Everything your limited company needs to know about commercial mortgages, who they’re for and how to apply.
A commercial mortgage, often referred to as a business mortgage, is designed to support business owners looking to secure property or land for commercial use.
It’s effectively a loan, typically over £25,000, which is secured against a property being offered as security. With a range of competitive commercial mortgage rates currently available in the UK, more and more businesses are using this option to aid growth.
This mortgage can be used for:
Use our commercial mortgage calculator to see what your monthly repayments are likely to look like, as well as the total cost of the loan including interest. Just let us know how much you'd like to borrow, how long you'd like the repayments to be over and preferred interest rates. If something looks like a good match, you can get started with your application right away!
What do you need the funding for?
Mortgages, development and bridging loans for commercial or buy to let properties
For how long do you want to pay back your loan?
Interest rate
Loan amount
£ -Total interest amount
£ - 7% APR over a 10 yearsTotal repayable
£ -Total monthly repayment
£ - / monthNot sure what your business can afford?
Sign up to check your affordabilityCommercial mortgages can be used in a variety of different ways to benefit your business and put business plans in action. They are often used when a typical business loan has finished, yet an owner requires some additional financial support in relation to their premises or equipment.
Here is a list of examples of reasons your business could consider using a commercial mortgage loan:
A commercial mortgage is a medium to long-term loan spanning between three to 25 years. Most lenders require a deposit between 25% to 50%.
You can explore different commercial mortgage lenders below. Or reach out and chat to our funding specialists to learn more.
There are some advantages to using a commercial mortgage loan and helping your business release working capital to fuel growth.
At Capitalise, we work with a wide range of commercial mortgage lenders to offer you solutions that best suit your business needs. We’ll look at your financials, your business plans and help tailor financial options that work for you.
Take advantage of a property purchase opportunity without tying up working capital.
Commercial mortgages differ from the regular mortgages or business loans that you may be more familiar with.
Commercial mortgages tend to offer better interest rates than a regular unsecured business loan as the property itself provides security against the loan. However, they tend to have higher interest rates than a regular home mortgage as these are generally seen as higher-risk loans to lenders.
It’s important to note that when you take a commercial mortgage there are a number of fees you may have to pay on top. Including an arrangement fee and valuation fee. If you’d like to learn more about your options or how much a commercial mortgage is likely to cost your business, you can connect with a member of our team when signing up.
If you’re a business owner looking to either release equity or cash from an existing business premise or looking to expand your premises, a commercial mortgage could be a good solution. Similarly, if you’re a business looking to acquire a buy-to-let property.
These mortgages can help to finance business or expansion plans as well as reduce monthly overheads.
In order to get approved for a commercial mortgage, you’ll have to prove that you meet financial requirements including:
The application and requirement will depend on the specific lender.
At Capitalise, we aim to make this process easier. Once your Capitalise profile has been created, you'll be able to apply to multiple lenders simultaneously as well as receiving decision letters online, enabling you to compare fully underwritten options before committing to the one which best suits your business.
There are a few key differentiators between commercial mortgages and personal mortgages, the obvious being that commercial mortgages are for business purposes, and personal mortgages are for the buyer to live in.
The key differences you’ll need to know as a potential buyer are:
The minimum deposit you will need for a commercial mortgage is 25% of the property value, although this can be up to 40%. The level of risk of the business and the amount of security provided will all impact how much deposit you may need to put down.
The nature of the property will also impact how much of a deposit you will need. Owner occupied properties tend to require 20-30% deposits. While commercial investment mortgages are likely to require at least 25%.
The short answer is yes - but you will likely be subject to higher interest rates. A lower credit score will be perceived by the lender as taking on higher risk.
If you have any adverse credit history, you should provide the lender with as much detail as possible.If you can offer an explanation, the lender may be more flexible.
Check your credit profile and improve your business credit score before applying to access the best rates.
Yes - a commercial mortgage is a type of secured loan, meaning the loan is secured against an asset, normally a home. So if you default on your mortgage,the lender could take your property as payment.
It’s worth bearing in mind that the lender will try and put a payment plan in place first - repossessing the property is the last option, but it is a risk you should be aware of.
Yes! Most new businesses can get a commercial mortgage, however as lenders use trading history as judgement for affordability, you will be viewed as high risk, so you will typically need a larger deposit - typically around 50% of the purchase price.
To maximise your chances of getting a commercial mortgage as a new business, ensure you have an air tight business plan and projections for profitability, and check your business credit profile for no adverse credit history.
Yes, you can get a commercial mortgage in a limited company. Choosing to get a commercial mortgage through a limited company can even come with tax benefits, as corporation tax can be more favourable than income tax.
A lender will assess the affordability of the mortgage based on the strength of the applicant’s business, so it’s worth bearing in mind that the business should be able to show clear affordability for the monthly mortgage repayments.
No, it’s not necessary to set up a limited company to get a commercial mortgage and many sole traders choose to explore this type of loan. If you do not have a limited company, private landlords with a commercial mortgage do not benefit from the same allowances and can only claim the basic rate tax credit against their mortgage interest. It will be worth consulting your accountant to see the most tax efficient method for your specific needs.
