Commercial Mortgage Guide | A commercial mortgage helps you finance business property. This guide explains how commercial mortgages work and how to secure the best deal. You will learn the criteria, costs, risks, deposit requirements, lender checks and required documents. You will also see when expert advice matters most. This guide will help you prepare a strong application and understand each step clearly.

What Is a Commercial Mortgage?

A commercial mortgage is a loan used to buy property for business use. It is different from a standard residential mortgage. It can support owner-occupied premises or commercial investment properties. Typical commercial mortgage terms range from 5 to 25 years. These loans usually involve bespoke underwriting and detailed financial checks. Rates are often higher than residential rates because lenders face increased risk.

Who Can Apply for a Commercial Mortgage?

Commercial mortgages suit many types of UK businesses.
They can support:

• Limited companies

• Sole traders

• Partnerships

• Commercial landlords

• Property investors

• Developers buying mixed-use or semi-commercial units

Lenders assess applications individually. Strong financial history improves your chances of approval. Businesses with irregular income may need additional documentation.

What Can a Commercial Mortgage Fund?

A commercial mortgage can fund:

• Offices

• Warehouses

• Retail units

• Industrial units

• Hotels

• Care homes

• Mixed-use buildings

• Semi-commercial properties

Some lenders accept specialist assets, but the criteria vary. If you want more details on mixed-use lending, you can read our internal guide on semi-commercial mortgages.

How Much Deposit Do You Need?

Most lenders require a deposit of 25% to 40% of the property’s value. Stronger applicants may secure lower deposit requirements. Riskier cases may require deposits of 40% or more.

Deposit levels depend on:

• Credit strength

• Business performance

• Property type

• Lending purpose

• Security offered

How Much Can You Borrow?

Loan amounts depend on the property’s value and the business’s income. Most lenders offer Loan-to-Value (LTV) ratios of 60–75%. Investment properties often receive lower LTVs than owner-occupied units.  Lenders will test affordability using DSCR or rental coverage checks. You can read our internal article on Loan to Value (LTV) if you need more guidance.

Commercial Mortgage Interest Rates

Commercial mortgage rates vary widely.
Your rate depends on:

• Business credit record

• Trading history

• Deposit size

• Property type

• Loan purpose

Recent UK commercial mortgage rates range from approximately 4% to 11%. Investment properties may attract higher pricing. Complex or specialist loans often carry additional risk margins.

Commercial Mortgage Fees

Commercial mortgages include several fees.  Common fees include:

• Arrangement fees

• Broker fees

• Valuation fees

• Legal fees

• Exit fees or early repayment charges

Arrangement fees usually range from 1% to 2% of the loan. Valuation fees depend on property size and type. Legal costs vary by lender and complexity. To compare broker models, read our How to Find a Mortgage Broker guide.

Lender Criteria and Required Checks

Lenders check business strength carefully.
Expect them to assess:

• Your profit history

• Filed accounts

• Credit record

• Business forecasts

• Property condition

• Tenant strength for investments

• Rental or trading income levels

They may request:

• Three years of accounts

• Three months of bank statements

• A detailed business plan

• Forecasts for the next 12 months

• Asset and liability statements

Providing organised documents strengthens your application.

Commercial Mortgage Types

There are several commercial mortgage types. These include:

• Owner-occupied commercial mortgages

• Commercial investment mortgages

• Semi-commercial mortgages

• Bridging loans for commercial property

• Development finance

You can learn more about short-term funding in our Development Finance Guide.

Commercial Mortgage Application Process

Here are the main steps:

1. Assess borrowing needs.

2. Gather financial documents.

3. Secure a property valuation.

4. Choose a specialist commercial broker.

5. Compare lenders with whole-market access.

6. Submit the application.

7. Complete legal checks.

8. Finalise underwriting.

9. Receive the mortgage offer.

10. Complete and release funds.

A strong broker can manage the process while reducing delays.

Benefits of a Commercial Mortgage

Commercial mortgages offer many advantages.

Key benefits include:

• Ownership builds long-term business equity

• Monthly payments can be more stable than rent

• You gain better control over your premises

• Investment properties can generate rental income

• Commercial mortgages offer longer repayment terms

You can read our Commercial vs Buy-to-Let article for a comparison.

Risks of a Commercial Mortgage

Important risks include:

• Higher interest costs

• Large deposit requirements

• Lender security over your property

• Valuation shortfalls

• Market downturn exposure

• Higher fees and long processing times

A broker can help assess your risk exposure in detail.

How to Improve Your Chances of Approval

These practical steps can strengthen your application:

• Improve business credit

• Reduce existing debt

• Increase your deposit

• Prepare strong financial forecasts

• Provide clear trading history

• Present a robust business plan

• Work with a commercial mortgage specialist

These steps help lenders assess you more favourably.

You can speak with a commercial mortgage specialist through our broker directory. Our directory helps you find FCA-registered advisers who understand complex business needs.
A specialist can help you secure competitive terms and guide you through each step.

Find Mortgage Advisers

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Frequently Asked Questions – Commercial Mortgage Guide