A complete guide to
Commercial Mortgages
Finance for fully commercial and mixed-use property across the UK.
Over 200 UK lenders
Commercial property expertise
Support from enquiry to completion
Amir Shojaee
Director and Founder of PBSBrokers
CeMAP Qualified Mortgage Adviser
Commercial Mortgage Types
Whether you are buying premises for your own business, investing in commercial property, or financing a building with both residential and commercial use, we offer support across different commercial mortgage routes. Each option is assessed using factors such as business performance, rental income, property use, deposit, lease terms, and long-term affordability.
Bridging Loans
A bridging loan is a short-term form of finance that can help with fast purchases, auction properties, chain breaks, refurbishment, or situations where a standard mortgage is not yet suitable. We help you review the costs, security, timescale, and proposed exit strategy.
Development Finance
Development finance is designed to support property construction, conversion, and major refurbishment projects. We help developers assess funding requirements, build costs, staged drawdowns, project experience, and the planned repayment route.
Self-Build
Self-build mortgages are structured differently from standard home loans, with funds typically released in stages. We help you explore the right route for building your own home.
Second Charge Mortgage
A second charge mortgage allows you to borrow additional money against a property while keeping your existing first mortgage in place. We help you compare second charge options, available equity, combined LTV, affordability, costs, and alternatives such as remortgaging or a further advance.
Refurbishment Finance
Self-build mortgages are structured differently from standard home loans, with funds typically released in stages. We help you explore the right route for building your own home.
Auction Finance
Auction finance can help buyers complete a property purchase within the shorter timescales commonly associated with property auctions. We help you review the funding requirement, deposit, property condition, LTV, completion deadline, bridging options, and planned exit before or after bidding.
Choose the Right Commercial Mortgage Route
Start with the property itself. The main distinction is whether it is entirely commercial or combines commercial and residential space. Occupation and repayment source are considered later within the selected route.
Standard Commercial Mortgage
For property with no residential element, including offices, shops, warehouses, industrial units, workshops, surgeries, restaurants and hotels.
Semi-Commercial (Mixed Use)
For property combining business and residential space, such as a shop with a flat above or a pub with living accommodation.
The dedicated child pages can explore their own lender criteria, valuation issues and property examples without duplicating the purpose of this parent guide.
What Is a Commercial Property Mortgage?
A commercial property mortgage is borrowing secured against land or buildings used for business. It can support the purchase of business premises, the acquisition of a commercial investment, refinancing of an existing loan or release of equity for an acceptable business purpose.
It differs from a residential mortgage because affordability may be based on company cash flow, rental income or both. The valuation may also consider commercial rent, lease terms, vacant-possession value and alternative use.
Some lenders offer terms of up to 25 years, although the available term depends on the borrower, property, repayment structure and lender criteria.
Buy premises for a trading business or acquire commercial property for tenants.
Replace an existing facility or change the term and repayment structure.
Raise additional capital for an acceptable business purpose, subject to valuation and affordability.
How Will the Property Be Used?
Owner-occupied and commercial investment mortgages are not additional website routes. They describe how a Standard or Semi-Commercial property will be used and where the repayments are expected to come from.
The applicant’s business trades from the property. The lender normally reviews accounts, management figures, cash flow, existing commitments and management experience to decide whether trading income can sustain the payments.
The property is leased to another business. The lender pays greater attention to rent, tenant strength, the remaining lease term, break clauses, rent reviews and vacancy risk.
How Does a Commercial Mortgage Work?
The borrower normally contributes a commercial mortgage deposit and the lender advances the balance, subject to valuation and affordability. Around 25% can be a useful planning assumption, but it is not a market-wide guarantee.
Specialist property, a new business, weak trading figures, adverse credit or limited resale demand may lead to a lower commercial mortgage LTV and a larger contribution.
- COMMERCIAL FINANCE STRUCTURE
Deposit, security and repayment
Separate the purchase contribution from fees, additional security and the working capital the business still needs after completion.
Legal security
The lender normally takes a legal charge and may also request guarantees, a debenture, assignment of rent or additional property security.
Rates and total cost
Commercial mortgage rates are usually priced individually. Compare the rate with arrangement, valuation, legal and early repayment costs.
Repayment structure
Repayment may be capital and interest, straight-line capital or interest-only. Interest-only borrowing needs a credible exit strategy.
Commercial Mortgage Eligibility
Commercial mortgage eligibility depends on the applicant and property. Established businesses are commonly asked for recent accounts, management information, bank statements and forecasts. The lender may also review existing debts, credit history and the deposit source.
A commercial mortgage for a new business may still be possible. The application may rely more heavily on a business plan, cash-flow forecast, sector experience, contracts, a larger deposit or additional security.
Accounts, management figures, bank statements and sustainable cash flow are normally central.
