Commercial Mortgages Explained
Everything you need to know before applying for commercial property finance.
📅 Updated July 2026 • ⏱️ 8 minute read
Everything you need to know before applying for commercial property finance.
Quick Summary
A commercial mortgage allows businesses and investors to purchase or refinance commercial property. Whether you’re buying offices, warehouses, retail premises, mixed-use buildings or investment property, understanding how lenders assess applications can significantly improve your chances of approval.
This guide explains the process in straightforward language and highlights the factors lenders consider before making a lending decision.
In This Guide
- What is a commercial mortgage?
- Who can apply?
- What properties can be financed?
- How much can you borrow?
- Deposit requirements
- Interest rates explained
- How lenders assess applications
- Documents you’ll need
- Common reasons applications are declined
- Frequently asked questions
What is a Commercial Mortgage?
A commercial mortgage is a loan secured against a property used for business purposes.
Unlike residential mortgages, commercial mortgages are individually assessed. Lenders consider the strength of the business, the property itself and how affordable the repayments will be. Commercial mortgages can be used to purchase or refinance a wide range of properties including:
- Offices
- Retail premises
- Industrial units
- Warehouses
- Medical practices
- Hotels and guest houses
- Mixed-use properties
- Investment property
- Semi-commercial premises
Every lender has different criteria, which is why choosing the right lender from the outset can save significant time.
Who Can Apply?
Commercial mortgages are available to:
- Limited companies
- Sole traders
- Partnerships
- LLPs
- Property investors
- Pension funds (SIPPs and SSASs)
- Trading businesses
- Professional practices
Some lenders will also consider first-time commercial borrowers, provided there is sufficient experience within the business.
Commercial mortgages generally fall into two categories.
Owner Occupier
This is where your business occupies the property.
Examples include:
- Engineering company buying a warehouse
- Dentist purchasing a surgery
- Accountancy practice buying offices
The lender will assess both the business and the property.
Commercial Investment
This is where the property is let to tenants who pay rent.
Examples include:
- Office blocks
- Retail units
- Industrial estates
- Mixed-use investments
In these cases, lenders place significant emphasis on rental income alongside the property’s value.
The amount available depends on several factors including:
- Property value
- Business profitability
- Existing borrowing
- Deposit available
- Trading history
- Rental income (where applicable)
Unlike residential lending, there isn’t a simple income multiple.
Each application is assessed individually.
Commercial mortgages usually require a deposit.
Typical borrowing levels are:
| Property Type | Typical Maximum Loan |
|---|---|
| Owner Occupier | Up to 75% LTV |
| Commercial Investment | Up to 75% LTV |
| Specialist Cases | May vary |
Higher deposits often provide access to a wider range of lenders and potentially more competitive pricing.
Commercial mortgage rates are influenced by:
- Loan size
- Deposit
- Property type
- Business sector
- Trading performance
- Credit history
- Overall risk
Rates may be available on either a fixed or variable basis depending on the lender.
The amount available depends on several factors including:
- Property value
- Business profitability
- Existing borrowing
- Deposit available
- Trading history
- Rental income (where applicable)
Unlike residential lending, there isn’t a simple income multiple.
Each application is assessed individually.
Although requirements vary, lenders commonly request:
- Latest accounts
- Management accounts
- Business bank statements
- Personal bank statements
- Asset and liability statement
- Property details
- Identification documents
- Business plan (where appropriate)
Having these prepared early can significantly speed up the application.
Applications are most commonly delayed or declined because of:
- Insufficient deposit
- Weak cash flow
- Incomplete accounts
- Poor credit history
- Unrealistic borrowing expectations
- Lack of experience
- Issues identified during valuation
Many of these can be addressed before submitting an application by selecting the most appropriate lender.
Expert Tip
Commercial mortgages aren’t simply about finding the lowest interest rate. The right lender is the one whose criteria best matches your business, property and future plans. Choosing correctly at the start can save weeks of unnecessary delays.
Frequently Asked Questions
Still Have Questions?
Every business is different, and so is every lender.
Our experienced team will help you identify the most suitable funding options and guide you through the application process from enquiry through to completion.