Commercial mortgage financing
Buying or refinancing a commercial property is a big step for any business. Whether you're purchasing a new office, warehouse, or retail space, a commercial mortgage can help you spread the cost over time - freeing up capital to invest elsewhere. Compare options from 80+ UK lenders with Funding Options by Tide.
Commercial mortgage: what it is and how it works
What is a commercial mortgage?
A commercial mortgage is a loan secured against a property used for business purposes. It works similarly to a residential mortgage, but it's designed specifically for commercial buildings - like offices, warehouses, factories, or retail units.
You borrow a lump sum to buy or refinance a property and repay it over a fixed term, typically between 5 and 25 years. The property acts as collateral, which can make this form of borrowing more accessible for eligible businesses.
What can it be used for?
Buying your own premises
Refinancing existing commercial property loans
Purchasing land for development
Expanding or relocating your business
Investing in commercial property as a landlord
How it differs from residential mortgages
Feature | Commercial mortgage | Residential mortgage |
Purpose | Business property | Personal home |
Interest rates | Typically higher | Typically lower |
Deposit required | 20%–40% | 5%–20% |
Term | 5–25 years | 10–30 years |
Regulatory protection | Fewer protections (not FCA regulated) | Consumer protections apply |
The different types of commercial mortgages
Owner-occupier mortgage
Ideal if your business plans to operate within the property. These owner occupied commercial mortgage products often come with lower commercial mortgage rates and can stretch over 15 to 25 years. Typically, you can borrow up to 75% of the property’s value.
Buy-to-let mortgage
Designed for rental properties—commercial or residential. The lender focuses on projected rental income to gauge affordability. While potentially lucrative, a buy to let commercial mortgage comes with the risk of market fluctuations in rent demand.
Partial commercial mortgage
Perfect for mixed-use properties (e.g., a retail storefront with flats above). A semi commercial mortgage usually factors in both rental potential and your business’s income.
Bridging loans for commercial purposes
for short-term funding or development
How does Funding Options work?
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If you're ready to take your business to the next level, use our business loans calculator to get an idea of what you can afford.
Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Financial product information
Representative example*
• 7.63% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,252.94. The total amount payable is £54,070.56
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 2.75% APR
Repayment period
1 month to 30 years terms
Benefits of a commercial mortgage
Traditional commercial mortgages (like owner-occupied and buy-to-let mortgages) can be advantageous, depending on your business’s financial situation. The benefits of a commercial mortgage include:
Property ownership
A business mortgage (also known as a commercial property mortgage) enables you to own real estate through your company. Owning a premises can offer operational control and potentially reduce long-term costs compared to leasing.
Investment value
Commercial real estate often holds or increases in value. With a semi commercial mortgage (for mixed-use properties) or a buy to let mortgage (for rentals), you can leverage future rental income to help offset repayments.
Tax benefits
With many business mortgages, the interest you pay can often be claimed as a deductible business expense. This may reduce your tax liability and free up funds for reinvestment.
Things to consider
❗ Deposit requirements
Typically 25%–40% of the property’s value
❗ Fees
Arrangement fees, valuation costs, and legal fees may apply
❗ Repayment risk
Property can be repossessed if repayments are missed
❗ Eligibility checks
Lenders assess credit score, trading history, and income
Am I eligible for a commercial mortgage?
Eligibility depends on several factors:
Your business type and trading history
Your deposit size (usually 25% or more)
The type and value of the property
Your credit history and financial accounts
Intended use of the property (owner-occupied vs rental)
Startups may find it more challenging to qualify unless they can offer additional security or a guarantor.
How to apply for a commercial mortgage
1. Assess your needs
Understand what you're buying and how much you can borrow
2. Prepare documents
Submit business accounts, property details, and identification
3. Compare lenders
Or use a broker like Funding Options by Tide to explore the market
4. Get an offer
Lenders will assess the property and your business profile
5. Complete legal checks
Legal and valuation processes take place before completion
6. Draw down funds
Once everything is approved, the loan is released
Alternatives to commercial mortgages
Short-term funding for property purchases or development
For construction or refurbishment projects
Unsecured or secured finance for general business needs
For purchasing equipment or vehicles alongside property
Find out more about traditional business mortgages
Who is eligible for business mortgage financing?
