What is the average commercial mortgage rate in the UK in 2026?

As of 2026, commercial mortgage rates in the UK typically range from 5.5% to 8.5% per annum. Owner-occupied commercial property with strong financials and a 60% LTV or below can achieve rates at the lower end. Investment commercial property and semi-commercial assets (e.g. shop with flat above) typically sit in the 6–8% range.

Are commercial mortgage rates fixed or variable?

Both options exist. Fixed rates — typically fixed for 2, 3, or 5 years — give payment certainty but often carry early repayment charges of 3–5% of the outstanding balance. Variable rates (usually base rate + a margin) expose you to rate movements but offer more flexibility. In a falling rate environment, variable or short fixed-term deals make more sense.

What deposit do I need for a commercial mortgage?

Most commercial mortgage lenders require a minimum 25–30% deposit (70–75% LTV). For investment properties, 35% (65% LTV) is more common. Lenders rarely exceed 75% LTV on commercial property; those that do tend to charge significantly higher rates and may require additional security.

How is affordability assessed for a commercial mortgage?

For owner-occupied property, lenders stress-test the business's ability to service the mortgage from trading income, typically requiring EBITDA to cover annual mortgage payments by at least 125–150%. For investment commercial property, the rent must cover the mortgage payment by 125–150% at the stressed rate. Both the actual rent and the estimated rent if vacant (ERV) are assessed.

Can I get a commercial mortgage if I have a complex company structure?

Yes, but it narrows your lender pool. SPV (Special Purpose Vehicle) structures, overseas directors, or holding company layers all add complexity. Specialist commercial lenders and challenger banks are generally more comfortable with complex structures than high-street banks. A commercial mortgage broker is particularly valuable in these cases.

Commercial Mortgage Rates UK — Current Rates & What Affects Them

Current Commercial Mortgage Rate Ranges (2026)

Rates as of early 2026, based on Bank of England base rate at 4.5%:

Property Type	LTV	Indicative Rate Range
Owner-occupied office/industrial	Up to 65%	5.5% – 6.5%
Owner-occupied retail	Up to 65%	5.75% – 7.0%
Investment commercial (let to single tenant)	Up to 65%	6.0% – 7.5%
Semi-commercial (e.g. retail + residential flat)	Up to 70%	6.5% – 8.0%
HMO or multi-unit investment	Up to 70%	6.5% – 8.5%
Hospitality (hotel, pub, restaurant)	Up to 60%	7.0% – 9.0%

These are indicative ranges. Your actual rate will depend on the factors covered below.

Fixed vs Variable Rate Commercial Mortgages

Fixed Rate

Rate is locked for an agreed period — typically 2, 3, or 5 years
Provides certainty for budgeting and business planning
Usually carries early repayment charges (ERCs) of 2–5% in year 1, reducing annually
Typically slightly higher than an equivalent variable rate at the point of fixing

Best for: Businesses with tight margins who need payment certainty, or those who believe rates will rise.

Variable Rate (Base Rate Tracker or SONIA-Linked)

Moves up or down with the Bank of England base rate or SONIA
No ERCs (or very short ERC window), giving flexibility to refinance or repay early
Currently: base rate + 1.5–3.5% margin depending on the deal
At base rate 4.5%, a tracker at +2.0% = 6.5%

Best for: Businesses expecting rates to fall, or planning to sell the property within 2–3 years.

Discounted Variable Rate

Some lenders offer a discounted rate — e.g. SVR minus 1.5% — for an initial period. These are less common in commercial lending than residential but do exist, particularly with challenger banks.

What Determines Your Commercial Mortgage Rate?

1. Loan-to-Value (LTV)

The most significant rate driver. Every 5% reduction in LTV typically reduces your rate by 0.1–0.3%. Example:

75% LTV: 7.5%
65% LTV: 6.5%
55% LTV: 5.75%

If you can put in a larger deposit or use equity in another property, the rate saving can be substantial over a 15–25 year term.

2. Property Type and Condition

Lenders have defined risk appetites for different asset classes. Industrial units and warehouses attract low rates (easy to re-let). Specialist retail (nightclubs, petrol stations, care homes) attracts higher rates or is declined entirely by mainstream lenders.

Vacant or partially let property is higher risk. A property that is 100% let on a long lease to a strong covenant (e.g. a national retailer) will attract the best investment rates.

3. Lease Terms and Tenant Covenant

For investment commercial mortgages, lenders assess:

Remaining lease length (most want 5+ years unexpired, preferably longer than the mortgage term)
Tenant covenant strength — a FTSE 250 tenant is very different from an independent local business
Break clauses — some lenders cap LTV if a break clause falls within the mortgage term

4. Borrower and Business Financial Strength

For owner-occupied commercial mortgages, the business’s accounts matter as much as the property. Lenders assess:

2–3 years of profit and loss accounts
Debt service coverage ratio (DSCR) — generally must be 125%+ at stressed rate
Director personal credit history
Existing debt obligations

5. Trading History

Most commercial mortgage lenders want 2–3 years of trading history. Newer businesses may be considered with a strong business plan, significant deposit, or additional security, but rates will be higher and LTV caps lower.

How to Access the Best Commercial Mortgage Rates

Use a whole-of-market commercial mortgage broker. Most lenders operate on introduced business only and don’t publish their best rates online. A broker with strong lender relationships — particularly with challenger banks such as Allica, Recognise, and OakNorth — will access rates that aren’t publicly available.

Lenders available only via intermediaries include:

Allica Bank (strong on SME owner-occupied)
Recognise Bank (flexible on complex structures)
OakNorth (high-value commercial and semi-commercial)
Shawbrook Bank (investment and semi-commercial)
Aldermore (semi-commercial and HMO)

Typical Commercial Mortgage Costs Beyond the Rate

The rate is just one cost. Budget for:

Arrangement fee: 1–2% of the loan (sometimes 0.5% up front + 0.5% on completion)
Valuation fee: £1,000–£5,000 for standard commercial; more for specialist assets
Legal fees: your solicitor + lender’s solicitor, typically £3,000–£8,000 combined
Broker fee: 0.5–1.5% of the loan (often paid by lender, sometimes charged to borrower)
Survey: may be separate to valuation; relevant for older buildings

On a £750,000 commercial mortgage, total setup costs are typically £15,000–£30,000 before the ongoing interest.

What are current commercial mortgage rates in the UK?

In short