Commercial Mortgages & Building Funding
- Build Business Equity
- Fixed Cost Stability
- Tax Efficient Repayments
- Access to Specialist 'Broker-Only' Rates
- Improve your cash flow, by spreading the costs over time, not upfront.
So don’t wait, speak to a member of our business finance team today.
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Commercial Mortgage Calculator
Get an instant estimate for your asset financing with our commercial mortgage finance calculator, which will give you an illustrative snapshot of what your potential costs could be.
Commercial Mortgage Calculator
Get an instant estimate for your asset financing.
This calculator provides you with an illustrative snapshot of what your potential costs could be.
Please note: While these figures offer you a helpful starting point, our dedicated finance specialists will work with you directly to provide you with a bespoke quote – and a precise rate – to your specific business needs, unique profile and goals as well.
This is more for illustrative purposes only.
Commercial Mortgage Calculator
Estimated Monthly Repayment
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Disclaimer: This calculator is provided for illustrative purposes only. All calculations are estimates based on the information provided and current market rates. The figures shown also do not constitute a formal offer of credit or financial advice, and your final rate and eligibility will depend on a full assessment of your business circumstances and credit profile.
What is a commercial mortgage?
A commercial mortgage is a long-term loan secured against non-residential property, such as offices, retail units, or warehouses. Unlike residential loans, these are assessed based on business profitability, rental yield, and sector risk. They typically require a deposit of 25% to 40% and serve either owner-occupiers or commercial landlords seeking investment growth.
Quick Eligibility Check
Commercial Mortgage vs Business Loan How Do They Differ?
These actually differ in a large number of ways, including, for instance:
| Feature | Commercial Mortgage | Business Loan |
|---|---|---|
| Security | Secured against property. | Usually unsecured or personal guarantee. |
| Loan Term | Up to 25 years. | Typically 1 to 5 years. |
| Best For… | High-value property purchases. | Short-term cash flow or equipment. |
Quick and Easy Application Process
Apply for commercial finance in minutes online.
Competitive Rates
Fast approval process with competitive rates.
Customisable Financing Options
Flexible repayment options tailored to your business needs.
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Meet the Team Behind Business Finance
How Commercial Mortgages Can Help You Pay Less
What are the main types of commercial mortgages?
The two primary categories are owner-occupied mortgages and commercial buy-to-let mortgages. Owner-occupied loans are for businesses purchasing premises for their own operations to build equity. Commercial buy-to-let mortgages are for investors who intend to lease the property to third-party tenants, focusing primarily on the projected rental income for repayment.
Owner-Occupied Mortgages
These are for businesses that want to buy premises to trade from. If you are a shop owner or a manufacturer, this allows you to stop paying rent and build equity in your own asset.
Commercial Buy to Let
These are for investors who intend to let the property to a third party. This is common for office blocks, retail units, or warehouses where the income comes from tenant rent.
Healthcare
Lenders often view GP surgeries, dental practices, and care homes as stable investments due to consistent demand. Financing for these properties may offer longer repayment terms.
Meet Our Dedicated Commercial Mortgage Finance Advisors
Elliott Boreham
I specialise in a broad range of commercial finance solutions, helping SMEs unlock funding for growth, cashflow, and stability through business loans, asset finance, and tailored facilities. I also support property investors with structured finance — always focused on clear communication and finding solutions that genuinely fit.
Find out if a Commercial Mortgage is right for you
At Business Finance, we make commercial finance simple and stress-free. No more worrying about finding the right ideal – we do all the hard work for you. Our team is here to secure the best finance option that suits your business needs.
Want to know how much you could borrow and what your monthly repayments might be?
No problem, Get in touch with our friendly team today, and we’ll be happy to help.
Commercial Mortgage Funding Explained
Commercial mortgages usually last between 3 and 25 years. Because businesses are seen as higher risk than individuals, the interest rates are often higher than residential rates. Most lenders will require a deposit of around 25% to 40% of the property value.
How much can I borrow for a commercial property?
Lenders typically offer a Loan-to-Value (LTV) ratio between 60% and 75%. The specific amount depends on the business’s EBITDA, the quality of the property, and the industry sector. Established professional practices (like GPs or dentists) often secure higher leverage and better terms than high-risk sectors like hospitality.
How is a commercial mortgage calculated for a new business?
