Skip to main content

ePayment Financial Solutions

COMMERCIAL MORTGAGES

Commercial Property Mortgages

Whether you're buying premises for your business, investing in commercial property or refinancing an existing asset, we help you understand the finance options and find a structure suited to your business and property.

UNDERSTANDING COMMERCIAL FINANCE

What Is a Commercial Mortgage?

A commercial mortgage is a loan secured against property that isn't your home. This can include shops, offices, industrial units, warehouses, surgeries, pubs, care homes and mixed-use buildings. Unlike residential mortgages, commercial finance is usually assessed on a deal-by-deal basis.

01

Owner-Occupier

Your trading business purchases the premises it operates from. Lenders generally assess your business performance, profitability and ability to service the borrowing.

Key factor: Business trading performance and adjusted profit.
02

Commercial Investment

You purchase a commercial property and rent it to a business tenant. The tenant's covenant strength, lease and rental income can all influence the lender's decision.

Key factor: Rental income and tenant strength.
03

Semi-Commercial

Mixed-use properties such as a shop with residential flats above can fall into this category. These properties can sometimes attract more favourable terms than pure commercial assets.

Typical example: Retail premises with flats above.
WHO IT'S FOR

Who Can Benefit From Commercial Finance?

Commercial mortgages can help established businesses, investors and professional practices purchase, refinance or raise capital against commercial property.

They can be particularly useful for business owners who are currently paying rent and want to build equity in premises they control.

Commercial finance can also provide an alternative route for investors looking to diversify beyond residential property.

✓

Businesses buying their own premises

✓

Commercial property investors

✓

Mixed-use property purchases

✓

Refinancing existing commercial debt

✓

Raising capital against commercial property

✓

Dental, medical and professional practices

RATES & TERMS

Commercial Mortgage Rates & Borrowing

Commercial mortgage pricing varies significantly depending on the property, business, tenant strength, loan-to-value and overall risk profile. There is no single rate that applies to every commercial borrower.

%

Indicative Rates

Commercial mortgage pricing can commonly range from around 5.5% to 9.5%, with specialist assets potentially higher.

25%

Typical Deposit

Expect around 25–35% as a typical deposit, with weaker or specialist properties often requiring more.

25

Loan Terms

Terms can range from around 3 to 25 years depending on whether the property is owner-occupied or investment.

1.25×

Income Cover

Lenders commonly want net profit or rental income to cover mortgage costs by around 125–150%.

Commercial finance is individually assessed The right lender can be just as important as the headline rate, particularly for specialist or complex properties.
SPECIALIST BUSINESSES

Finance for Professional Practices

Some professional practices can benefit from specialist commercial mortgage criteria. Depending on the business, profession and property, lenders may take a different approach to assessing affordability and security.

✓

Dental Practices

Finance for dentists purchasing or refinancing professional premises and practice-related property.

✓

Medical Practices

Commercial finance options for doctors, clinics and other established healthcare businesses.

✓

Veterinary Practices

Funding solutions for veterinary businesses acquiring or refinancing their premises.

✓

Other Professionals

Certain legal, accountancy and professional practices may also qualify for specialist lending.

THE PROCESS

How Does a Commercial Mortgage Work?

Commercial property finance involves more detailed assessment than a typical residential mortgage. Preparing the right information early can help keep the transaction moving.

01

Initial Feasibility

Review the property, business, accounts, deposit, borrowing requirement and proposed ownership structure.

02

Prepare Your Documents

Lenders may request accounts, management figures, bank statements, SA302s, asset and liability statements, leases and proof of deposit.

03

Agreement in Principle

A suitable lender can provide an indication of whether the proposed transaction fits its lending criteria.

04

Commercial Valuation

A RICS commercial valuer assesses the property and provides the lender with an independent valuation.

05

Underwriting

The lender reviews the business, borrower, property, security, income, lease and overall credit position.

06

Formal Mortgage Offer

Once underwriting is complete, the lender issues a formal offer subject to its conditions.

07

Legal Work

Solicitors handle title checks, searches, leases, security documentation and lender conditions.

