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Buying a Business Through Mortgage Lending

Can you buy a business with a mortgage? Read on for all the information you need to know about applying for mortgages for business investments.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-01
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How To Get a Business Mortgage

The Revolution team often hears from investors looking to purchase a business and wanting to know whether mortgage lending is available to finance this.

Mortgages can undoubtedly be used for a business purchase, and here we explain the most important factors to be aware of when comparing mortgages for business investments.

With more help with mortgage lending for business investment, contact mortgage brokers on 0330 304 3040 or send us a message to [email protected].

What Business Investments can I Pay for Through Mortgage Finance?

Lenders will consider a broad range of circumstances, before deciding whether to offer mortgages for business acquisitions so the best option is to consult a professional, independent broker who can point you in the right direction.

Commercial mortgages for business investments fall into two main categories:

  • Investment mortgages - for buy to let commercial properties.
  • Owner-occupier mortgages - for business to buy premises to trade from.

Mortgages for business investments can finance any sort of premises acquisition, including offices, medical facilities, schools, retail sites, and professional properties.


Understanding the different types of business mortgages is crucial for anyone looking into buying commercial property or getting a buy-to-let mortgage. Each type targets specific needs and offers various benefits.

  1. Owner-Occupied Commercial Mortgages: These are for businesses planning to buy or refinance their own workspaces. Interest rates are often lower than residential mortgages, making them attractive for small to medium-sized enterprises.
  2. Commercial Investment Mortgages: Aimed at property investors looking to purchase or refinance properties they will rent out. Rates are slightly higher than owner-occupied mortgages due to the perceived higher risk.
  3. Buy-to-Let Mortgages: These cater specifically to landlords wanting to invest in rental properties. They assess rental income as part of the eligibility criteria, which can be more relaxed compared to traditional loans.
  4. Green Commercial Mortgages: Offered to those investing in energy-efficient buildings, these mortgages come with discounted rates to encourage sustainable investments.
  5. Bridging Loans: Short-term funding options for those needing quick finance between selling one property and buying another, or while awaiting long-term financing.
  6. Refinancing Options: Allows businesses to revise their existing mortgage terms, potentially lowering interest rates or adjusting the loan amount based on new valuations since interest rates tend to adjust faster.
  7. Mezzanine Finance: A hybrid that combines debt and equity financing, giving lenders the right to convert their loan into an equity interest in the company in case of default.

Fixed-Rate Mortgages: Locks in your interest rate for a set period, protecting borrowers from any increases in the Bank of England base rate during that time.

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How do Lenders Calculate Business Mortgage Eligibility?

Every lender will consider applications for mortgages for business purchases on their own merit, and will evaluate the following factors:

  • Affordability - whether the business profits demonstrate that the company would be able to keep up with the mortgage monthly repayments.
  • Deposit - most lenders offering mortgages for business acquisitions need a deposit of 20-40% for investment mortgages, depending on the risk factor. Owner-occupier mortgages usually require a slightly lower deposit of 20-30%. If you have no deposit, then you may be able to borrow at 100% LTV, but will need to offer another form of security.
  • Credit history - if you have a bad credit history, then you will need to apply through a specialist lender who caters to this scenario.
  • Trading history - if you have a long track record for at least two to three years of accounts, the business is considered less risky and will have a greater choice between mortgages for business investments.

Eligibility Criteria

To qualify for a business mortgage, applicants need solid sector experience and must show how they plan to repay the loan. This means bringing in documents that prove their ability to pay back what they borrow.

Banks and other lenders look closely at your trading history, making sure your business is healthy and can handle the debt. They also check your credit score to assess risk.

Lenders may ask for personal guarantees if they see you as high-risk. This means you promise to cover the loan if your business cannot pay it back. When applying, you'll need proof of identity and address, along with a detailed account of your finances, including the business premises value and any debts or savings.

Understanding these requirements early helps make the process smoother.

Who Can Get One?

Business owners with strong credit history and financial health can get a commercial mortgage. Banks often look for companies that have been around for at least three years. They check your business accounts to make sure you're doing well.

Some lenders, known as Tier 2 and Tier 3, are more flexible. They might lend to you if your business has only one full year of accounts. If an owner has a not-so-good credit score, they still might get a business loan but with higher interest rates. Lenders need proof like bank statements, tax returns, and details on assets and liabilities.

They also want to know about the property's value on most commercial mortgages and how much deposit you can put down.

How do I apply for a Commercial Mortgage?

The key in finding mortgages for business investments is to apply to the right lenders, where you know you meet most of their eligibility criteria. It can be challenging for businesses to make this decision without having the experience and insight of an expert commercial mortgage broker.

Your broker will help you to put your application for mortgages for business investments together in a favourable way to meet the criteria of your chosen provider.

Are there Alternatives to Finance a Business Investment?

There certainly are - you will find a range of commercial lending products to compare against mortgages for business acquisitions, each of which has its own pros and cons. These include:

  • Bridging finance
  • Remortgaging
  • Unsecured business loans

Bridging Finance to Buy a Business


Bridging loans are quick to organise and often used for company purchases at auction, or where time is critical, rather than mortgages for business acquisitions.

It is vital to have an exit strategy to work out how you will repay the temporary finance when the term ends, usually after one to three years.

Most borrowers using mortgages for business investments either plan to remortgage, or sell the asset, to repay their bridging loan.

Remortgaging to Invest in a Business

Another option, where you have an existing property and own equity, is to consider remortgaging. These mortgages for business acquisitions release the equity you need to purchase a business, although the affordability assessment will apply.

Unsecured Business Loans for Company Investments

Loans are often a good choice if you need to borrow on a shorter-term basis and need £25,000 or less from lenders offering mortgages for business acquisitions. These are usually quicker to arrange and do not require any security but may require valuation fees, arrangement fees, and other outgoings as well.

If you need to borrow a higher value, another option might be more cost-effective.

Are Commercial Mortgages Available to Buy a Residential Property?

Commercial mortgages are not intended for this purpose, so if you'd like to buy a home, you are best applying for a residential mortgage

However, if the property is going to be a business - such as a B&B - then commercial lending is applicable rather than a residential mortgage. If you live in your own business property, your residential space must not account for more than 40% of the total property space to qualify for mortgages for business investments.

In some cases, a semi-commercial mortgage is the most suitable choice, for properties with both a commercial and residential aspect, such as a retail premise with an apartment above.

How Can a Broker Help Me Fund a Business Investment?

The Revolution Brokers team has years of experience in commercial mortgage lending. As a whole-of-market, independent mortgage broker, we can recommend mortgages for business acquisitions from any provider, and any product that we think best suits your circumstances.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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