Commercial Mortgages

Commercial mortgages can be used on a wide range of property types, securing a loan to buy a:


Hotel and Public House

Bed and Breakfast / Guest House

Office Premises / Retail Unit (Shops)

Factory or Warehouse

Nursing and Care Home

HMO Mortgage

Investment Properties and Portfolio Mortgages

Buy to Let

Complex Mortgages

If you are looking to purchase, remortgage or invest in commercial property we are the team of lending experts to help you with any form of Commercial Mortgages. Regardless of your situation or the scenario you are in, just give us a call, and we’ll help find the right solutions for you.


Commercial Mortgages - What are they, and should I get one?

A commercial mortgage can be a great solution if you're looking to invest in your business long term. With your own premises, you'll be given more flexibility as you run your business, and will feel the benefit of lower monthly repayments and better interest rates than other business loans. Sounds great, right?

However, these types of mortgages can be a bit tricky to find and define as they don't come as an "off the shelf" style product. Each loan will be shaped and catered to your exact circumstances, for example, the nature and size of your business, your budget and even your building.

This means that whether a business mortgage suits you will be dependent on your own specific situation, and they won't work for everyone.


What is a commercial mortgage?


A commercial mortgage is a loan secured on a premises that isn't your residential property. This is usually commercial property, such as a studio or an office building. Generally speaking, you'll be able to borrow anything over £25,000.

Typically, commercial mortgages are used once a business loan runs out. Sometimes known as a commercial investment mortgage, they're a way for your to continue to run and grow your business without too much financial disruption.

As a medium to long term loan, commercial mortgages can last between three and twenty-five years.


commercial mortgage loans


What can I use a business mortgage for?


Business mortgages can be used for a number of different property types, including:

  • Buying property
  • Buying out an existing business
  • Freeing up capital to invest back into your business
  • Property development
  • Investing in property to rent to other businesses
  • Renovating your existing business premises
  • Buying tech, vehicles and other equipment


What types of commercial mortgages are there?


There are two main types of commercial mortgages available on the market. Choosing an appropriate product that is the best deal for you can be complicated, so it's vital that you seek the advice of a qualified commercial mortgage broker like The Lending Channel.

  • Owner-occupied mortgage

This loan will be used to buy premises that your business will trade from. This could be your existing property or a brand new place.

  • Commercial investment mortgages

A commercial investment mortgage can be used to buy a property that you intend to rent out to other individuals or businesses. You'll need a special buy to let commercial mortgage if this is your intention.

Seeking property to let can be a very fruitful way of making money, but it does come with its risks.


commercial mortgage for office buildings


What are some of the typical features of a commercial mortgage?


Business mortgages are characterised by a few key features:

  • There are often no fixed-rate mortgages available when seeking a commercial mortgage - instead, rates are based on your specific circumstances and the terms agreed with your lender
  • As commercial mortgages are considered higher-risk, it's likely interest rates will be higher. However, because they're leveraged against your premises, interest rates will still be lower than other business finance options, such as a business loan
  • A commercial mortgage lender will generally require a deposit of between 25% to 50%
  • The maximum you can borrow is normally 75% of your business property


deposit sign for a commercial mortgage


What are the benefits of commercial mortgages?


Firstly, a commercial mortgage allows you to take the money you would be paying on rental and invest it into your business. Rental payments tend to be more expensive than mortgage repayments, and so it's likely you'll benefit from reduced monthly payments, too.

The interest on your commercial mortgage is tax-deductible, which can help to bring down your annual tax overheads.

Finally, you'll benefit from lower interest rates than more traditional business loans, as commercial mortgage providers consider them less risky.


What fees will I need to consider?


You'll need to consider a number of fees when taking out a commercial mortgage. These include:

  • Arrangement fees - generally between 0.75%-2% of the total loan, you pay this to your mortgage lender for arranging the loan
  • Valuation fees - this pays for the lender to visit the property and evaluate it. It usually amounts to a few hundred pounds, which is higher than a residential property as the lender has to take other factors into account
  • Legal fees - your legal fees will vary depending on which solicitor you choose. Bear in mind you have to pay for the lender's legal fees too.


fess to consider for commercial mortgage deals


What are the drawbacks of a commercial mortgage?


When contemplating whether this product is for you, you should consider a few of the following factors:

  • Your credit history - if you have bad credit, your lender will ask questions and might not accept you for high-risksk loan
  • You could lose your property - remember, this loan is secured against your premises. If you can't make the repayments, you could lose it
  • Deposits will be higher - as a commercial mortgage is considered higher risk, it's likely you'll need a larger deposit to secure it
  • If you're a new business - you might struggle to be accepted and have to jump through more hoops. Loan to value (LTV) might sit at around 50% of the purchase price, and you may be asked to supply a personal guarantee


Should I take out a commercial mortgage?


All in all, this is a loan that can be extremely profitable and convenient for some, and unsuitable for others.

The absolute best way to determine whether or not this loan will work for you is by seeking the professional advice of a registered mortgage broker, like The Lending Channel.

We are a specialist broker that's experienced in all kinds of difficult loans, so no matter what your circumstances are we'll provide you with reliable, no-obligation mortgage advice.

Commercial mortgages require a degree of negotiation, and using our expertise and contacts we feel confident that we can find the best mortgage deal for you.

The Lending Channel is fully authorised and regulated by the Financial Conduct Authority (FCA) and an accredited member of the National Association of Commercial Finance Brokers (NACFB).


If you are not a direct client looking for a lending solution, perhaps you are interested in introducing business to us? If so, please call now on 01738 583008 for more details, or follow the Introducers Link.

Regulated service

The Lending Channel are fully authorised and regulated by the Financial Conduct Authority (FCA) and are an accredited member of the National Association of Commercial Finance Brokers (NACFB) – the national trade body for brokers who arrange finance for businesses. It operates a professional Code of Practice, giving you complete peace of mind.

The Lending Channel is a member of the National Association of Commercial Finance Brokers (NACFB).

2/1 King James VI Business Centre, Friarton Road, Perth, PH2 8DY
Tel: 01738 583008 | Fax: 01738 500402

The Lending Channel are authorised and regulated by the Financial Conduct Authority.
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