08

Completion

The mortgage completes, funds are released and the lender's charge is registered against the property.

Typical timescale: Around 6–8 weeks for a straightforward case, with complex properties, guarantors or portfolios potentially taking longer.
PLAN YOUR BUDGET

Commercial Mortgage Costs

Commercial property transactions generally involve higher upfront costs than residential mortgages. These should be considered before committing to the purchase.

%

Arrangement Fee

Mainstream commercial lenders may charge around 1–2%, while specialist or complex cases can be significantly higher.

Budget: Often 1–2% for mainstream lending.
£

Commercial Valuation

A RICS commercial valuation can commonly cost around £1,500–£5,000+ plus VAT depending on the property.

Important: The valuation fee is generally non-refundable once instructed.
⚖

Legal Fees

Both your legal work and lender requirements need to be accounted for, particularly where leases or complex titles are involved.

Allow for: Additional legal work on commercial security.
Don't budget for the deposit alone As a broad planning guide, allow around 5% of the purchase price for fees and taxes in addition to your deposit.
TAX & PURCHASE COSTS

Commercial Stamp Duty & VAT

Commercial property has different tax treatment from residential property, and the structure of your purchase can have a major impact on the amount of cash required at completion.

0%

Up to £150,000

Non-residential SDLT is generally charged at 0% on the portion of the purchase price up to £150,000.

2%

£150,001–£250,000

The portion between £150,001 and £250,000 is generally subject to SDLT at 2%.

5%

Above £250,000

The portion above £250,000 is generally subject to non-residential SDLT at 5%.

VAT

VAT Exposure

Some commercial properties are opted to tax, potentially adding VAT to the purchase price and creating a significant completion cash-flow requirement.

!
IMPORTANT TO KNOW

The Valuation Can Change the Whole Deal

One of the biggest risks in commercial property finance is the difference between the price you agree with the seller and the value reported by the lender's commercial valuer.

If the valuer reports a lower vacant possession or market value, the lender may calculate its maximum loan against that lower figure rather than the price you agreed. You may therefore need to contribute additional cash to complete the purchase.

This is particularly important with specialist trading premises where the property's value can depend heavily on its existing use, tenant, location or business operation.

RISK & SECURITY

Understand the Personal Guarantee

Borrowing through a limited company does not necessarily mean that your personal assets are completely protected. Commercial lenders commonly request personal guarantees from directors.

01

Personal Guarantee

Directors may be required to personally guarantee some or all of the company's commercial borrowing.

02

Additional Security

Depending on the deal, lenders may request additional security or charges over other assets.

03

Cap the Exposure

Where possible, understand whether the guarantee can be capped and exactly what obligations it covers.

04

Review the Structure

Get appropriate legal and professional advice before accepting guarantees or complex security arrangements.

!
WATCH FOR REFINANCE RISK

Commercial Finance Doesn't End at Completion

Some commercial mortgages have shorter terms than the underlying repayment period, leaving a balance that needs to be refinanced or repaid when the term ends.

Lenders can also carry out annual covenant reviews and reassess business performance. A decline in profitability, rental income or property value can affect your position even if every payment has been made on time.

Before taking commercial finance, consider your exit strategy, likely refinance options and whether your business could continue servicing the debt if trading conditions change.

WHY GET SPECIALIST ADVICE?

Find the Right Commercial Finance Structure

Commercial mortgages are not as straightforward as residential borrowing. The property, business, tenant, lease, accounts and exit strategy can all influence which lenders are willing to consider your application.

✓

Assess the Property

Understand how the property type, location, use and valuation could affect available lenders.

✓

Review Your Business

Assess trading performance, profitability and income cover before approaching lenders.

✓

Compare Lenders

Access specialist commercial lenders where the right deal may not be available through mainstream providers.

✓

Plan Your Exit

Consider the refinance, repayment or sale strategy before committing to the borrowing.

READY TO EXPLORE COMMERCIAL FINANCE?

Let's Find the Right Finance for Your Property

Whether you're buying business premises, investing in commercial property, refinancing existing debt or raising capital, we can help you understand your commercial mortgage options.