| Typical loan size | £100,000 to £10m+ |
|---|---|
| Maximum LTV | Usually 60–75%, depending on property and borrower |
| Term | Typically 3 to 25 years |
| Repayment | Capital repayment, part interest-only or interest-only |
| Key affordability test | Business profits or rental income cover |
| Borrower types | Individuals, limited companies, LLPs, SPVs, pension schemes |
| FCA regulated? | No, commercial mortgages are not usually regulated |
Who is this for?
- Trading businesses buying the premises they operate from
- Investors buying let shops, offices or industrial units
- Owners refinancing to release capital or move to a better lender
- SIPP and SSAS pension schemes buying commercial property
- Professional practices such as dentists, GPs and solicitors
What is a commercial mortgage?
A commercial mortgage is a long-term loan secured against property that is used mainly for business purposes. It works like a residential mortgage, but lenders assess the business, the property and the income it produces rather than just your personal salary.
Common property types include offices, retail units, warehouses, industrial units, care homes, hotels, pubs, restaurants and medical practices. If a building mixes a shop with flats above, a semi-commercial mortgage may fit better.
What can a commercial mortgage be used for?
Commercial mortgages can fund a purchase, a refinance or a capital raise against property you already own.
- Buying your business premises instead of renting
- Buying let commercial property as an investment
- Refinancing from another lender or off a bridging loan
- Releasing equity to fund business growth
- Buying a trading business together with its property, such as a care home or hotel
Some lenders also fund light refurbishment as part of the loan. Larger works usually need development finance or a bridge first.
Owner-occupied or investment: what is the difference?
An owner-occupied commercial mortgage is for a business buying premises it trades from. An investment commercial mortgage is for a landlord buying property let to third-party tenants. Lenders assess the two very differently.
- Owner-occupied: lenders look at the trading accounts, usually two to three years, and test whether profits (often EBITDA) comfortably cover the repayments.
- Investment: lenders look at the rent, the tenant's financial strength, the lease length and any break clauses. Rental income usually needs to cover the interest by a set margin.
Owning your premises can give a business stability and an asset that may grow in value. It also ties up capital and puts the property at risk if repayments are missed.
How much can I borrow for a commercial property?
Most commercial lenders will lend up to 60–75% of the property's value, so you will usually need a deposit of at least 25–40%. The exact amount depends on affordability, the type of property, its location and the strength of your business or tenants.
Specialist properties such as hotels, pubs or care homes are often valued on their trading performance. They may attract lower loan-to-value limits. Additional security, such as a charge over another property, can sometimes increase the amount available.
Lenders also test serviceability. For investment property, rent often needs to cover interest by a margin, commonly 125% to 150% or more, tested at a notional rate. For owner-occupiers, profits must comfortably cover repayments after other commitments.
What do commercial lenders look for?
Commercial lenders underwrite each case individually. There is no single credit-scoring formula, which is why presentation matters.
- Trading history: filed accounts, management accounts and cash flow forecasts.
- The property: condition, use class, location and how easily it could be re-let or sold.
- Leases: tenant covenant strength, unexpired term and break dates.
- Experience: your track record running the business or managing property.
- Personal guarantees: many lenders ask directors to guarantee loans to limited companies.
A RICS valuation is required, and lenders' fees, valuation and legal costs are usually higher than for residential mortgages.
Are commercial mortgages regulated by the FCA?
Most commercial mortgages are not regulated by the Financial Conduct Authority. That means you will not have the same protections as a regulated residential mortgage, such as access to the Financial Ombudsman Service in many cases.
The exception is where you, or a close family member, will live in part of the property. In that case the loan may be regulated, and we will advise you on that basis. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Why use a broker for a commercial mortgage?
Commercial lending varies far more between lenders than residential lending. Appetite for property types, sectors and loan sizes changes often, and many lenders only deal through intermediaries.
OMB is an independent, whole-of-market broker based in Mayfair. We prepare a clear credit proposal, approach the lenders most likely to say yes, and negotiate terms such as fees, covenants and early repayment charges. Where speed matters, we can also look at a bridging loan to secure the purchase first.
Run the numbersLTV, monthly payment, debt service and rental cover for commercial property.
Commercial mortgage calculatorHow we arrange it
- Free 15-minute call
- We review accounts, leases and the property
- We prepare a credit proposal and approach suitable lenders
- Valuation, legal work and offer
- Completion and ongoing reviews
Example cases
Illustrative examples based on the type of case we arrange. Not specific clients; every case is different.
£840,000 owner-occupier commercial mortgage at 70% LTV for a dental practice
£1.08m commercial investment mortgage at 60% LTV on a let industrial unit
£422,500 commercial mortgage at 65% LTV for a restaurant owner buying its freehold
From the blogRent or buy? How to finance your own business premises
Read the articleFrequently asked questions
How much deposit do I need for a commercial mortgage?
Most lenders need a deposit of 25–40% of the purchase price, as they typically lend up to 60–75% loan-to-value. Strong trading businesses buying standard premises may reach the higher end. Specialist or trading properties such as hotels or pubs often need a larger deposit.
Can I get a commercial mortgage for a new business?
It is harder but possible. Lenders usually prefer two to three years of trading accounts. A start-up may need a larger deposit, strong industry experience, a detailed business plan and possibly additional security. Some specialist lenders are more flexible than high street banks.
How long does a commercial mortgage take?
Commercial mortgages usually take longer than residential ones because underwriting, valuation and legal work are more detailed. The timescale depends on the property, the lender and how quickly documents are provided. If you face a tight deadline, a bridging loan may help bridge the gap.
Can I get an interest-only commercial mortgage?
Some lenders offer interest-only or part interest-only terms, particularly for investment property with strong tenants. You will need a credible plan to repay the capital at the end of the term, such as sale or refinance. Interest-only keeps payments lower but the debt does not reduce.
Can my pension buy commercial property?
Yes, a SIPP or SSAS can usually buy commercial property, and some lenders will lend to the pension scheme. Rules on borrowing limits apply, and the trustees must be involved. You should take advice from your pension provider and a financial adviser alongside the mortgage.
Do I need to give a personal guarantee?
Many lenders ask directors or shareholders to give a personal guarantee when lending to a limited company. This means you could be personally liable if the company cannot repay. The level of guarantee is sometimes negotiable, and you should take independent legal advice before signing.
Can I remortgage a commercial property to raise capital?
Yes. Many owners refinance to release equity for business investment, to buy further property or to move to better terms. Lenders will reassess affordability and value. Check early repayment charges on your current loan before switching, as commercial penalties can be significant.
Are commercial mortgage rates fixed or variable?
Both are available. Many commercial loans are priced as a margin over Bank of England base rate or SONIA, while others offer fixed rates for a set period. The right choice depends on your cash flow and appetite for risk. We do not quote rates without understanding your case.
Can a foreign national or overseas company get a UK commercial mortgage?
Some lenders do lend to overseas individuals and companies, subject to enhanced checks on identity, source of funds and corporate structure. Choice is narrower and deposits are often larger. International borrowers are a common part of our work from Mayfair.
What fees are involved in a commercial mortgage?
Expect a lender arrangement fee, a RICS valuation fee, your own legal fees and usually the lender's legal fees. A broker fee may also apply; at OMB this can be up to 1% of the loan, with a typical fee of £500. All fees are confirmed before you proceed.
Important: Commercial mortgages and most business finance are not regulated by the FCA. Your property may be repossessed if you do not keep up repayments on loans secured against it.