How to Get a Commercial Mortgage in the UK: A Complete Guide
Share
A commercial mortgage is one of the most powerful tools a UK business owner has for buying premises, refinancing an existing property, or investing in commercial real estate. But the process is very different from a residential mortgage, and the terms you're offered can vary enormously between lenders. This guide breaks down how commercial mortgages work and how to give yourself the best chance of approval.
What is a commercial mortgage?
A commercial mortgage is a loan secured against property used for business purposes - offices, retail units, warehouses, industrial space, or investment property such as buy-to-let portfolios and mixed-use schemes. Terms typically run from 5 to 25 years, and lending is usually offered on either an owner-occupier basis (you trade from the property) or an investment basis (you let it out to tenants).
How much can you borrow?
Most lenders will advance 60-75% of the property value, meaning you'll usually need a deposit of 25-40%. Owner-occupied premises sometimes attract higher loan-to-value ratios than pure investment deals. The exact figure depends on the strength of your business, the quality of the property, and the rental income or trading profit available to service the debt.
What do lenders look at?
- Affordability: for owner-occupiers, your trading profits; for investments, the rental income and its coverage of the mortgage payment.
- The property: its condition, location, use class, and marketability if the lender ever had to sell.
- Your track record: business accounts, experience in the sector, and credit history.
- Deposit and source of funds: how much you're contributing and where it comes from.
Fixed or variable rates?
Commercial mortgage rates are usually priced as a margin above a reference rate, and many lenders offer a fixed-rate period (commonly 2 to 5 years) for certainty, after which the loan reverts to a variable rate. Fixed rates protect you from rate rises; variable rates can be cheaper when the base rate is falling. The right choice depends on your cash-flow tolerance and how long you plan to hold the property.
The typical process
- Agreement in principle based on your figures and the property.
- Full application with accounts, bank statements and business plan.
- Valuation instructed by the lender.
- Formal offer, then legal work through solicitors.
- Completion and drawdown of funds.
From application to completion, a straightforward case often takes 6 to 12 weeks - complex properties or leaseholds can take longer.
How we help
The commercial mortgage market is fragmented, and high-street banks are only part of the picture. A specialist who knows which of the 300+ UK lenders will look favourably on your sector, property type and circumstances can structure the application for approval rather than a cold submission that risks a decline. At Sadi's Commercial Finance, founded by a former banker, we place deals with the right funder from the start.
Thinking about a commercial mortgage? See our commercial property finance service or speak to a specialist for a no-obligation conversation about your options.
About the author
Jaff Sadi, MBA is the Founder & Managing Director of Sadi's Commercial Finance. With 25+ years across UK high-street, retail, and commercial banking, he holds an MBA in Banking and Finance, a Chartered Banker Institute certification, and a specialist qualification in Climate Change and Finance from the University of Edinburgh.