How commercial mortgage rates are set
There is no rate table for commercial mortgages. Every quote is a margin over a benchmark, set by how the lender sees the property, the business and you. Here is how to read a quote and how to get a better one.
Variable: base rate plus a margin
The default structure. The lender quotes, say, "Bank of England base rate plus 3%". If base rate is 4%, you pay 7%. If base moves, your payment moves the next month or quarter. Some lenders use their own base rate or SONIA instead; the principle is the same. Margins in 2026 run from about 2% for the strongest high street cases to 5% or more for specialist lending.
Fixed
Two, three or five years fixed, typically at a small premium to the equivalent variable rate, with an early repayment charge (3% to 5% of the balance, stepping down each year) if you clear the loan or refinance within the fixed period. Some lenders fix for the whole term on smaller loans. Fixing makes sense when the payment is a large share of the business's cash and you cannot absorb a rise; it costs more if rates fall.
What moves the margin
| Factor | Better pricing | Worse pricing |
|---|---|---|
| Loan-to-value | 50% to 60% | 70% to 75% |
| Property | Office, industrial, good retail in a good location | Pub, hotel, care, leisure, rural, unusual construction |
| Business or tenant | Three years' rising profit; national tenant on a long FRI lease | New venture; short lease; weak tenant covenant |
| Borrower | Experienced, strong personal balance sheet, clean credit | First-timer, thin assets, credit history |
| Structure | Repayment, sensible term, full information up front | Interest-only at high LTV, gaps in the file |
| Lender | High street | Specialist / private |
Reading a quote properly
- Ask for the total cost: rate, arrangement fee, valuation, legal, exit. A low rate with a 2% fee can cost more than a higher rate with 1%.
- Ask whether the rate is fixed or variable, over what benchmark, and what the early repayment charge is.
- Ask what the covenants are: maximum LTV, minimum interest cover, and what happens if they are breached.
- Ask about review dates: some lenders reserve the right to re-price at year five.
How to get a lower rate
- Put down more. Every 5% of LTV is worth something.
- Present a complete file on day one; uncertainty is priced.
- Let an adviser run the case to several lenders; the spread between the best and worst quote on the same deal is commonly two or three points.
- Offer additional security if you have it.
- Move your business banking to the lender if it is a high street bank; they price relationships.
A note on the numbers. Rates, loan-to-value limits, fees and criteria are typical figures at the time of writing (2026). Commercial lending is priced case by case, so your own terms depend on the property, the business, the tenant and you. This is information, not advice, and not an offer of finance.
Quick answers
Can I get an interest-only commercial mortgage?
On investment property, commonly. On owner-occupier loans, some lenders allow an interest-only period (one to five years) or a part-and-part structure; full-term interest-only is rare.
What is a typical commercial mortgage rate in 2026?
Roughly 6% to 7% for strong owner-occupiers at a high street bank, 7% to 9% for most brokered cases at challenger banks, and 9% to 11% for specialist lending. Bridging is quoted monthly: 0.6% to 1%.
Ready to talk to someone who can actually arrange it?
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