You can purchase a commercial property as either a limited company or a sole trader.
Purchasing a commercial property as a limited company could protect your personal assets from business debts and legal claims, reducing your overall personal financial risk.
Eligibility is determined by how long a business has been trading, their affordability as shown in their profit & loss statements and overall strength of the business
What are the risks of a business mortgage?
It’s important to consider the possible financial risks when making any property decisions. Aside from funding the purchase of the property, there are many additional costs and risks to keep in mind when acquiring commercial real estate:
Commercial mortgage fees: Fees like arrangement fees, mortgage broker fees, and valuation fees charged on a business mortgage can vary according to the lender. Additionally, the stamp duty land tax is required for properties costing £150,000 or more. Business owners should also consider the cost of legal services, such as insurance or site surveys.
Property development or renovation: For businesses that plan to expand on a property – either with a new addition to an existing structure, a renovation, or a completely new construction – you’ll need the financial means to cover the costs of property development. You will likely need to secure additional financing for property development projects.
Refinancing: If you opt into a business mortgage with shorter terms, you’ll need to refinance your commercial property more often. Depending on the market conditions, having to refinance your business property can expose you to new risks or more stringent terms.
Legal complications: Defaulting on a business mortgage might lead to legal actions and foreclosure over the property.
Please note that asset finance typically requires an upfront deposit and there is less flexibility with early repayments.
How to apply for a business mortgage and alternative financing in the UK
Assess your needs: Calculate how much you want to borrow and decide whether a commercial mortgage is best—or if bridging loans or development finance might suit your short-term needs.
Check eligibility: Lenders look at your credit rating, business liquidity, and repayment history. A higher deposit may be required compared to residential loans, especially for interest only commercial mortgage products or if you have limited trading history.
Compare commercial mortgages: Commercial mortgage lenders offer varying terms, so shop around or use a broker to find current commercial mortgage rates uk that match your business profile. Funding Options by Tide can streamline this comparison.
Submit your documents: Expect to provide a property valuation report, business accounts, and proof of income. Lenders will want to see proof of deposit and your company's financials such as full accounts and bank statements.The deposit on a commercial mortgage can vary—often from 25% to 40%—depending on the lender and loan-to-value ratio.
Use a business mortgage calculator: Tools like a commercial mortgage calculator or business mortgage calculator help estimate monthly repayments, factoring in principal, interest rates, and any fees. This step can highlight how different interest rates or deposit sizes affect total costs.
Can I get a commercial mortgage as a limited company or sole trader?
Yes. You can apply as either a limited company or a sole trader. Limited company borrowers often benefit from separating personal and business liabilities, though eligibility criteria may differ from sole traders.
How is a commercial mortgage different from bridging finance?
A commercial mortgage is usually long-term financing (often 10–25 years or more), whereas bridging finance is short-term—used to “bridge” a gap until longer funding is secured. Bridging loans also tend to have higher interest rates but faster approval times.
How much deposit do I need for a commercial mortgage?
Most lenders typically require a deposit of 25%–40%. The exact amount depends on factors like the property’s value, your business’s credit profile, and the lender’s loan-to-value criteria.
What if my business credit score is low?
While a stronger credit score typically secures better rates, some commercial mortgage lenders cater to businesses with less-than-perfect credit. However, you may face higher interest rates or stricter terms.
Can I use a commercial mortgage calculator to compare deals?
Yes. A commercial mortgage calculator helps estimate monthly repayments, interest costs, and total loan amounts. It’s a quick way to compare different commercial mortgage rates or deposit scenarios before applying.
Can I get a commercial mortgage as a startup?
It’s possible, but more difficult without trading history or security.
How long does it take to complete?
The process usually takes 6–12 weeks, depending on valuation and legal checks.
Is it regulated by the FCA?
Most commercial mortgages are not FCA regulated unless the property is partially residential.
What happens if I miss repayments?
The lender may repossess the property. Always seek independent advice.
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.
Vivek Seda
Business Finance Manager
Vivek is the Asset Based Lending Manager at Funding Options by Tide. Vivek has been in the industry for over 10 years, working for both lenders and brokers. His product specialisms cover Asset Finance, Invoice Finance, Property Finance and structured transactions.