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Commercial mortgages

Long-term finance for buying, refinancing or releasing money from business premises and commercial property.

  • Free to use, no obligation
  • £5,000 to £2m+ for UK limited companies and LLPs
  • Matched to a broker who arranges commercial mortgages
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Free to useNo fees for businesses, ever
About a minuteOne short form, plain English
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What commercial mortgages are

A commercial mortgage is a long-term loan secured on business property, such as offices, shops, warehouses, workshops, pubs, hotels or care homes. It works in a similar way to a home mortgage: the lender lends a proportion of the property’s value, you put in a deposit, and you repay over an agreed term that can run for many years. Rates can be fixed or variable, and the property is the main security.

There are two broad types. Owner-occupier mortgages are for companies buying premises they will trade from, where lenders focus on the strength of the business. Commercial investment mortgages are for property let to tenants, where rental income matters most. Both can suit companies that would rather own than rent, want to refinance an existing mortgage, or wish to release equity from property they already own.

What businesses use it for

Buying your premises

Move from renting to owning the property your business trades from, building equity over time and gaining more control over how the premises are used.

Commercial investment

Buy shops, offices or industrial units let to tenants, with the rental income playing a central part in how much a lender will offer.

Refinancing

Move an existing commercial mortgage to a new lender when a fixed rate ends or your needs change, potentially on terms that suit the business better.

Releasing equity

Raise money against commercial property the company already owns, to reinvest in the business, buy further property or consolidate other borrowing.

How it works

1Your plans are reviewed
A broker looks at the property, how it will be used, the deposit available and your company’s finances. For investment property, they will also look at the tenancies and the rental income.
2Valuation and offer
The lender instructs a valuation of the property and assesses the application. If it is approved, you receive an offer setting out the amount, the term, the rate and any conditions attached.
3Legal work and completion
Solicitors handle the legal work, including searches and registering the lender’s charge over the property. Once this is complete, the money is released and the purchase or refinance goes ahead.

What lenders look at

Every lender has its own criteria, but these are the things they usually check.
Property type, location and condition
Deposit or equity available
Company accounts and trading performance
Rental income and tenancies, for investment property
Credit history of the business and its directors

To use Loanleaf

  • UK limited company or LLP
  • Trading for 6 months or more
  • Annual revenue of £50,000+
  • Borrowing £5,000 or more
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Things to consider

Deposit and loan to value

Lenders usually lend a proportion of the property’s value, so a significant deposit is normally needed, often more than for a residential mortgage. The amount depends on the property type, how it is used and the strength of your business.

Total costs

Beyond interest, budget for valuation fees, legal fees for you and the lender, arrangement fees and, when buying, Stamp Duty Land Tax or its equivalent in Scotland and Wales. Some mortgages also have early repayment charges during a fixed period.

Security and guarantees

The property is at risk if repayments are not kept up. Lenders may also ask directors for personal guarantees, especially for smaller or newer companies. Think about how repayments would be met if trading conditions or tenancies change.

Commercial mortgages: questions and answers

How much deposit do I need for a commercial mortgage?
It varies by lender, property and business, but commercial mortgages usually need a larger deposit than residential ones. A broker can tell you what lenders are likely to expect for your property and circumstances before you commit to anything.
How long can a commercial mortgage last?
Terms vary widely. Some run for just a few years, while others can last for 20 years or more. The right term depends on the property, the amount and what suits your company’s cash flow and plans.
What is the difference between owner-occupier and investment mortgages?
An owner-occupier mortgage is for property your business trades from, and lenders focus mainly on your company’s finances. An investment mortgage is for property let to tenants, where lenders look closely at the rental income and tenancy terms.
Can a limited company or LLP take out a commercial mortgage?
Yes. Many commercial mortgages are taken out by limited companies, LLPs or special purpose vehicles set up to hold property. Lenders will usually look at the directors or members as well as the company itself.
Can I refinance my current commercial mortgage?
Often, yes. Businesses refinance to secure a new rate, change the term, release equity or move away from a lender that no longer suits them. Check whether your current mortgage has early repayment charges first.
How can Loanleaf help?
Loanleaf is an introduction service, not a lender or broker, and we don’t give advice. You answer one short form about your company and what you need, and we match you with a specialist finance broker who works with commercial mortgages. It’s free to use and there’s no obligation to go ahead. The broker will explain any fees of their own.
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