Commercial Mortgages

Commercial Mortgages Expert Finance for Commercial Properties

Buying commercial property – a shop, office, medical practice, warehouse or business premises – requires different financing from residential property. Commercial mortgages have different assessment criteria, rates and terms.

What is a Commercial Mortgage?

A commercial mortgage is a loan secured against commercial property used for business purposes. The property generates business revenue or reduces occupancy costs for the business.

Commercial mortgages differ from residential mortgages in assessment criteria, rates, terms and flexibility. Lenders assess commercial mortgages based on the property’s business viability and the business trading history.

Types of Commercial Properties

Retail Properties

Shops, shopping centres, retail units. Assessment based on tenant quality, lease terms, location and retail market strength. Owner-occupied retail (your own business premises) assessed on your business viability.

Office Buildings

Offices from single units to multi-storey buildings. Can be investment (tenant-occupied) or owner-occupied (your business headquarters). Assessment considers location, tenant stability, lease terms.

Medical and Professional Practices

Premises for doctors, dentists, accountants, solicitors. Assessed on practice profitability and business stability. These are specialist mortgages – many high street lenders don’t offer them.

Industrial and Warehouse Properties

Warehouses, factories, distribution centres. Investment (tenant-occupied) or owner-occupied (your business operations). Assessment considers industrial market, tenant strength, property condition.

Mixed-Use Properties

Properties combining residential and commercial (flats above shops, offices above retail). Assessment considers both elements and market viability.

Commercial vs Residential Mortgages

Key differences in commercial mortgage lending:

Assessment basis – Commercial mortgages assess business viability and trading history. Residential assesses personal income.
Rates – Commercial rates are typically higher (5-7%+) than residential (4-5%).
Terms – Commercial mortgages are often shorter (10-15 years) than residential (25-35 years).
Deposits – Commercial lenders typically require higher deposits (25-30%) than residential (20%).
Flexibility – Commercial mortgages are less regulated and offer more flexibility around terms and conditions.

Commercial Mortgage Scenarios

Buying Investment Commercial Property

You’re buying a commercial property to let to tenants. The lender assesses tenant quality, lease terms and property covenant. Rates depend on tenant stability – a national chain tenant gets better rates than a single independent business.

Owner-Occupied Business Premises

You’re buying premises for your own business (medical practice, law firm, retail shop). The lender assesses your business profitability, trading history and personal financial strength.

Commercial Refinancing

You want to refinance your existing commercial property – to release equity, improve rates or consolidate debt.

Commercial Mortgage Assessment

Lenders assessing commercial mortgages focus on:

Business profitability – Is the business profitable? What's the EBITDA? Sustainable profit?
Tenant strength – For investment properties, what's the tenant quality? National chain or local independent?
Lease terms – What's the lease length? Can it support the mortgage term?
Property location and type – Is it in a strong commercial location? Is the property type in demand?
Personal finances – Your personal income and credit history still matter.
Exit strategy – How will the property be sold or refinanced if needed?

Commercial Mortgage FAQs

How much can I borrow for a commercial property?

Typically 70-75% of the property’s value (25-30% deposit). Some specialist lenders go to
80% LTV for strong applications with good tenants.

What's the interest rate on a commercial mortgage?

Typically 5-7%, depending on property type, tenant strength and your circumstances. Better
rates for strong tenants (national chains) and good property locations.

How long does a commercial mortgage take to arrange?

8-12 weeks typically. Longer than residential because assessment is more complex (involves
business assessment, not just personal income).

Can I get a commercial mortgage if my business is young?

Lenders typically want 2-3 years of accounts. A new business faces harder lending. Having a
strong personal financial position can help.

Can I refinance my commercial property?

Yes. Refinancing is common for commercial properties – to release equity, improve rates or
restructure debt.

What if my commercial property tenant leaves?

Lenders assess based on lease terms. Shorter leases (less than 5 years) are riskier. A
vacant property creates problems – you’d need to refinance with new tenant or sell.

Why Choose a Commercial Mortgage Specialist

Commercial mortgage lending is different from residential. Most general brokers don’t specialise
in commercial. Specialist brokers understand business assessment, tenant analysis and
specialist commercial lenders.

COMMERCIAL MORTGAGES