Commercial mortgages
A commercial mortgage is long-term finance secured against commercial property you buy or refinance, repaid over 5 to 25 years. Two types: owner-occupier (you trade from the property) and investment (you let it to a third party). Different underwriting, different lenders. Best for trading companies buying their own premises, and for investors refinancing let commercial property onto better terms.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's guides and lender reviews.
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At a glance
- Ticket size
- £150,000 to £10m+
- Typical LTV
- Up to 75% owner-occupier; investment varies by lender
- Term
- 5 to 25 years
- Typical rate
- From 7.5% (rate-sensitive)
- Decision
- 2 to 4 weeks
- Personal guarantee
- Usually limited PG
Owner-occupier vs investment
Owner-occupier mortgages are easier to underwrite because the lender can see the trading business that will service the debt. Investment mortgages depend on rental coverage of the debt service (typically 130% to 150%) and the quality of the tenant covenant.
UK lenders in this market
Allica Bank, OakNorth, Aldermore, Shawbrook, Hampshire Trust Bank, Cambridge & Counties, plus high-street commercial lenders such as HSBC business banking for clean owner-occupier deals on smaller tickets. For the detail, see how commercial mortgage rates are priced and the documents, timeline and fees a lender expects, or compare business finance options side by side.
When a different facility fits better
If you need to move before a mortgage can complete (an auction lot, a chain-break, a refurbishment before you refinance), bridging finance is the usual short-term route. Building or converting rather than buying finished stock is development finance, with a commercial mortgage as one of its exits. If the property comes as part of buying a business, see business acquisition loans for how the freehold is carved out of the deal. If the spend is equipment rather than the building, asset finance secures against the asset itself, and where you would rather not tie the deal to a property at all, an unsecured business loan may suit.
Check the cover
Commercial-mortgage underwriting hinges on DSCR. Confirm your serviceable cover comfortably exceeds the lender's threshold before applying.
- Commercial mortgage calculator Monthly payment, total repayable and total interest, repayment or interest-only.
- Affordability ratio DSCR check: most commercial-mortgage lenders look for 1.25x to 1.5x cover at stressed rates.
- Eligibility self-score Quick pre-flight on lender appetite given your sector, ticket and LTV ask.