Forecasts, sector experience, deposit and additional security may carry greater weight.
Sole traders, partnerships, LLPs and companies may apply; guarantees may be required.
The issue’s type, age and explanation are assessed with the wider case.
Commercial Mortgage Valuation and Property Checks
A commercial mortgage valuation is prepared for the lender. It may consider market value, vacant-possession value, market rent, current rent, lease terms, tenant quality, building condition and demand for alternative uses.
If the independent valuation is lower than the agreed price, the available loan may fall and the borrower may need a larger deposit.
The valuation is not a full survey or legal review. The buyer’s solicitor may need to examine title, leases, planning use, access rights, repair obligations and environmental searches.
The valuer reviews evidence, demand, alternative uses and resale prospects.
Investment value can depend on rent, tenant strength, lease expiry and break clauses.
Title, planning, access, contamination and condition may require further investigation.
EPC, Commercial Mortgage Costs and Regulation
Energy efficiency can affect whether property can be let, future improvement costs and long-term marketability. In England and Wales, many privately rented non-domestic properties currently need an EPC rating of E or above unless a valid exemption applies.
Commercial mortgage costs may include the deposit, arrangement fee, valuation, legal fees, survey, insurance and broker charges. Buyers should also budget for repairs, business rates, service charges and VAT where applicable.
Energy efficiency
Check the certificate, improvement costs and letting position.
Tax and costs
Allow for tax, legal work, valuation, fees and VAT where relevant.
Regulation
Mixed-use occupation must be assessed rather than assumed.
Residential occupation and the proportion used as a dwelling can affect the regulatory position. A Semi-Commercial case should not be assumed to be regulated or unregulated without checking the borrower, occupation and loan purpose.
How to Get a Commercial Mortgage
A strong commercial mortgage application begins by confirming whether the property is Standard Commercial or Semi-Commercial. The adviser or lender then establishes who will occupy it, where repayments will come from, the available deposit and whether the proposed use is acceptable.
The applicant provides financial and property documents before indicative terms are issued. The full process then includes credit assessment, commercial valuation, formal offer and legal work.
01
Classify the property
Standard or Semi-Commercial.
02
Review affordability
Test cash flow or rent, deposit and credit.
03
Value and underwrite
Assess the applicant, property and rent.
04
Offer and complete
Meet conditions and complete legal work.
Commercial Remortgages and Equity Release
A commercial remortgage can replace an expiring facility, change the repayment structure, extend the term or release capital from property already owned.
The available amount depends on the valuation, mortgage balance, business affordability, rental income and commercial mortgage LTV. Releasing equity can support refurbishment or another suitable business purpose, but it increases the debt secured against the property.
The new deal should be compared with arrangement fees, legal costs, valuation charges and any early repayment penalty.
Is a Commercial Mortgage Right for You?
Owning commercial premises can provide control, reduce dependence on a landlord and allow a business to build property equity. A commercial investment property may also generate rental income.
The risks are equally important. Deposit and fees tie up capital, repayments may rise, values can fall and specialist premises may take longer to sell or re-let. Owners also assume responsibility for repairs, insurance and compliance.
Control of premises
Ownership can provide greater certainty and flexibility for a trading business.
Equity and rental potential
The property may build equity or produce income from commercial tenants.
Cash-flow pressure
Deposits, fees, repairs and higher payments can reduce working capital.
Property and exit risk
Values can fall and specialist property may take longer to sell or re-let.
How a Commercial Mortgage Broker Can Help
A commercial mortgage broker can first identify whether the property belongs in the Standard Commercial or Semi-Commercial route. The adviser can then present the owner-occupied or investment repayment case, compare lender appetite and flag issues involving accounts, leases, EPC, valuation or security.
PBSBrokers can review the business, property, deposit and repayment plan as one connected case, comparing total cost and suitability rather than only the lowest headline rate.
CeMAP Qualified Mortgage Adviser
Amir Shojaee
Commercial Mortgage Questions
These questions summarise the main points. Detailed property and mixed-use criteria will sit within the two dedicated child pages.
Around 25% can be a useful starting assumption, but the final requirement depends on the property, applicant, lender and repayment case.
Potentially. Strong forecasts, sector experience, a credible business plan and suitable security can become especially important.
Many fully commercial cases are outside ordinary residential mortgage regulation. Mixed-use and residential-occupation cases must be assessed individually.
Standard Commercial property has no residential element. Semi-Commercial property combines business and residential space.
Let's Find the Right Mortgage for You
Amir Shojaee
Director and Founder of PBSBrokers
CeMAP Qualified Mortgage Adviser
At PBSbrokers, we offer a free initial consultation to review your income, deposit, affordability, credit profile, and mortgage objectives. Whether your case is straightforward or more complex, we'll help you understand the options that may be available and guide you through the next steps.
