Commercial mortgage comparison: what you should know

If you’re buying business property, comparing mortgages the right way could save you thousands.

Buying or refinancing a business property is one of the biggest financial decisions you’ll make. And with high-street banks taking up to 12 weeks to approve a mortgage, while specialist lenders can do it in half that time, the lender you choose can make all the difference.

But it’s not just about speed. Hidden fees, inflexible terms and rejection risks can turn what should be a rewarding step into a costly headache. Fortunately, focusing on the right criteria and knowing where to look can help you secure a deal that saves you money and fits your business needs.

In this article, we explain why it’s so important to compare commercial mortgages, how to compare them, how to avoid rejection, how to apply, and other financing options to consider.

Key points:

• With over 200 commercial mortgage lenders on the market, finding the most suitable product could save you thousands of pounds

• Consider the interest rate, fees, loan terms, and lender flexibility

• Funding Options by Tide can help when optimisation of working capital isn’t enough, offering access to business finance up to £20 million

Why compare commercial mortgages?

When you’re financing a property purchase, it’s important to compare commercial mortgages that are as suitable and competitive as possible. But with over 200 lenders in the UK – each offering a range of commercial mortgage products – there’s a lot to choose from.

Commercial mortgages vary in lots of ways. Interest rates can range from between 3% and 12%, fees can differ by thousands of pounds, and approval times can vary by months. The result can affect your bank balance and how quickly you can move ahead.

As of 2025, around 60% of SMEs use specialist or challenger lenders instead of high-street banks. These lenders often offer faster approvals, more flexible criteria and a better chance of success if your business doesn’t fit the traditional mould. But you won’t find them unless you compare your options properly.

Many businesses go wrong by assuming the first offer they get is the best they can do. But by taking the time to compare lenders and their deals, you could save thousands in fees, secure a more competitive interest rate and increase the chance of your application being approved quickly.

Six ways to compare commercial mortgages

Comparing commercial mortgages is about more than finding the lowest interest rate. From hidden fees and repayment flexibility to how quickly you can secure funding, there are many factors that play a role in determining whether a deal truly works for you.

A mortgage that looks competitive at first glance might come with rigid terms, hefty penalties or a slow approval process that derails your plans. So to make the right choice, you’ll need to weigh up several important areas.

1. Interest rate: fixed vs. variable

Depending on your needs and preferences, you can opt for a fixed or variable interest rate.

• Fixed rates mean your monthly repayments don’t change, which is great if you want to lock in predictable costs and avoid surprises.

• Variable rates can be cheaper if interest rates fall. But your repayments could jump by hundreds of pounds a month if rates rise.

But don’t just look at the headline rate. Ask whether it’s introductory or tied to the Bank of England base rate. And if you’re considering a variable rate commercial mortgage, make sure you can afford the repayments if rates go up.

2. Fees and hidden costs

Most commercial mortgages come with upfront fees you’ll need to pay, and many have extra fees that are charged in certain situations.

• Arrangement fees can be 1-2% of the loan amount

• Valuation fees can run into thousands

• Legal fees can add hundreds or thousands to the cost

• Early repayment fees can cost tends of thousands

For example, a 2% arrangement fee would equate to £10,000 on a £500,000 loan. So always ask for the total cost of credit, not just the interest rate.

Early repayment penalties are another big factor to consider. Some lenders charge up to 5% of the outstanding balance if you pay off the mortgage early (e.g. £25,000 on a £500,000 loan). So if you think you might sell the property or remortgage in a few years, look for a lender with capped penalties or flexible terms.

3. Loan-to-value (LTV) ratio

The loan-to-value ratio (LTV) measures how much you can borrow compared to a property’s value. For example, if you borrow 70% of the property’s value, that’s a 70% LTV. Mortgage lenders use LTV to assess lending risk – the higher the LTV, the greater the risk.  

Most commercial lenders will typically offer up to 70% LTV, meaning you’ll need at least a 30% deposit. Some specialist lenders may go up to 80% if your business has strong cash flow, although higher LTVs usually come with higher interest rates. In general, the larger the deposit you provide, the better the deal you’re likely to secure.

4. Approval speed

If you’re in a hurry, high-street banks may not be your best bet. Specialist lenders and challenger banks tend to review and approve applications much faster – in as little as 6-8 weeks.

If you’re in a real rush, you may want to consider a bridging loan which could deliver funds in just 2-4 weeks. Speed can be an important factor if you’re buying at auction or need to move quickly to secure a property.

5. Flexibility

When getting a commercial mortgage, you’ll want to consider how much freedom you’ll have to adjust your repayments or terms. For example, will the lender let you overpay without penalties? Or can you switch from variable to fixed later?

Many lenders let you make overpayments of up to 10% a year, which can help you pay off the mortgage faster and save interest over the full term. But others can lock you in with strict terms. So if flexibility is important to you, make sure it’s mentioned in the agreement.

