📅 Updated August 2026 • ⏱️ 8 minute read

How Much Deposit Do You Need for a Commercial Mortgage?

If you’re considering buying commercial property, one of the first questions you’re likely to ask is:

How much deposit do I need for a commercial mortgage?

Unlike residential mortgages, there isn’t one standard answer. The commercial mortgage deposit required will depend on the property, how it will be used, the strength of the business or investment, and the lender considering the application.

As a general guide, commercial mortgage borrowers may need to contribute around 20% to 40% of the property’s value or purchase price, although this can vary considerably. In some circumstances, a lender may be prepared to consider a smaller cash contribution, particularly where additional security is available.

Understanding how lenders assess the transaction can therefore be just as important as knowing the headline loan-to-value (LTV).

Commercial Mortgage Deposits at a Glance

While every application is assessed individually, the amount of deposit required may be influenced by:

• Whether the property will be owner-occupied or let to a third party
• The type and condition of the property
• The strength and trading history of the business
• Affordability and expected cash flow
• Rental income for investment properties
• The applicant’s experience
• The sector in which the business operates
• The lender’s individual criteria and appetite
• Whether additional property or assets are available as security

This is why two businesses purchasing similarly priced properties could be offered very different lending terms.

What Is Loan-to-Value?

When discussing a commercial mortgage deposit, you’ll often hear the term loan-to-value, or LTV.

LTV describes the amount being borrowed as a percentage of the property’s value.

For example, if a commercial property is valued at £500,000 and the lender is prepared to lend £350,000, the LTV would be 70%.

The borrower would therefore need to provide the remaining £150,000, equivalent to a 30% contribution, as well as allowing for the other costs associated with the purchase.

Importantly, lenders will normally consider the property’s valuation as part of their assessment. If the valuation is lower than the agreed purchase price, the amount the lender is prepared to advance could also reduce, potentially increasing the cash contribution required.

How Much Deposit Do You Need for an Owner-Occupied Commercial Mortgage?

An owner-occupied commercial mortgage is generally used when a business is purchasing premises from which it intends to trade.

This could include an office, warehouse, shop, workshop, industrial unit or other business premises.

Depending on the lender and overall strength of the application, borrowing may be available at higher LTVs than some applicants expect.

However, lenders won’t assess the property alone.

They’ll normally want to understand whether the business can comfortably support the mortgage payments. This may involve reviewing:

• Business accounts
• Recent bank statements
• Management accounts where appropriate
• Profitability and cash flow
• Existing borrowing and commitments
• Trading history
• The directors’ experience
• Future business plans

A business with strong, sustainable trading figures may therefore have access to different options from one with a short trading history or inconsistent profitability.

What About Commercial Investment Property?

The assessment can be different if you’re purchasing a commercial property to rent to another business.

In this situation, the lender may place greater emphasis on the property’s investment characteristics.

This can include:

• Current or expected rental income
• The tenant and strength of the lease
• Remaining lease term
• Property type
• Location
• Expected rental coverage
• The borrower’s experience
• The proposed repayment strategy

The deposit required for a commercial investment property will depend on the lender’s maximum LTV and its assessment of the overall transaction.

Again, there isn’t one universal percentage that applies across the market.

Does the Type of Commercial Property Affect the Deposit?

Yes.

The type of property being purchased can have a significant influence on the amount a lender is prepared to advance.

A standard office, industrial unit or established retail premises may be viewed differently from a highly specialised property with a smaller potential resale market.

Properties such as hotels, pubs, care facilities, leisure businesses and other specialist premises may require a different approach because the property value and the success of the underlying business can be closely connected.

Some lenders specialise in particular sectors, while others may have little or no appetite for them.

This is one reason why finding the right lender for the transaction can be more important than simply searching for the lender advertising the highest LTV.

Can a New Business Get a Commercial Mortgage?

Potentially, yes.

A limited trading history doesn’t automatically prevent a business from obtaining commercial finance.

However, the lender may want to understand the people behind the business in greater detail.

