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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.
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.
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
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.
Typical Deposit
Expect around 25–35% as a typical deposit, with weaker or specialist properties often requiring more.
Loan Terms
Terms can range from around 3 to 25 years depending on whether the property is owner-occupied or investment.
Income Cover
Lenders commonly want net profit or rental income to cover mortgage costs by around 125–150%.
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.
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.
Initial Feasibility
Review the property, business, accounts, deposit, borrowing requirement and proposed ownership structure.
Prepare Your Documents
Lenders may request accounts, management figures, bank statements, SA302s, asset and liability statements, leases and proof of deposit.
Agreement in Principle
A suitable lender can provide an indication of whether the proposed transaction fits its lending criteria.
Commercial Valuation
A RICS commercial valuer assesses the property and provides the lender with an independent valuation.
Underwriting
The lender reviews the business, borrower, property, security, income, lease and overall credit position.
Formal Mortgage Offer
Once underwriting is complete, the lender issues a formal offer subject to its conditions.
Legal Work
Solicitors handle title checks, searches, leases, security documentation and lender conditions.
Completion
The mortgage completes, funds are released and the lender's charge is registered against the property.
Commercial Mortgage Costs
Commercial property transactions generally involve higher upfront costs than residential mortgages. These should be considered before committing to the purchase.
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.
Up to £150,000
Non-residential SDLT is generally charged at 0% on the portion of the purchase price up to £150,000.
£150,001–£250,000
The portion between £150,001 and £250,000 is generally subject to SDLT at 2%.
Above £250,000
The portion above £250,000 is generally subject to non-residential SDLT at 5%.
VAT Exposure
Some commercial properties are opted to tax, potentially adding VAT to the purchase price and creating a significant completion cash-flow requirement.
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.
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.
Personal Guarantee
Directors may be required to personally guarantee some or all of the company's commercial borrowing.
Additional Security
Depending on the deal, lenders may request additional security or charges over other assets.
Cap the Exposure
Where possible, understand whether the guarantee can be capped and exactly what obligations it covers.
Review the Structure
Get appropriate legal and professional advice before accepting guarantees or complex security arrangements.
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.
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.
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.