Lenders calculate these loans based on “pro-forma” or projected income rather than historic accounts.
They will focus on your Debt Service Coverage Ratio (DSCR) using your business plan’s forecast. Because there is no trading history, the loan is often capped at a lower LTV, and the credit risk assessment will be much stricter.
What are some of the best commercial mortgage lenders for dental practices?
Dental practices are highly valued by High Street Banks like Barclays, HSBC, and NatWest because of their stable income. However, Challenger Banks often provide better loan term flexibility for practice acquisitions that include “goodwill” value. Specialist healthcare brokers can usually find the best rates for these “Tier 1” medical assets.
✔ Hospitality
Loans for hotels, pubs, and restaurants often focus heavily on the “goodwill” and trading history of the business. Lending criteria may differ here, as income can be seasonal.
✔ Agricultural
Finance for farms or agricultural land often involves specialist lenders who understand land management and long-term crop or livestock cycles.
The lending process is also more complex. Lenders will look at your business accounts, projected income, and the quality of the property. They want to ensure that the business or the rental income can comfortably cover the monthly repayments.
Owner-occupied vs investment mortgages, Which is right for your business?
When it comes to these types of commercial mortgages, here you have:
| Feature | Owner-Occupied | Commercial Buy-to-Let |
|---|---|---|
| Income Source | Operational business profits. | Rental income from tenants. |
| LTV Ratio | Often up to 75% or 80%. | Usually capped at 65% to 75%. |
| Best For… | Trading businesses. | Property investors and landlords. |
Your Capital Structure
When looking for business premises funding, it is important to understand the hierarchy of debt.
Here, most commercial mortgages are considered senior debt, meaning they have first priority for repayment. If your project requires additional funds beyond what the main lender provides, you might seek mezzanine finance, which sits behind the senior loan.
As a result, lenders will also assess your weighted average cost of capital (WACC) to ensure the investment is viable. While some high-net-worth structures allow for non-recourse lending, where the lender’s only claim is the property itself, most SME loans will require personal guarantees from the directors to mitigate credit risk assessment concerns.
Understanding Your Affordability
Lenders conduct a thorough credit risk assessment to determine your mortgage serviceability, ensuring your business can handle the debt.
For this, they can use several models, including, for instance:
EBITDA
This stands for Earnings Before Interest, Taxes, Depreciation, and Amortisation. It is the “clean” profit figure lenders use to see how much cash your business actually generates.
Debt Service Coverage Ratio (DSCR)
This is a key technical metric. It compares your EBITDA to your annual mortgage payments. Most lenders look for a ratio of 1.2 or higher to ensure there is a “buffer” if your income dips.
Technical Lending Metrics
Lenders use several other measures during stress testing to ensure you meet liquidity requirements that you should be aware of. For instance, here they will check your tangible net worth and may calculate the debt-to-yield ratio to see the cash return on the loan.
As a result, rates are often discussed in basis points (bps); for instance, a margin might be quoted as 300bps above the base rate.
Due to this, beyond basic profit, lenders will also use specific units and ratios to gauge risk:
✔ Interest Cover Ratio (ICR)
Similar to DSCR, the ICR specifically measures how easily your business can pay the interest portion of the loan from its profits.
✔ Liquidity Requirements
You may need to prove you meet certain liquidity requirements, meaning you have enough “cash on hand” to cover several months of repayments if trade slows down.
✔ Tangible Net Worth
Lenders look at your tangible net worth (total assets minus liabilities and intangible assets like goodwill) to see the true “strength” of your balance sheet.
✔ Basis Points (BPS)
Lenders often quote rates in basis points. One basis point is equal to 0.01%. For example, a 50bps increase means a 0.5% rise in your rate.
✔ Debt-to-Yield Ratio
This is your net operating income divided by the loan amount. It helps lenders understand the cash flow return regardless of the interest rate.
✔ Stress Testing
Before approval, your application undergoes stress testing. This simulates how your business would cope if interest rates rose by several basis points or if income dropped.
Industry Risk and LTV Limits
Lenders do not treat all buildings equally. The maximum amount you can borrow (LTV) is heavily influenced by how easily the property could be sold or repurposed if your business stopped trading. This is known as “asset liquidity”.
Why does the LTV vary?
