guarantees before you agree
A lender may ask for a personal guarantee, especially if your business has limited trading history or the loan is a higher risk. This means you agree to repay the debt personally if your business cannot pay.
A personal guarantee may help your application, but it also puts your own finances at risk. Always understand what you’re signing and consider getting independent legal advice before you agree. If you use a specialist broker, they can help you navigate this too.
What are the pros and cons of a commercial mortgage?
Alternatives to commercial mortgages
A commercial mortgage can help you buy business property, but it may not suit every situation. These options may work better if you need a smaller amount more quickly or finance for a different purpose.
Unsecured business loan - Borrow money without using property or another asset as security. It can suit smaller costs, such as refurbishing premises, covering setup costs or managing cash flow.
Secured business loan - Borrow against an asset like property or machinery. You may be able to borrow more, but you risk losing the asset if you do not keep up with repayments.
Invoice finance - Access money tied up in unpaid customer invoices. It can help if your customers take a long time to pay.
Asset finance - Buy or lease machinery or vehicles and spread the cost without needing a large amount of cash upfront.
Commercial mortgages FAQs
You’ll typically need a deposit of around 30% of the property's purchase price, although this can vary depending on the lender, property and your circumstances.
For example, if you’re looking to buy a commercial property for £200,000 and the lender requires a 30% deposit, you’d need to put down £60,000, with the remaining £140,000 covered by the mortgage.
You can apply for a commercial mortgage through a lender directly, or through a broker.
Before you apply, gather your business accounts, bank statements, proof of income, details of your deposit and information about the property you want to buy.
The lender will review your finances, value the property and check whether your business can afford the repayments before making a mortgage offer.
A commercial mortgage application can take anywhere from a few weeks to a few months. It depends on:
the lender
the property
the valuation
how quickly you provide the information
You can help speed things up by preparing your supporting documentation before you apply. Complex purchases usually take longer, especially if the lender needs extra checks or extensive legal work.
You can use a business mortgage to buy many types of commercial property, including:
offices
shops
warehouses
factories
restaurants
pubs
surgeries
care homes
land for business use
Some lenders also offer semi-commercial mortgages for properties that mix business and residential space - such as a shop or pub with a flat above it.
Yes, you can refinance an existing commercial mortgage.
Refinancing means you switch to a new mortgage deal - either with your current lender or a new one. You might do this to get a lower interest rate, change your repayment terms or release money from the property.
Before you switch, check for exit or valuation fees, legal costs and any new arrangement fees as these can all impact how much you save.
Yes. Limited companies can apply for residential investment mortgages to buy properties to let to tenants. The mortgage available will depend on the lender, the property and the company's circumstances.
Property development finance is designed to help fund projects such as constructing, converting or refurbishing property. It's a different type of finance from a standard commercial mortgage, so the right option will depend on the project and your circumstances.
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