Mortgage.One

Secure competitive rates and tailored commercial mortgage solutions to fuel your portfolio growth. Whether it’s expansion, refinancing, or unlocking capital, our expertise and wide lender network deliver results
highlight-border
mobile-text-bg

Discover:

Your potential borrowing power.

The latest commercial mortgage rates.

How commercial mortgages work and securing the best terms.

Get informed: Explore our guides & calculators.

Discover how commercial mortgages work, eligibility, best rates, and secure the right financing.

What is a commercial mortgage?

A commercial mortgage loan is specifically designed for purchasing, refinancing, or releasing equity from a commercial or a semi-commercial property. Unlike residential mortgages where income is the primary focus, commercial mortgages heavily assess the property’s income-generating potential and the overall financial strength of the borrower.

How Does a Commercial Mortgages Work?

Commercial mortgages are loans for purchasing or refinancing commercial properties like offices, retail spaces, and industrial units. Borrowers can secure up to 75% of the property value, with repayment terms ranging from 5 to 25 years. Interest rates can be fixed or variable. Eligibility is based on business financials, credit history, and the property’s income potential. The process involves detailed documentation, underwriting, and legal formalities. A mortgage broker can help access a wider range of lenders and secure better terms.

How Much Can I Borrow?

Discover your commercial mortgage eligibility. Our calculator uses rental income to estimate how much you might qualify for. Just enter the monthly income.

Rental Income (per month/per property)
£
Disclaimer: Rates apply for England and Northern Ireland only.

How to Apply for a Commercial Mortgage?

The process and requirements for applying for a new commercial mortgage or refinancing an existing one are very similar.

While you can approach a bank directly, working with a mortgage broker offers distinct advantages. Brokers have access to a wider network of lenders, including specialist ones, and broker only lenders increasing your chances of finding the most competitive terms.

The steps involved in apply for a commercial mortgage includes:

Pre-application:

  • Gather comprehensive information about your business, the property you wish to purchase or refinance, and your overall financial situation. This includes business plans, financial statements, and property details.

Find a Lender:

  • Consult a Broker:Engaging with a mortgage broker is highly beneficial as they have access to a wide network of lenders, including specialist lenders that you might not find on your own. Brokers can provide personalized advice and help you find the best mortgage options tailored to your needs.
  • Speak to a Bank: Alternatively, you can approach banks directly, but this might limit your options to the products they offer.

Submit Application:

  • Provide the chosen lender with all necessary documentation. This typically includes detailed business plans, financial statements, property information, and personal financial details. Brokers can assist in ensuring all documentation is complete and properly presented.

Underwriting:

  • The lender will thoroughly assess your application. This process involves property valuations, credit checks, and due diligence. Brokers can help facilitate communication between you and the lender, smoothing out any potential issues that may arise during underwriting.

Mortgage Offer:

  • If your application is approved, you will receive a formal mortgage offer detailing the terms and conditions. Brokers can help you understand the offer and ensure it meets your expectations.

Legal Completion:

  • Instruct a solicitor to handle the legal aspects of the transaction, ensuring all necessary legal work is completed accurately and efficiently. This step finalizes the purchase or refinancing of the property.

By using a broker, you gain access to a wider range of mortgage products, benefit from expert guidance throughout the application process, and increase the likelihood of a positive outcome. Brokers help navigate the complexities of commercial mortgages, ensuring that your application is handled smoothly and effectively.

Why choose Mortgage.One for your commercial property mortgage?

Expert Tips, In-Depth Knowledge

Navigate commercial property finance

Use our guides and calculators for a clear path forward.

See how much can you borrow on Mortgage

Rental Income (per month/per property)
£
Disclaimer: Rates apply for England and Northern Ireland only.

See How Much it will Cost on Mortgage

How much do you want to borrow?
£
Over how many years?
years
Interest rate
%
Repayment type
Disclaimer: Rates apply for England and Northern Ireland only.

Investing in Commercial Property?

Calculate the Stamp Duty Land Tax (SDLT) for your commercial property purchase in England or Northern Ireland. Take into account freehold or leasehold ownership for accurate calculations.

I am buying
Property price
£
Disclaimer: Rates apply for England and Northern Ireland only.

See Mortgage Interest Calculator

Loan amount
£
Interest rate
%
Disclaimer: Rates apply for England and Northern Ireland only.

See Mortgage Overpayment Calculator

Loan amount
£
Interest rate
%
Remaining mortgage term
Years
Amount
£

Disclaimer: Rates apply for England and Northern Ireland only.
Real Feedback, Genuine Experiences

Speak to Our Expert

Connect with Our Expert
Mortgage Advisors

Call free for mobile and landline

Start Your
Mortgage Online

See the deals you qualify for & how much you could borrow

Simplify Your Mortgage Journey

Get Answers to the Top 10 Commercial Mortgage Questions

What is the different between commercial investment mortgage and owner-occupied commercial mortgage?
A commercial investment mortgage is a type of loan used to purchase or refinance commercial properties intended for investment purposes. These properties are typically rented out to tenants to generate rental income and potentially appreciate in value over time.
An owner-occupied commercial mortgage is a loan tailored for business owners who purchase a commercial property to be used as their primary business premises. The property is occupied by the owner’s business operations.
Who is Eligible for a Commercial Mortgage?