Lenders look at the “alternative use” value. A Care Home is a stable, essential service that can often be sold to another provider with minimal changes.
In contrast, a Nightclub is considered a “specialist” building. If the business fails, the lender may struggle to find a buyer who wants a nightclub, and converting the building into something else is a costly and slow process. This increased “exit risk” is why you must provide a significantly higher deposit.
Difference between owner-occupied and investment mortgages?
The main difference lies in the source of repayment. Owner-occupied mortgages are settled using the operational profits of the business trading from the site. Investment mortgages (Commercial Buy-to-Let) rely on the rental income paid by a third-party tenant. Lenders often view investment loans as higher risk because they depend on the tenant’s ability to pay and the lease terms.
Just Starting Out? We’ve Got You Covered
Starting a new business is exciting – but let’s be honest, it can be a bit overwhelming too, especially when it comes to buying the equipment or vehicles you need to get going. That’s where we come in.
We specialise in asset finance for new business ventures, helping you secure the tools you need without tying up all your cash. So, whether it’s machinery, office tech, company vehicles, or anything in between, this type of finance lets you spread the cost, so you can focus on growing your business instead of stressing over big upfront payments.
And don’t worry if you are not sure where to begin, our team can guide you through the process. As an experienced broker in asset finance, we have helped loads of new businesses just like yours find the right deals, even if you are still building up your credit history or haven’t been trading long.
Consequently, we will connect you with trusted asset finance lenders who understand the unique needs of start-ups and offer flexible terms tailored to your situation.
In short, we’ll sort the finance, so you can get on with building your dream business.
Semi-commercial and mixed-use property mortgage options
A Mixed-Use Property (often referred to as semi-commercial), which is a single building that contains both commercial and residential elements.
This is a unique asset class that requires a specific type of lending approach.
Common Examples
A local shop with a flat above it, a pub with owner accommodation, or an office building where the top floor has been converted into apartments.
The Benefit
These properties offer diversified income. If the commercial unit is vacant, the residential rent can often help cover the mortgage, reducing the overall risk for both you and the lender.
How it is Valued?
Here, lenders look at the “split” of the property. If the residential element makes up a large part of the building, you may find more flexible terms. However, if the commercial element is high-risk (like a takeaway or a noisy workshop), it may affect the interest rates.
✔ Approval and Terms
Once the application is approved, you will then need to review the loan terms that the lenders and we will make clear to you, which can include, for instance, your repayment schedules, fixed or variable interest rates, and conditions for early termination for example.
How to switch from a residential to a semi-commercial mortgage?
If you are converting a home into a Mixed-Use Property (such as adding a ground-floor office), you cannot simply stay on a residential product.
Here, you must perform a commercial refinancing exercise. The lender will require a new RICS valuation and a change-of-use title check to ensure the property meets semi-commercial lending criteria.
2026 EPC Regulations
In 2026, energy efficiency is no longer just a “green” choice – it is a strict lending requirement. Most commercial mortgage providers now require a minimum Energy Performance Certificate (EPC) rating of “C” or even “B” before they will approve a loan.
Lending Restrictions
If a building has a poor rating (D to G), lenders may refuse the mortgage or hold back a portion of the funds until energy-saving improvements are made.
Green Mortgages
Conversely, if your building meets high efficiency standards, you may be eligible for “Green Mortgage” products, which often offer lower interest cover ratios (ICR) or reduced arrangement fees.
EPC Impact on Lending
| EPC Rating | Lending Status (2026) | Impact on Rate |
|---|---|---|
| A or B | Fully eligible; “Green” products. | Potential for 0.25% – 0.50% discount. |
| C | Standard eligibility. | Standard market rates apply. |
| D or Below | Restricted; works required. | Higher rates or “Retention” of funds. |
Understanding Yields and Planning
For investment properties, lenders focus on the “Yield” or the return on investment:
Net Initial Yield
This is the current annual rent (minus costs) as a percentage of the property price.
Gross Development Value (GDV)
If you are buying a property to refurbish or build, lenders look at the GDV – the estimated final value of the project once all work is finished.
Investment and Development
If you are buying for investment, lenders look at the net initial yield (current return) and the reversionary yield (expected future return).
For renovation projects, the gross development value (GDV) is the key metric. You may also use permitted development rights to change a building’s use, which can be a strong exit strategy.
