Commercial Mortgages

Commercial mortgages cover offices, retail units, warehouses, industrial units, hotels, care homes, and mixed-use properties. Each type has different lending criteria and risk profiles. Offices and retail in good locations are easiest to finance. Specialist uses (hotels, care homes, pubs) require specialist lenders. Mixed-use properties with residential elements may have more favorable terms. We know which lenders prefer which property types.

Commercial mortgages typically require 25-40% deposits, though this varies significantly. Owner-occupied premises (you run your business from there) may accept 20-25%. Investment properties often need 30-40%. Complex or specialist properties require larger deposits. Your business trading history, property type, and location all affect requirements. Established businesses with strong accounts may access better LTVs.

Most commercial mortgages offer 60-75% LTV, meaning you need 25-40% deposit. Owner-occupied properties sometimes reach 80% LTV. Investment properties rarely exceed 70-75%. Specialist or unique properties may be limited to 60% LTV. Higher LTVs are possible with strong financials, prime locations, or established tenancies. The LTV you can achieve significantly affects your interest rate.

You'll need comprehensive business documentation: 2-3 years' accounts, business plans, cash flow forecasts, and details of existing tenants (for investment properties). Lenders assess the viability of your business or investment, not just the property. Start-ups need detailed business plans showing how they'll afford repayments. Existing businesses need strong trading history. Professional business plans significantly improve your chances.

Many commercial mortgages require personal guarantees from directors or shareholders, making you personally liable if the business defaults. This protects the lender but puts your personal assets at risk. Some lenders offer non-recourse lending (no personal guarantee) but with higher rates or deposits. If buying through a limited company, expect to provide personal guarantees. Understand this commitment fully before proceeding.

Commercial mortgage rates are typically 1-3% higher than residential mortgages, currently around 5-8%. Rates depend on deposit size, property type, loan amount, and business strength. Terms range from 5 to 25 years, often with 5 or 10-year fixed periods. Some lenders offer tracker rates. Arrangement fees are higher than residential (1-2% of loan). Calculate total cost including all fees when comparing.