How much deposit do you need for a commercial mortgage?

Commercial Mortgage Deposit Requirements by Property Type (2026)

The deposit you need depends primarily on the type of property and how you’ll use it. Here are typical requirements across the main categories:

These figures represent mainstream lender appetite. Specialist lenders may go higher in some categories — but at a meaningfully higher rate.

Why LTV Matters So Much in Commercial Lending

In residential mortgages, a 5% LTV difference often shifts rates by a few basis points. In commercial lending, the effect is more pronounced. Moving from 75% LTV to 65% LTV can reduce your rate by 0.75–1.5% per annum — a significant saving on a long-term loan.

Example: A £1,000,000 commercial mortgage over 15 years.

• At 75% LTV (£250,000 deposit): Rate 7.5% → Annual interest approximately £56,000
• At 65% LTV (£350,000 deposit): Rate 6.5% → Annual interest approximately £42,000

That additional £100,000 of deposit saves approximately £14,000 per year in interest — or £210,000 over the 15-year term. In many cases, the additional deposit pays for itself many times over.

Owner-Occupied vs Investment Commercial Mortgages

Owner-Occupied Commercial Property

When your business trades from the property you’re mortgaging, lenders assess affordability based on your trading income — specifically whether EBITDA (earnings before interest, tax, depreciation and amortisation) covers the mortgage payment by at least 125%.

Because the lender has direct visibility of the business income, owner-occupied deals are typically lower risk. Most lenders will go to 75% LTV, and some challengers (such as Allica Bank) can go to 80% for established businesses with clean credit.

Minimum deposit: 25%

Investment Commercial Property

Here, repayment relies on rental income from tenants rather than the borrower’s trading. Lenders stress-test rent at a higher notional rate (typically the pay rate + 2%) to ensure the income covers payments even if rates rise. Because of this additional variable, most lenders cap at 65–70% LTV.

Minimum deposit: 30–35%

Ways to Reduce the Deposit Needed

1. Cross-Charge Existing Property

If you or your business own other property — a home with equity, a commercial unit, or investment property — a lender may place a charge on that asset as additional security, allowing you to borrow more against the target property.

Important: Cross-charging your home to a commercial deal carries personal risk. Independent legal advice is required.

2. Mezzanine Finance

A mezzanine lender sits behind the senior mortgage and lends a further 10–15% of the purchase price. This fills the gap between your available deposit and the senior lender’s maximum LTV.

Costs: typically 12–18% per annum, often rolled up. Factor this into your total funding cost carefully.

Example: Property value £800,000. Senior lender lends 65% = £520,000. You have £160,000 deposit (20%). Mezzanine lender provides £120,000 at 15%. This bridges the gap — but at a cost of approximately £18,000 per year in additional interest.

3. Vendor Finance

Some vendors, particularly private sellers of commercial property, will defer part of the purchase price as a loan. This is sometimes called a “vendor second charge” or “vendor loan note.” It is subject to the senior lender’s consent and must be disclosed.

4. Government-Backed Schemes

For certain property types — particularly those tied to regeneration or enterprise zones — grant funding or local authority loans may be available to support the deposit. These are property- and region-specific and worth exploring via your local Growth Hub.

What Lenders Look at Beyond the Deposit

The deposit unlocks the loan, but lenders assess a range of other factors before offering:

• Trading history: Most lenders want 2–3 years of accounts. New businesses may need a larger deposit to compensate.
• Business profitability: The DSCR (Debt Service Coverage Ratio) must be 125%+ in most cases.
• Director credit history: Personal credit searches are standard. Adverse credit (CCJs, defaults) will restrict lender options and push rates up.
• Property condition and planning use: Vacant property, mixed-use buildings, or properties requiring planning permission are more complex to finance.
• Lease structure (investment deals): Unexpired lease term, break clauses, and tenant covenant strength all affect LTV appetite.

How to Approach Your Commercial Mortgage Application

The single most effective step before applying is to speak to a whole-of-market commercial mortgage broker. Lenders do not publish their exact criteria publicly, and many operate exclusively through intermediaries. A broker can match your specific profile — deposit level, property type, business age — to the right lender from the outset, avoiding declined applications that damage your credit file.

For most commercial mortgage applications, you will need to provide two to three years of business accounts, six months of business bank statements, details of the property (and tenancy schedule if investment), and personal financial information for directors or partners who are providing personal guarantees.