Written by the Lendus editorial team · Last updated: April 2026
A commercial mortgage is a long-term loan secured against a commercial property — such as an office, warehouse, retail unit, or mixed-use building. They're used either to purchase the property or to release equity from property you already own. Terms typically run from 5 to 25 years, with deposits of 25–40% required.
A commercial mortgage is a long-term lending product secured against a commercial property. Like a residential mortgage, the lender takes a legal charge over the property — meaning they can enforce a sale if you default on payments. Unlike a residential mortgage, the assessment focuses on the property’s commercial income potential and the borrower’s business finances, not personal salary.
Commercial mortgages in the UK are used for two broad purposes:
The most common type. Your business buys a property to trade from — an office, workshop, warehouse, or retail unit. The lender assesses:
Key benefit: You build equity over time rather than paying rent to a landlord, and the mortgage payment may be lower than equivalent market rent. Any capital growth belongs to you.
Used to purchase commercial property that is let (or will be let) to business tenants. The lender assesses:
Stress tests typically require rent to cover the mortgage payment by 125–150% at the stressed (higher) rate.
For mixed-use properties with both commercial and residential elements — a shop with a flat above, a pub with a manager’s flat, or a mixed retail/residential building. These are assessed differently from pure commercial or pure residential, and attract a specific lender pool. Rates are generally slightly higher than pure commercial of equivalent quality.
Releasing capital from a property you own (with or without an existing mortgage) to fund business growth, capital expenditure, or acquisition. The lender takes a first charge and advances a percentage of the current market value, less any existing mortgage.
As of early 2026 (base rate 4.5%):
| Property Type | LTV | Rate Range |
|---|---|---|
| Owner-occupied office/industrial | 65% | 5.5–6.5% |
| Commercial investment (strong covenant) | 65% | 6.0–7.0% |
| Semi-commercial | 70% | 6.5–8.0% |
| Hospitality/leisure | 60% | 7.0–9.0% |
Rates are available on a fixed (typically 2, 3, or 5 year fixed) or variable (base rate tracker) basis.
| Property Type | Typical LTV Cap | Minimum Deposit |
|---|---|---|
| Owner-occupied standard | 75% | 25% |
| Commercial investment | 65–70% | 30–35% |
| Semi-commercial | 65–70% | 30–35% |
| Hospitality/specialist | 55–65% | 35–45% |
Lenders will sometimes consider cross-charging additional properties to reduce the effective deposit requirement. A borrower putting up a second property as additional security may access higher LTV on the primary property.
Step 1 — Initial discussion and DIP (1–2 days) Provide basic details: property address, type and value, loan amount required, business accounts, and intended use. The lender or broker can usually provide a Decision in Principle within 24–72 hours.
Step 2 — Formal application (Days 1–7) Submit formal application with full documentation: 2–3 years of accounts (company and/or personal), bank statements, lease documents (for investment), personal and business credit information.
Step 3 — Valuation (Days 5–15) The lender commissions an independent RICS valuation of the property. For standard commercial property, this typically takes 1–2 weeks. Specialist or larger assets take longer.
Step 4 — Credit committee decision (Days 10–21) The lender’s credit team reviews the full case. For mainstream banks, this may go to a credit committee; specialist and challenger banks often have more streamlined decision-making.
Step 5 — Legal work (Days 14–35) Both sets of solicitors complete title investigation, searches, and documentation. The lender’s solicitor prepares the mortgage deed. For investment property, tenant and lease review adds to the timeline.
Step 6 — Completion Funds are released and the legal charge is registered at Companies House and Land Registry.
| Cost | Typical Amount |
|---|---|
| Arrangement fee | 1–2% of loan |
| Valuation fee | £1,000–£5,000+ |
| Legal fees (both sides) | £3,000–£10,000 |
| Broker fee | 0–1.5% (sometimes paid by lender) |
| Stamp Duty Land Tax | 5% on commercial property above £150,000 (non-residential rates) |
| Survey/building report | £500–£3,000 depending on age and type |
On a £600,000 commercial mortgage, setup costs are typically £15,000–£30,000 before you consider SDLT.
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