Reversionary Yield
This is the expected yield in the future when current leases end, and the rent is “reset” to market value.
Permitted Development Rights
In some cases, you can change a property’s use (e.g., office to residential) using permitted development rights, which avoids the need for full planning permission and can speed up your exit strategy.
Find out if a Commercial Mortgage is right for you
At Business Finance, we make commercial finance simple and stress-free. No more worrying about finding the right ideal – we do all the hard work for you. Our team is here to secure the best finance option that suits your business needs.
Want to know how much you could borrow and what your monthly repayments might be?
No problem, Get in touch with our friendly team today, and we’ll be happy to help.
2026 UK commercial mortgage rates and market outlook
While rates change based on the economy, most businesses currently pay between 2% and 6% above the Bank of England base rate.
Your specific rate, though, will depend on the risk level of your industry and the size of your deposit. High street banks usually offer the lowest rates for established firms, while specialist lenders provide more flexible options for a slightly higher cost.
What is the average commercial mortgage rate in the UK today?
In 2026, most businesses find that average commercial mortgage rates sit between 2.25% and 6% above the Bank of England base rate. For a low-risk firm with a large deposit, an “all-in” rate might be around 6.5% to 7.5%, while specialist or higher-risk sectors may pay 9% or more.
High street banks vs specialist lenders, Comparing commercial mortgage providers
There are a number of differences here, including:
| Feature | High Street Bank | Specialist Lender |
|---|---|---|
| Interest Rates | Lowest available market rates. | Slightly higher margins. |
| Acceptance | Very strict criteria. | Flexible, case-by-case approach. |
| Best For… | Established firms with high profits. | Complex cases or niche industries. |
What is the Difference Between Tier 1 vs Tier 2 Commercial Lenders?
| Feature | Tier 1 (High Street) | Tier 2 (Challenger) |
|---|---|---|
| Pricing | Market-leading low rates. | Mid-market pricing. |
| Process | Slow, rigid compliance. | Fast, entrepreneurial mindset. |
| Best For… | Pristine financial history. | Rapid expansion or asset repairs. |
Key Benefits of Commercial Property Finance
Tailored for SMEs (Small and Medium-sized Enterprises), commercial finance allows growing firms like yours to invest in your own premises – which offers you several advantages for a growing business.
✔ Stability
Buying a property protects you from sudden rent increases or the risk of a landlord ending your lease. You have full control over the building.
✔ Subletting Opportunities
If you buy a building that is larger than you currently need, you may be able to sublet the extra space. This provides an additional stream of income to help pay off the mortgage.
✔ Capital Growth
As the value of the property increases over time, your business builds a valuable asset. This can be sold in the future or used as security for other business loans.
While property appreciation builds equity, you should also be mindful of potential Capital Gains Tax (CGT) liabilities if you sell the asset for a profit later.
✔ Tax Deductions
The interest payments on a commercial mortgage are usually tax-deductible as a business expense. You should always check with an accountant to see how this applies to your specific situation.
Are commercial mortgage arrangement fees tax-deductible?
Yes, generally, commercial mortgage arrangement fees are considered a business expense and are tax-deductible. They are typically spread over the life of the loan or the fixed-rate period. This also applies to valuation and legal fees, but you should always confirm the current treatment with a qualified accountant.
Can I use a SIPP to buy commercial property?
A popular strategy for SMEs is to use a Self-Invested Personal Pension (SIPP) to buy business premises. The pension fund buys the property and leases it back to your business. This is highly tax-efficient as the rent paid by your company into the SIPP is a deductible expense and grows tax-free within the pension.
Legal and Regulatory Essentials
Commercial lending is actually overseen by several bodies to make sure the market remains stable, with these consisting of:
The FCA and PRA
While most commercial mortgages are not “regulated” in the same way as home loans, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) set the standards for how banks and lenders must operate and manage risk.
Indemnity Insurance
During the legal process, your solicitor might suggest Indemnity Insurance. This protects you against “hidden” legal defects in the property’s title that could cause issues later.
RICS Valuations
To protect both parties, lenders insist on a valuation from a member of the Royal Institution of Chartered Surveyors (RICS). This ensures the property value meets professional, independent standards.
Do commercial mortgages require a personal guarantee?
