What is a commercial mortgage?
A loan secured on a property that is used for business. Two main kinds, two very different sets of lenders, and a few things that surprise people coming from the residential world. Here is the whole landscape.
The plain definition
A commercial mortgage is a loan secured on a property that is not a private home: a shop, an office, a warehouse, an industrial unit, a pub, a hotel, a care home, a surgery, a farm building, a nursery, a gym, or a mixed-use building such as a shop with flats above. Like a residential mortgage it is long-term (up to 25 years, occasionally 30) and the property is the lender's security. Unlike a residential mortgage, almost everything else about it is negotiated: the rate, the fees, the term, the loan-to-value and the conditions.
The two kinds
1. Owner-occupier
You are buying (or refinancing) premises for your own business to trade from. The lender looks mainly at the business: can its profits comfortably cover the repayments? Typical loan-to-value 70% to 75%, sometimes 80% for professions with predictable income (dentists, vets, pharmacists, solicitors). Rates from around 6% in 2026.
2. Commercial investment
You are buying a commercial property to let to a business tenant. The lender looks mainly at the tenant and the lease: who they are, how long the lease has to run, whether the rent covers the interest with room to spare. Typical loan-to-value 65% to 70%. Rates from around 7%. Interest-only is common.
A third category, semi-commercial (mixed-use, typically a shop with residential above), sits between the two and has lenders of its own. Semi-commercial explained.
How it differs from a residential mortgage
| Residential | Commercial | |
|---|---|---|
| Who lends | Banks, building societies; standard products | High street banks, challenger banks, specialist lenders; case-by-case terms |
| Maximum LTV | 90% to 95% | 65% to 75% (80% for some professions) |
| Rate | Advertised, fixed for 2 to 5 years typically | Quoted per case; variable over base rate, or fixed 2 to 5 years |
| Affordability | Your income and outgoings | The business's profit, or the rent from the tenant |
| Fees | £0 to £1,500 | Arrangement 1% to 2% plus valuation, legal and broker |
| Time to complete | 4 to 8 weeks | 6 to 12 weeks, sometimes longer with a high street bank |
| Regulated by the FCA | Yes | Usually not |
| Personal guarantee | No | Nearly always, for a limited company borrower |
Who lends, and how they differ
- High street banks (Barclays, HSBC, Lloyds, NatWest, Santander and the like): the cheapest money, the slowest process, the strictest criteria. They want established businesses with clean accounts and often an existing banking relationship.
- Challenger banks (Shawbrook, Aldermore, Hampshire Trust, Cynergy, Allica, Redwood and others): a point or two dearer, a great deal more flexible on property type, trading history, credit blips and structure. Where most brokered commercial mortgages end up.
- Specialist and private lenders: for unusual property, weak accounts, short leases, complex ownership or speed. Dearer again, and sometimes the only option.
The point of using an adviser is that they know which of forty-odd lenders will like your case, and at what price, before you fill in a single form. Choosing a lender.
Repayment or interest-only
Owner-occupier loans are usually capital repayment over the term, so the business owns the building outright at the end. Investment loans are often interest-only for some or all of the term, which keeps the monthly cost close to the rent and leaves the capital to be repaid from a sale or refinance. Some lenders allow a mix, or a repayment holiday in year one.
What "not regulated" means for you
Because most commercial lending is outside FCA regulation, there is no standard illustration, no cooling-off period and no ombudsman for a limited company borrower. The protection you have is the quality of the advice and the wording of the offer. Read the offer letter in full, particularly the covenants (the promises you make, such as keeping the loan-to-value under a limit) and the events of default. A good adviser or solicitor will explain each one.
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 a commercial mortgage on a residential buy-to-let?
No; that is a buy-to-let mortgage, a different product with different lenders. Our sister site Buy to Let Remortgages covers it. Commercial mortgages are for property used for business, or mixed-use property where the commercial element is significant.
What is the minimum loan?
High street banks typically start at £25,000 to £50,000; specialist lenders at £100,000 or so, some £250,000. There is no practical maximum: loans run into the tens of millions.
Can a new business get one?
Yes, but with more effort. Without two years of accounts, lenders look at forecasts, the experience of the people behind it, personal financial strength, and the deposit (which will need to be larger). Buying an existing business with premises, where there are historic accounts, is easier than starting from scratch.
What is the difference between a commercial mortgage and a business loan?
A commercial mortgage is secured on a specific property and runs for up to 25 years at property-lending rates. A business loan is usually unsecured or secured on the business generally, shorter, and dearer. If the money is to buy or refinance a building, it is a commercial mortgage.
Ready to talk to someone who can actually arrange it?
Tell us about the property and the business, and a commercial finance adviser will come back with which lenders fit, what rate to expect and what they'll want to see. No fee for the conversation, no obligation.