Long-term finance for commercial property purchase and refinance
A commercial mortgage is a long-term loan secured against commercial property. It is used by businesses buying the premises they trade from, and by investors purchasing or refinancing property let to commercial tenants. Terms typically range from 5 to 25 years, and the finance stays in place for as long as the borrower holds the property.
​
Commercial mortgages are assessed very differently from residential mortgages. The lender looks at the property, the borrower's financial position and background, the purpose of the finance and the income or trading activity that will service the debt. Getting all of this right and presenting it clearly ensures you get the best terms available.
Owner-occupier and investment commercial mortgages
Owner-occupier commercial mortgages
For businesses buying the property they trade from. The lender will assess the trading performance and financial position of the business alongside the property value.
The business's ability to service the mortgage from its trading income is central to the assessment.
Typical loan to value (LTV) for owner-occupier commercial mortgages ranges from 65% to 75%, though this varies by lender and property type.
Commercial investment mortgages
For investors purchasing or refinancing commercial property that is let or will be let to tenants.
The lender will look at the rental income, the quality of the tenancy, the tenant covenant and the property itself.
The strength of the tenancy, including the length of the lease and the financial standing of the tenant, significantly influences lender appetite and the terms available.
Types of property covered
Offices and professional premises
Retail units and high street property
Industrial units, warehouses and trade counters
Pubs, restaurants and leisure property
Healthcare and care sector property
Mixed-use and semi-commercial properties
HMOs (Houses in Multiple Occupation) and multi-unit residential blocks held as investments
What lenders look at
The property: type, location, condition, tenure and valuation
For owner-occupier: the trading history, turnover, profitability and ability to service the debt
For investment: the rental income, lease terms, tenant covenant and void risk
The borrower: financial position, credit history, experience and background
Whether the borrowing is personal or through a limited company
The proposed LTV and the level of equity or deposit available
Is this right for your situation?
A commercial mortgage is likely to be suitable if:
You are buying commercial premises to trade from and want long-term finance.
​
You are purchasing commercial property as an investment and need funding against the rental income.
​
You want to refinance existing commercial property finance at better terms or to release equity.
​
You are moving from a short-term bridging arrangement onto a longer-term facility.
A commercial mortgage may not be suitable if:
The property is not yet in a lettable or tradeable condition - bridging or refurbishment finance may be needed first.
​
You need funds very quickly and a full commercial mortgage assessment cannot be completed in time.
​
The property is your personal home - we do not arrange residential mortgages