In most cases, yes. Unless you are a very large PLC, lenders will require personal guarantees from the company directors. This means that if the business fails to meet its obligations, the individuals become personally liable for the debt. This is a standard part of a credit risk assessment for limited companies.
Personal Guarantees for SME Loans
While a commercial mortgage is secured against the building, most lenders require Personal Guarantees (PGs) from the company directors for SME loans.
Secondary Security
This gives the lender a claim against your personal assets if the business profits and the property value are not enough to cover the debt.
Limited Liability
Even if your business is a Limited Company, a PG “pierces the corporate veil,” making you personally responsible. You should always seek independent legal advice before signing a guarantee.
Commercial Title and Tenure
A key part of commercial property finance is verifying the commercial title deeds. Your solicitor will confirm whether the property is:
Freehold
You own the building and the land it stands on indefinitely.
Leasehold
You own the right to occupy the building for a set number of years.
Understanding leasehold vs freehold commercial status is vital, as a short lease can significantly impact mortgage serviceability and future exit strategies.
Security of Tenure and Legal Rights
The legal relationship between a landlord and tenant is governed by the Landlord and Tenant Act 1954.
✔ Security of Tenure
Under the 1954 Act, many commercial tenants have a legal right to stay in the property after the lease expires. Lenders will check if a property is “Inside the Act” as this affects value.
✔ Environmental Indemnity
Lenders may require an environmental indemnity to protect them against costs related to historical pollution or land contamination.
✔ Legal Protections
Most leases fall under the Landlord and Tenant Act 1954, providing security of tenure.
Always check for break clauses that allow you to exit early. During the application, you will sign the heads of terms and may be asked to provide an environmental indemnity.
Finally, note that bank reports usually include a valuation non-reliance clause, meaning they are for the bank’s use only.
✔ Break Clauses
These are specific dates in a lease where either the landlord or tenant can end the agreement early. These must be declared during the application.
✔ Valuation Non-Reliance
Be aware that most bank valuations include a valuation non-reliance clause, meaning that while you pay for the report, you cannot legally rely on it for your own purposes; it is for the lender only.
How do I apply for a commercial mortgage?
Applying for a commercial mortgage requires preparation. You will need to provide a range of documents to prove your financial health.
✔ Business Plan
Lenders want to see that you have a clear strategy. This should include how the new property fits into your growth plans.
✔ Property Valuation
A professional surveyor will need to value the building. Lenders then use the valuation to set the Loan to Value (LTV) ratio, which is the percentage of the property’s value you are borrowing versus your deposit.
✔ Drawdown Period
Once the mortgage is approved, you usually have a set drawdown period (e.g., 3 to 6 months) to take the funds.
✔ Amortisation Schedule
Upon completion, your lender provides an amortisation schedule, which is a month-by-month table showing how much of each payment goes to interest versus the repayment capital.
✔ Financial Statements
Expect to provide at least two years of audited accounts. Lenders will focus on your earnings to assess your ability to pay.
✔ Heads of Terms
Before the full legal process starts, you will sign the Heads of Terms. This is a non-binding document that outlines the main parts of the deal.
✔ Early Repayment Charges (ERC)
If you then pay off the loan before the end of a fixed-rate period, you will likely face Early Repayment Charges (ERC). These are often tiered (e.g., 5% in year one, 4% in year two).
✔ Non-Status Lending
For firms with unique backgrounds, some specialist providers offer non-status lending, focusing on the property’s value rather than the borrower’s traditional credit history.
Freehold vs Long Leasehold Options Examples
| Feature | Freehold | Long Leasehold |
|---|---|---|
| Ownership | Permanent ownership of land. | Ownership for fixed years (e.g. 999). |
| Ground Rent | None. | Often applicable annually. |
| Best For… | Maximum asset control. | Properties in city centers/estates. |
Legal Fees and Costs
Remember to budget for extra costs. These include valuation fees, legal fees, and Stamp Duty Land Tax. There may also be an arrangement fee charged by the lender.
The 20% Gap
If a building is opted for VAT, you must pay an extra 20% on top of the purchase price.
Stamp Duty
Be aware that Stamp Duty Land Tax (SDLT) is calculated on the VAT-inclusive price, which further increases your upfront costs.