6. Suitability

Not all lenders are a good fit for every business or type of property. Some lenders specialise in certain sectors (e.g. hospitality or healthcare), while others avoid “non-standard” properties like mixed-use buildings or those needing major renovations.

If your business is in a niche industry or your property is unusual, a broker can help you find lenders that understand your needs. Always check whether the lender has experience with businesses like yours before applying.

Three common rejection reasons to avoid

Getting rejected for a commercial mortgage can be frustrating, delay your plans and even hurt your credit score. Fortunately, most rejections can be avoided if you know what lenders are looking for.

1. Your sector’s deemed “too risky”

This is the number one reason for rejection, accounting for 31% of declined applications. Traditional banks are often wary of industries with volatile cash flow, like hospitality or retail. But specialist lenders often have a different appetite. If you’re in a sector that struggles with mainstream lenders, a broker could connect you with alternatives.

2. Poor credit history

Missed payments, CCJs or past insolvencies can make lenders nervous. But it’s not necessarily a deal-breaker. Some challenger banks focus more on your current cash flow than your credit history. So if your credit isn’t perfect, be upfront about it and look for lenders that are open to businesses with less than perfect credit scores.

3. Missing or incorrect documents

This might seem obvious, but missing or incorrect documents are a surprisingly common reason for rejection. Your lender will need to see your business accounts, tax returns, a solid business plan and proof of income. If you’re self-employed or have non-standard income, you may need to provide additional evidence. Make sure to double-check everything before you apply as this could save you weeks of delays.

Applying directly vs. using a broker

When it comes to securing a commercial mortgage, one of the biggest decisions you’ll face is whether to apply directly with a lender or enlist the help of a broker.

Going it alone can seem straightforward but it limits you to a single lender’s offerings, while a mortgage broker can open doors to a much wider market – but may charge a fee for the privilege. So, which is right for you?

Applying directly

If you have a strong relationship with your bank and a straightforward application, going direct can work. You’ll avoid potential broker fees (not all charge a fee), and the process might feel simpler. But you’ll only have access to that lender’s products, which might not be the best fit for your needs.

Using a broker

Mortgage brokers have access to a much wider range of lenders, including specialist and challenger banks that you might not find on your own. They can also help you navigate the application process, increasing your chances of approval.

While some brokers are free to use, some charge a fee of around 1-2% of the loan amount. In some cases, the savings they help you secure more than offset the cost. And because they know which lenders are most likely to approve your application, they can save you time and stress.

At Funding Options by Tide, we work with over 120 commercial mortgage lenders, so we can match you with the most suitable deal for your situation.

Alternatives to commercial mortgages

A commercial mortgage may not be the right fit for your business. You may not want the long-term commitment, you may need funds faster or your property might not meet the lender’s criteria. Fortunately, there are many other ways to finance business property or free up capital.

• Bridging loans: Get fast, short-term funding to buy property quickly – ideal for auctions or while you arrange a longer-term mortgage.

• Property development finance: Fund renovations or new builds with staged payments, designed specifically for construction and refurbishment projects.

• Commercial loans: Borrow a lump sum for property purchases with flexible terms, either secured against assets or unsecured for quicker access.

• Auction finance: Secure immediate funds to meet auction deadlines, with the option to refinance later into a mortgage or sell the property.

Find business finance with Funding Options by Tide

Whether you’re looking for a standard business loan, a short-term business loan, or something a little more specialist, like auction finance for property developers, we’re one of the leading names in business finance in the UK, having helped facilitate over £1 billion in finance to more than 20,000 customers.

Checking if you’re eligible is free, only takes a few minutes, and while a full application would impact your personal or business credit score, checking eligibility won’t. Just submit your details via the link below to find out if you could be eligible to borrow up to £20 million.

Find business finance.

FAQs

How long does it take to get a commercial mortgage?

High-street banks typically take 8-12 weeks to review and approve a commercial mortgage, while specialist lenders can take as little as 6-8 weeks. If you need funding fast, a bridging loan could provide the money even faster, in around 2-4 weeks.

Can I get a commercial mortgage with less than two years’ trading history?

It’s possible to get a commercial mortgage with less than two years’ trading history, but you’ll likely need to provide a larger deposit or additional security. Some challenger banks consider applications with just one year of accounts.

How do commercial mortgages affect my business’s tax?

Interest payments on commercial mortgages are usually tax-deductible, but the rules can be complex. So it’s worth speaking to an accountant to understand how a commercial mortgage will impact your tax liabilities.

Is it better to lease or buy business property?

Buying property builds equity and can be cheaper in the long run, but leasing can preserve your cash flow. The right choice will depend on your business’s financial situation and long-term plans.

What if my application gets rejected?

If your application gets rejected, don’t give up. A broker could help you find lenders that specialise in your sector or credit profile. Alternatively, you could explore bridging loans or other short-term finance options while you improve your application.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.