For example, it may consider:

• Previous experience within the sector
• Personal financial position
• Business plans and projections
• Available deposit
• The proposed property
• Existing income or contracts
• The overall strength of the proposal

Some lenders are more comfortable with start-ups and newly established businesses than others.

An early conversation can therefore be particularly useful before approaching lenders.

Can You Get a Commercial Mortgage With a Small Deposit?

Possibly, depending on the circumstances.

A smaller commercial mortgage deposit usually means a higher LTV, which can represent greater risk to the lender.

However, the cash deposit isn’t necessarily the only factor.

For example, a lender may consider whether the borrower owns another suitable property that could potentially be offered as additional security.

Where additional security is available, it may sometimes be possible to structure the transaction differently.

This will depend entirely on the properties involved, their values, any existing borrowing and the lender’s criteria.

Is 100% Commercial Property Finance Possible?

In certain circumstances, it may be possible to arrange finance equivalent to 100% of the purchase price.

However, this doesn’t usually mean the lender is simply providing a 100% commercial mortgage against the property being purchased.

Instead, additional security may be required.

For example, if a business owner has another property with substantial equity, a lender may potentially consider taking security over both properties.

The combined value of the security could allow the lender to provide the full amount required for the purchase while keeping its overall loan-to-value within acceptable limits.

This is specialist lending and won’t be appropriate or available in every situation.

Providing additional security also puts that additional property at risk if the borrowing cannot be repaid, so the implications need to be carefully considered.

Don’t Forget the Other Costs

Your deposit isn’t the only cash you’ll need when purchasing commercial property.

Depending on the transaction, you may also need to budget for:

• Property valuation fees
• Legal fees
• Lender arrangement fees
• Broker fees where applicable
• Survey costs
• Stamp Duty Land Tax or the relevant property transaction tax
• Search and registration costs
• Insurance
• Potential refurbishment or fit-out costs

Understanding the total cash requirement at the beginning of the transaction can help avoid unpleasant surprises later.

What If You Don’t Have Enough Deposit?

If the required commercial mortgage deposit is higher than the funds currently available, it doesn’t necessarily mean the transaction has to stop.

Depending on the circumstances, there may be other funding structures worth exploring.

These could potentially include additional security, bridging finance, asset finance for equipment purchases, or a different combination of funding facilities.

The important thing is to look at the transaction as a whole rather than trying to make one particular product fit.

For example, preserving working capital may be more important to a growing business than simply obtaining the highest possible commercial mortgage.

Commercial Mortgage Deposit: Why the Right Lender Matters

Commercial mortgage lending is much less standardised than residential lending.

Different lenders can have very different appetites for:

• Particular business sectors
• Property types
• Start-ups
• Experienced operators
• Commercial investments
• Higher LTV transactions
• Complex company structures
• Specialist properties

A transaction that doesn’t fit one lender’s criteria may therefore be perfectly acceptable to another.

This is why approaching the market strategically can be so important.

Submitting multiple applications without understanding individual lender criteria can waste time and potentially complicate a transaction.

How Liberty Verado Can Help

At Liberty Verado Commercial, we take time to understand the business, the property and what the client ultimately wants to achieve before exploring potential funding options.

Rather than looking solely at the headline rate or maximum LTV, we consider the wider transaction.

That may include the client’s available deposit, affordability, property type, timescales, future plans and whether alternative funding structures should also be considered.

Whether you’re purchasing your first business premises, expanding into a larger property, investing in commercial property or refinancing an existing asset, an early conversation can help establish what may be achievable before you commit to the transaction.

Frequently Asked Questions

Not Sure Which Funding Option Is Right?

Choosing between a commercial mortgage and bridging finance isn’t simply about interest rates—it’s about selecting the funding that best fits your project, timescales and long-term objectives.

Every transaction is different, which is why an early conversation can often save time, reduce costs and help avoid unnecessary complications later.

If you’re exploring your options, we’d be delighted to discuss your project with no obligation.

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