VAT on Commercial Property
A major hurdle in commercial transactions is the Option to Tax. While many commercial properties are exempt from VAT, a landlord can “opt to tax” a building to recover their own costs.
Funding the VAT
Most lenders will only lend against the “Net” price (the price before VAT). This means you may need to find a short-term Bridging Loan or use your own cash to cover the VAT until it can be reclaimed from HMRC.
Find out if a Commercial Mortgage Finance is right for you
At Business Finance, we make Commercial Mortgages simple and stress-free. No more worrying about finding the right ideal – we do all the hard work for you. Our team is here to secure the best finance option that suits your business needs.
Want to know how much you could borrow and what your monthly repayments might be?
No problem, Get in touch with our friendly team today, and we’ll be happy to help.
How much deposit is needed for a £1m commercial warehouse?
For a £1m warehouse, most lenders require a deposit of 25% to 35%, which equates to £250,000 to £350,000. If the property is for your own business use (owner-occupied), some specialist lenders may stretch to a 20% deposit (£200,000) if your EBITDA and mortgage serviceability are exceptionally strong.
What fees are involved?
Budget for arrangement fees (1% to 2%), professional valuation fees starting at £500, and legal costs starting at £1,500. Additional costs include Stamp Duty Land Tax (SDLT), broker fees, and potential commitment fees. Interest rates are usually quoted as a percentage “margin” above the Bank of England base rate.
Estimated Costs and Fees
| Fee Type | Estimated Cost | Notes |
|---|---|---|
| Arrangement fees | 1% to 2% | Percentage of the total loan amount charged by the lender. |
| Valuation fees | From £500 | Increases based on the size and complexity of the property. |
| Legal costs | From £1,500 | Includes your own legal costs and often the lender’s fees. |
Note: Swipe horizontally to view the full table on mobile devices.
Interest Rates and Fees
Interest rates for commercial mortgages are typically split into two categories.
✔ Variable Rates
These are usually linked to the Bank of England base rate. If the base rate goes up, your monthly payments will increase.
✔ Fixed Rates
Your interest rate stays the same for a set period, often between 2 and 5 years. This provides certainty for your business budgeting.
Lenders may also charge a commitment fee when they offer the loan and a redemption fee if you pay the mortgage off early.
How Do Interest-Only vs Repayment Options Differ?
| Feature | Interest-Only | Capital Repayment |
|---|---|---|
| Monthly Cost | Lower monthly outgoings. | Higher monthly outgoings. |
| Loan Balance | Remains the same until the end of the term. | Reduces every month. |
| Best For… | Maximum cash flow today. | Guaranteed debt clearance. |
Repayment Capital and Options
While most loans are repayment-based, some lenders can still offer interest-only options for a set period. This can help you with your initial cash flow, though you must ensure that you have a strong plan in place to repay the repayment capital at the end of the term.When it comes to this type of financing, it is important that you understand the difference between hard and soft assets.
For example, hard assets are tangible assets like your machinery, real estate, and vehicles, which have a physical presence and can often appreciate or retain their value over time.
Soft assets, on the other hand, include more intangibles such as intellectual property, software, and trademarks. While soft assets lack physical form, they can add a lot of value through brand equity and knowledge for instance.
Fixed Rate vs Variable Commercial Examples
Please see the table below to give you some examples of how these can compare.
| Feature | Fixed Rate | Variable Rate |
|---|---|---|
| Stability | Payments stay the same. | Payments fluctuate with base rate. |
| Early Exit | Likely high exit fees. | More flexible exit terms. |
| Best For… | Accurate long-term budgeting. | Those expecting rates to fall. |
Beyond the High Street
If a traditional bank is not the right fit, other options exist for you here, and our team of credit brokers will be able to help you with your options.
For instance, some alternative options can include:
✔ Challenger Banks
These are newer, specialist banks that often offer more flexible criteria or faster approvals than traditional “Tier 1” banks.
✔ Bridging Loans
If you need to secure a property quickly before a long-term mortgage is finalised, a Bridging Loan acts as short-term “gap” finance.
✔ Asset-Based Lending (ABL)
If you have significant equipment, stock, or unpaid invoices, you might use Asset-Based Lending. This uses those assets as collateral alongside or instead of the property.
