find the best commercial mortgage for your business
Commercial mortgage
A commercial mortgage offers lower interest rates than unsecured loans and flexible repayment terms of up to 25 years, making it a smart financing option to grow your business
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What is a commercial mortgage?
A commercial mortgage is a loan used to buy or refinance a property for business purposes, such as an office building, a shop, or a warehouse. Unlike a residential mortgage, which is for personal homes, a commercial mortgage is only used for properties that generate income or support a business.
A commercial mortgage cannot be taken out on the borrower’s principal primary residence.
With a commercial mortgage, the property itself is typically used as collateral. Loan terms, interest rates, and repayment schedules vary based on factors such as the loan amount, property type, and the borrower's financial profile.
Use a commercial mortgage for various purposes
Buy business premises
Refinance an existing property
Develop a property
Refurbish commercial properties
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How do commercial mortgages work?
Commercial mortgages can be used to both purchase a business property or to raise capital by refinancing a premises you own.
They are taken out over a pre-determined number of years with any charges, interest rates and fees transparently outlined upfront so you'll be able to budget effectively.
A commercial mortgage can come either with a variable interest rate, or a fixed interest rate.
Why get a commercial mortgage?
Compare multiple lenders
With access to a whole marketplace of lenders, you can compare multiple offers to find the best terms for your business.
Spread repayments over a longer period
You can spread the cost of your loan over a longer period - often up to 25 years - for more affordable monthly repayments and to help you manage cash flow effectively.
Access lower interest rates
Commercial mortgages generally offer lower interest rates than unsecured loans because the property serves as collateral. While rates may be higher than residential mortgages, they’re a competitive option for business owners.
Receive expert guidance
You’ll get support from one of our dedicated funding specialists who have experience supporting businesses in secured complex property finance deals. They’ll be on hand to guide you throughout the process.
How to get a commercial mortgage?
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Identify the property you want to buy or refinance.
Let us know what your business does and why exactly you need the funds
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Apply online
Submit your application online and go through our simple process.
We’ll ask you for information such as how much you want to borrow, your deposit and the type of property you're looking to purchase.
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Provide documents
Your dedicated funding specialist will let you know which documents to provide, such as financial statements, bank statements, and property details.
To make the process smoother, some lenders may ask you to connect your bank account securely too.
Once we have everything, we’ll package your application and match it with the most suitable lenders.
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Compare offers
If your business is approved, you will receive loan offers to review.
Your funding specialist will help you understand the costs, interest rates, and fees, so you can make an informed decision.
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Accept your offer
If you’re happy with the offer, accept it and secure the funding for your new commercial property.
What are the advantages and disadvantages of a commercial mortgage?
Advantages | Disadvantages |
|---|---|
Lower interest rates compared to unsecured loans | Usually requires a larger deposit (at least 25%) than residential mortgage |
Long term repayment options (up to 25 years) | Property must be used for commercial purposes |
Can help with property purchases or refinancing | Interest rates may be higher than residential mortgages |
Flexibility in property usage (business premises, investment, etc. | May involve upfront fees and charges, such as an arrangement fee |
What fees will you pay with a commercial mortgage?
Arrangement fee
This is a fee charged by the lender for processing and setting up your mortgage. It usually gets added to the total amount of your loan. The arrangement fee is typically around 1% of the loan amount, though this can vary depending on the lender. It covers the work the lender does to arrange your mortgage.
Valuation fee
This fee covers the cost of a professional property valuation. Typically, you'll pay the fee to the lender, who will arrange the valuation. It must be paid before you can proceed with your loan application. The valuation helps the lender confirm the property's value, giving them confidence in lending against it.
Legal fees
These fees cover the legal work needed to complete the mortgage. This could include property searches, transferring ownership, and other legal tasks. While these fees are separate from the mortgage itself, they are necessary to finalise the property purchase and legally transfer it into yours or your business’ name.
Interest payments
Interest is the cost you pay for borrowing the money. This will be charged over the life of the loan and can vary based on your interest rate. The higher the interest rate, the more you’ll pay over time. The interest rate is often influenced by factors like your creditworthiness, the deposit amount and the Band of England base rate.