Eligibility for a commercial mortgage depends on several factors, and various types of borrowers can qualify, including individuals, partnerships, and both new and existing limited companies. Here are the key considerations:

Creditworthiness:
  • Lenders will review both your business and personal credit history to assess your reliability in repaying the loan. A strong credit score can significantly enhance your chances of approval.
Business Financials:
  • Providing strong financial statements, a solid business plan, and clear cash flow projections can improve your chances of securing a commercial mortgage. Lenders want to see that your business is financially healthy and capable of meeting mortgage payments. This is more applicable in the case of owner-occupied business.
Property Type:
  • The type and location of the commercial property play a critical role in the lender’s decision. Properties in prime locations with high rental demand are generally more favorable to lenders. Additionally, the specific use of the property (e.g., retail, office, industrial) will be considered.
Borrower Types:
  • Individuals: Sole proprietors looking to invest in or operate from commercial property.
  • Partnerships: Business partnerships seeking to purchase or refinance commercial property.
  • Limited Companies:Both newly formed and existing limited companies can apply for commercial mortgages.
  • First-Time Landlords:While experience in business or property management is advantageous, some lenders are open to working with first-time landlords. Demonstrating a well-thought-out plan and sufficient financial backing can help mitigate the lack of experience.
Experience:
  • Experience in business or property management is often viewed favorably by lenders. However, certain lenders are open to working with first-time landlords, provided they can demonstrate a clear understanding of the market and robust financial planning.
By understanding these factors and presenting a strong application, a wide range of borrowers, from individuals and partnerships to both new and established limited companies, can improve their chances of securing a commercial mortgage.
How Can I Find the Best Commercial Mortgage Deals?

Finding the best commercial mortgage deals involves several strategic steps:

Compare Lenders:
  • Research and compare offers from various lenders to identify competitive rates and terms. This can be done by directly contacting banks and other financial institutions to understand their mortgage products.
Use a Mortgage Broker:
  • Consider working with a mortgage broker who specializes in commercial mortgages. Brokers have access to a wide range of lenders, including those that only deal through brokers, which can open up exclusive deals and better rates. They can provide expert advice tailored to your specific needs and help you navigate the complexities of the mortgage market.
Negotiate Terms:
  • Don’t hesitate to negotiate terms with lenders to secure a better deal. Whether dealing directly with banks or through a broker, negotiating can help you obtain more favorable conditions, such as lower interest rates or reduced fees.
By comparing lenders, utilizing the expertise of a mortgage broker, and negotiating terms, you can significantly enhance your chances of finding the best commercial mortgage deals.
What are the Typical Fees and Charges Associated with Commercial Mortgages?
Typical fees and charges for commercial mortgages include:
Arrangement Fee:
  • A fee charged by the lender for setting up the mortgage.
Valuation Fee:
  • The cost of valuing the property to ensure it is worth the loan amount.
Legal Fees:
  • Costs associated with the legal work required to complete the mortgage.
Broker Fees:
  • If you use a mortgage broker, there may be additional fees for their services. At Mortgage.One, we don’t have broker fee because we are paid by the lender.
Early Repayment Charges:
  • Fees for paying off the mortgage early, which can vary by lender.
How Does the Underwriting Process Differ for Commercial Mortgages?

The underwriting process for commercial mortgages involves a detailed assessment of both the borrower and the property, but the requirements can differ significantly depending on whether the mortgage is for a commercial investment or owner-occupied property.

Commercial Investment Mortgages:
  • Income Potential:Lenders focus heavily on the property’s ability to generate rental income. They assess the lease agreements, tenant quality, and market rental rates to ensure the property can sustain mortgage repayments.
  • Property Valuation: Detailed property valuation is conducted to determine the market value and potential for capital appreciation.
  • Borrower’s Financial Health:While the primary focus is on the property’s income, lenders also review the borrower’s financial stability and credit history to ensure they can manage the property effectively.
Owner-Occupied Commercial Mortgages:
  • Business Financials: Lenders scrutinize the borrower’s business financial health, including revenue, profit margins, cash flow, and financial projections. They want to ensure the business can generate enough income to service the debt.
  • Business Plan:A robust business plan is crucial, particularly for new businesses, to demonstrate viability and growth potential.
  • Personal Guarantees: Lenders may require personal guarantees from the business owners to mitigate risk, especially if the business lacks a long financial history.
  • Property Use:The property’s suitability for the intended business use is also assessed, including its location, condition, and potential to support business operations.

Overall, while both types of commercial mortgages require a thorough assessment, commercial investment mortgages emphasize the property’s income potential, whereas owner-occupied mortgages focus more on the business’s financial health and viability.