Commercial Mortgage vs Bridging Finance
Some things to consider here include:
| Feature | Commercial Mortgage | Bridging Finance |
|---|---|---|
| Speed | 6 to 12 weeks. | 1 to 2 weeks. |
| Interest Type | Annualised rate. | Monthly rate. |
| Best For… | Long-term property ownership. | Auction buys or quick refurbishments. |
Why Use a Business Finance Broker?
Navigating the commercial mortgage market can be difficult. High street banks have strict criteria, and many of the best deals are offered by specialist lenders who do not deal directly with the public.
A broker can help you compare products from across the whole market. They understand which lenders are currently active in your specific industry. This saves you time and increases your chances of a successful application.
Why use a commercial mortgage broker?
A broker provides access to “broker-only” specialist lenders who do not deal directly with the public. They assist in structuring the business plan and accounts to meet specific lender criteria, significantly increasing the probability of approval—especially for complex mixed-use or high-leverage applications.
Frequently Asked Questions
Can I get a mortgage for a new business?
It is more difficult for startups, but not impossible. You will need a very strong business plan and a larger deposit.
What is a semi-commercial mortgage?
This is for properties that have both a business and a residential element, such as a flat above a shop.
How long does the process take?
Generally, it takes between 6 and 12 weeks from the initial application to completion.
Common commercial mortgage terms explained.
Commercial finance can often involve complex language. Here are some simple definitions for common terms you may encounter during your application.
Amortisation
The process of paying off your debt over time through regular instalments. Each payment covers both the interest and a portion of the original loan amount.
Debentures
A document that gives the lender a “charge” or legal claim over your business assets. It acts as security for the loan, allowing the lender to recover their funds if the business cannot pay.
Covenant Compliance
The ongoing requirement for a business to meet the rules set in the mortgage contract (such as maintaining a specific profit level).
Exit Strategies
The pre-planned method by which a borrower intends to settle the debt, such as selling the property or commercial refinancing.
FRI Lease (Full Repairing and Insuring)
A common commercial lease where the tenant (not the landlord) is responsible for all repairs and insurance costs.
Covenants
These are rules or conditions set by the lender that your business must follow. For example, a lender might require your business to maintain a certain level of profit to ensure you can continue making repayments.
Equity
The difference between the value of your property and the amount
you owe on your mortgage. As you pay off the loan or the property value rises, your equity increases.
Commercial Lender Criteria
The specific set of rules (such as minimum trading years or industry type) that a bank uses to decide whether to approve a loan.
SPV (Special Purpose Vehicle)
A limited company set up solely to hold a property asset. Many professional landlords use these for tax efficiency.
What Are The Differences Between SPV and personal name purchase?
| Feature | SPV (Ltd Co) | Personal Name |
|---|---|---|
| Tax Efficiency | Mortgage interest is deductible. | Taxed on gross rental income. |
| Lending Choice | Vast majority of lenders. | More restricted for commercial. |
| Best For… | Professional landlords (Higher tax). | Basic rate taxpayers (Rarely recommended). |
What happens if a business breaches a mortgage covenant?
If you fail to maintain covenant compliance (such as your profit falling below a certain level), the lender can technically call in the loan. However, they usually prefer to work with the business first. This might involve increasing the interest rate to reflect the higher risk or requiring an immediate repayment of capital to lower the LTV.
Full Repairing (FRI) vs Internal Repairing Lease
When it comes to these two, some things for you to consider include, for instance:
| Feature | Full Repairing (FRI) | Internal Repairing |
|---|---|---|
| Tenant Responsibility | Full building (structure + roof). | Internal walls and decor only. |
| Insurance | Paid by tenant. | Paid by landlord. |
| Best For… | Sole occupancy warehouses/offices. | Multi-let buildings or small retail. |
Are Commercial Mortgages Right For You?
A commercial mortgage is a powerful tool for any business looking to secure its future. While the process is more detailed than a standard home loan, the long-term rewards of property ownership are significant. Whether you are looking to buy your first office or expand an investment portfolio, getting the right advice is the first step toward success.
Find out if a Commercial Mortgage is right for you
At Business Finance, we make commercial finance simple and stress-free. No more worrying about finding the right ideal – we do all the hard work for you. Our team is here to secure the best finance option that suits your business needs.
Want to know how much you could borrow and what your monthly repayments might be?
No problem, Get in touch with our friendly team today, and we’ll be happy to help.