Commercial Mortgages

What is a commercial mortgage?

A commercial mortgage is a loan secured against a non-residential property typically used to buy business premises, invest in commercial buildings, or fund property development.

Every commercial property is unique, so lenders assess applications on a case-by-case basis. Terms can range from 3 to 25 years depending on the property and your financials.

What can commercial mortgages be used for?

• Purchasing a business premises or unit
• Property development or refurbishment
• Investing in commercial property
• Buying a trading business with premises

Key features of commercial mortgages

• Rates are usually variable and case-specific
• Interest rates may be higher than residential mortgages
• Deposit requirements typically start from 30–35%
• Your business premises are often used as loan security
• Flexible terms available based on business needs

How do I apply for a commercial mortgage?

Applying for a commercial mortgage is more complex than a standard residential loan. That’s why we recommend speaking to one of our commercial mortgage specialists first.

To apply, you’ll typically need:

• Business accounts – Preferably 2–3 years of trading, but some lenders will consider less
• Recent bank statements – Most lenders request at least 3 months of business bank activity
• Asset & liability statements – To assess your overall financial health
• Proof of deposit and income – Especially for investment properties

Who qualifies for a commercial mortgage?

Each lender has their own criteria, but generally you’ll need:

• Profitable business operations
• Minimal existing company debt
• 30%+ deposit (higher deposits unlock better deals)
• Established trading history (typically 2+ years)

If you’re a new business, we can still explore options—some lenders accept personal guarantees.

Commercial mortgage fees to expect

• Arrangement fees: Typically 0.5%–2%, often added to the loan
• Valuation fees: To assess the value of the premises (usually up to £500)
• Legal fees: Conveyancing on commercial property may cost up to £1,000
• Advisor fees: Flat rate or up to 1% of the loan (we’ll always outline this upfront)

What are the benefits of a commercial mortgage?

• Interest is tax-deductible as a business expense
• You own a tangible asset that may increase in value over time
• Rental income from tenants can offset repayments
• Equity release potential for future borrowing

Types of commercial mortgages we support

Owner-Occupier Mortgages

Used when you plan to trade from the property. Ideal for businesses wanting stability and control over their premises.

Commercial Investment Mortgages

Designed for investors buying property to lease out. If the building includes residential units (e.g. a flat above a shop), you’ll likely need a semi-commercial mortgage.

Commercial Buy-to-Let

For landlords renting to businesses. Lenders assess the lease terms, rental income, and quality of tenants. We help match you with lenders that suit your property and goals.

Portfolio Mortgages

If you manage multiple properties, a portfolio mortgage can combine them under one account simplifying your payments and leveraging equity across the portfolio.

HMO Mortgages

If you’re letting a House in Multiple Occupation (five or more tenancies), you’ll need an HMO mortgage especially for large licensed HMOs. We work with lenders who understand this niche.

Alternatives to a commercial mortgage

• Bridging loans – Short-term finance for cash flow or fast purchases
• Semi-commercial mortgage – For properties with both business and residential space
• Remortgaging – Use equity from a current property to fund the purchase
• Leasing – A lower-risk, faster option if buying isn’t feasible

Things to consider before applying

• Financial risk: The loan is secured against your business premises
• Deposit: Most lenders require 30–40% for competitive terms
• Credit history: Poor credit may limit your options or increase costs
• New businesses: May need to build trading history or lease first

Why use a commercial mortgage advisor?

Commercial mortgage products are more complex than residential ones. Many lenders only work via brokers and commercial advisors like us know exactly how to package your application to maximise approval chances.

From business premises to investment units, our experts will guide you through every step saving time, money, and unnecessary stress.

Let’s find your deal

Whether you’re buying your first unit or refinancing a commercial portfolio, Option Finance is here to help you secure a mortgage that fits your business goals.

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