What is the Typical Timeline for a Commercial Mortgage Application?
The timeline for a commercial mortgage application can vary significantly, primarily depending on the complexity of the application, the lender’s workload, and the borrower’s responsiveness in providing required documentation.
Here’s a general timeline for the different stages:
  • Initial Inquiry and Pre-Approval: This initial assessment can take anywhere from a few days to a couple of weeks.
  • Formal Application and Document SubmissionAllow another 1-2 weeks to gather and submit all required documents, such as business plans, financial statements, and property details.
  • Underwriting and Valuation: Lenders typically take 2-6 weeks to underwrite the application and conduct a property valuation. This can be longer for complex cases or if additional due diligence is required.
  • Final Approval and Offer: Once approved, you’ll receive a formal mortgage offer, which usually takes 1-2 weeks.
  • Legal Work and Completion:The legal process, including due diligence, conveyancing, and exchange of contracts, can take 1-2 weeks.
In total, the entire process for a commercial mortgage can take anywhere from 6 to 12 weeks, or potentially longer for complex cases. Simple, straightforward applications with prompt document submission can be much faster.
    Tips for a Faster Timeline:
  • Prepare all documents in advance.
  • Choose a lender known for quick turnaround times.
  • Work with a mortgage broker to streamline the process.
Remember, these are just estimates. Consult a mortgage broker or lender for a more accurate timeline based on your specific situation. By understanding the timeline and following these tips, you can ensure a smoother and more efficient commercial mortgage application process.
Can a newly formed company obtain a commercial mortgage to buy a property?

Securing a commercial mortgage for a newly formed company can be challenging but not impossible. The key factor is whether the property will be owner-occupied or an investment:

Investment Property:
  • If you’re buying a commercial property solely for investment purposes, it’s often more straightforward to obtain a mortgage. Lenders primarily focus on the property’s potential rental income to assess loan affordability. They’ll conduct thorough due diligence on the property’s market value, projected rental yield, and the financial strength of potential tenants.
Owner-Occupied Property:

    For owner-occupied commercial properties, lenders need to assess the business’s ability to service the debt. If your business is new and doesn’t have a trading history, this becomes more complex. However, you can still secure a mortgage by providing:

  • A detailed business plan: This outlines your business model, target market, revenue projections, and expenses. It demonstrates the viability and potential profitability of your business.
  • Cash flow forecasts:These projections demonstrate how your business will generate sufficient income to cover the mortgage payments.
  • Personal financial information Lenders will assess your personal financial standing, including credit history and income, as an additional measure of security.

Lenders will conduct thorough due diligence on both the business and the individuals involved to ensure the loan’s viability. While it may require more effort and documentation, obtaining a commercial mortgage for a new company is achievable with a well-prepared application and a solid business plan.

What’s the Difference Between a Commercial Mortgage and a Buy-to-Let Mortgage?

The primary difference lies in the property’s use:

  • Commercial Mortgage: Used for properties intended for business purposes, such as offices, retail spaces, or industrial units.
  • Buy-to-Let Mortgage: Used for residential properties rented out to tenants. While buy-to-let mortgages are for residential investments, commercial mortgages cater to business-related property investments.
Does It Take Longer to Get a Commercial Mortgage?

The process of obtaining a commercial mortgage can take longer than a residential mortgage due to the complexity involved. The timeline can vary based on the lender, the borrower’s financial situation, and the specifics of the property. On average, the process can take between 6 to 12 weeks from application to approval and completion of the loan.

Can I Refinance an Existing Commercial Mortgage?

Yes, refinancing an existing commercial mortgage is possible and can be beneficial. Refinancing can help you secure better interest rates, access equity for business expansion, or adjust loan terms to better suit your financial situation. The process involves applying for a new mortgage to pay off the existing one.

Simplify Your Mortgage Journey

Unlock Mortgage Wisdom

Explore Our Comprehensive Guides & Insights

Should my Buy to Let property be owned personally or through a limited company? Should you own your Buy to Let property personally or through a limited company? Read our guide for… Read More
What is own new rate reducer? Find out how the Own New Rate Reducer scheme works and if it could help you get on… Read More
Buying a property – how does the conveyancing process work? Conveyancing is an essential part of buying a property, so it's really important to understand the process. You… Read More
Should my Buy to Let property be owned personally or through a limited company? Should you own your Buy to Let property personally or through a limited company? Read our guide for… Read More
What is own new rate reducer? Find out how the Own New Rate Reducer scheme works and if it could help you get on… Read More
Buying a property – how does the conveyancing process work? Conveyancing is an essential part of buying a property, so it's really important to understand the process. You… Read More
commercial-investment
Should my Buy to Let property be owned personally or through a limited company? Should you own your Buy to Let property personally or through a limited company? Read our guide for… Read More
What is own new rate reducer? Find out how the Own New Rate Reducer scheme works and if it could help you get on… Read More
Buying a property – how does the conveyancing process work? Conveyancing is an essential part of buying a property, so it's really important to understand the process. You… Read More
commercial-Remortgage
OBJECTS (1)

Consult with a Pro

Connect with Our Expert Mortgage Advisors

Scroll to Top