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Commercial Mortgages

There are many different lenders and Commercial Mortgage products on the market which can be difficult to pick the best commercial mortgage that suits your needs.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-10
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What is a commercial mortgage?

Commercial mortgages are a type of loans secured on non-residential property. Commercial mortgages are also known as “business mortgages” which are oriented towards business owners that want to buy a new piece of property or land that they will use for commercial purposes.

How do commercial mortgages work?

Business or commercial mortgages are very similar to residential mortgages in that the lender advances money to business owners to buy a property. The difference with this type of mortgage is that business owners get funding to purchase a property that they will use for their business purposes rather than use the funds to buy a house to live or rent out.

The similarity between the two is that businesses need to pay back the loan over time and keep up with the commercial repayments to avoid defaulting on the loan.

What are the different types of commercial mortgages??

Commercial mortgages can come in two main categories:

Owner-Occupied Commercial Mortgages:

  • For businesses that plan to occupy at least 51% of the property.
  • Often have favorable terms and lower interest rates.
  • Can be financed through traditional lenders or SBA programs.

Commercial investment mortgages

These are designed specifically for individuals or entities that purchase commercial properties as investments, rather than for owner-occupation. These mortgages cater to the unique needs of investors seeking to generate income or capital appreciation from their commercial real estate holdings. These are used for property you’re planning to let out and some of them are:

  •  Buy-to-Let Mortgages
  •  Office Space Mortgages
  • Retail Property Mortgages
  • Industrial Property Mortgages
  • Mixed-Use Property Mortgages
  • CMBS (Commercial Mortgage-Backed Securities) Loans
  • Bridge Loans

Commercial Mortgage Calculator

Property or loan details

Error: Property must be valued at £50,000 or more.

Error: Estimated rental income must be between £1 and £99,999.

Based on your details, you can borrow up to: £0

This calculator is an estimation of how much you could borrow. If you’re ready to take out a mortgage, speak to a Revolution brokers to see what options are available.

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When are commercial mortgages used??

Commercial mortgages are often considered a better option than simple business loans. Business loans of about £25,000 are often unsecured but when it comes to bigger amounts, lenders require security to reduce the financial risk.

Business mortgages can last up to 25 years with a 70-75% mortgage. This loan-to-value ratio is to check how much you can borrow related to how much the property is worth. If you are looking at an investment, the amount will essentially be determined by the rental income that is generated by the investment but never above 65% of the purchase price.

What are the key features of a commercial mortgage??

A commercial mortgage, which is used to finance the purchase or refinance of commercial real estate, has several key features that differentiate it from residential mortgages:

  1. Loan Amount:
    • Typically higher than residential mortgages due to the higher value of commercial properties.
    • Can range from a few hundred thousand to several million pounds.
  2. Loan Term:
    • Generally shorter than residential mortgages.
    • Common terms are 5, 7, 10, 15, or 20 years, with longer amortization periods possible.
  3. Interest Rates:
    • Can be fixed or variable.
    • Variable rates fluctuate based on market conditions and are often tied to an index like the Prime Rate or LIBOR.
  4. Loan-to-Value Ratio (LTV):
    • The ratio of the loan amount to the appraised value of the property.
    • Lower LTVs (60-80%) are common, meaning borrowers need to contribute more equity.
    • Lenders often require a DSCR of 1.2 or higher.
  5. Types of Properties:
    • Can finance various property types, including office buildings, retail spaces, industrial properties, multi-family units, and mixed-use developments.

Understanding these key features helps borrowers navigate the commercial mortgage process and choose the best financing options for their commercial real estate investments.

What are the pros and cons of commercial mortgages??

Commercial mortgages offer businesses and investors the opportunity to finance the purchase, refinance, or development of commercial real estate properties. These mortgages come with distinct advantages and disadvantages that can significantly impact the financial health and strategic decisions of the borrower. Understanding the pros and cons of commercial mortgages is crucial for making informed decisions, whether you're looking to expand your business operations, invest in income-generating properties, or secure long-term financing for commercial projects.


  • Tax-deductible interest
  • The capital can increase if your property increases in value
  • Ability to rent out the property and earn extra income


  • A bigger deposit is often required upwards of 30%
  • Multiple fees are attached to the mortgage
  • The process can be lengthy

What fees will I pay on a business property mortgage??

When obtaining a business property mortgage, borrowers should be prepared for various fees that can significantly impact the overall cost of the loan. These fees are typically associated with the application, processing, and closing stages of the mortgage and are essential to cover the lender's costs and mitigate risks. Understanding the range and purpose of these fees is crucial for accurate financial planning and ensuring that the total cost of financing aligns with your business's budget and investment strategy.

Arrangement fees

Arrangement fees are added to the loan amount once the loan is approved. Some lenders tend to request these fees earlier in the process as a cover for their work in case the offer is not accepted by the business owners. These fees can vary from 1%-2% of the loan amount to £1 million.

Arrangement fees are typically added to the loan after the loan is approved. However, some lenders may request the arrangement fees earlier to cover their work if you don't accept their offer. Arrangement fees are usually 1% -2% of the loan amount for loans up to £1 million.

Valuation Fees

Valuation fees are paid after the valuer visits the property and establishes the true value of the property. These valuations start at around £500 and the costs are calculated individually.

Legal Fees

Legal fees are often paid twice since as a business owner, you will have to pay your own but also the lender’s fees which can start from £500.

Broker fees

Broker fees are paid to the brokers that advise you through your mortgaging process and their services are often 1% of the loan value.

How is interest paid on a commercial mortgage??

Commercial mortgages are usually paid with a variable rate of X% of the LIBOR base. Fixed-rate mortgages are only available for under £500,000 with the lender taking the risk. The rates however are not determined from the offset since lenders have a high risk profile.

How do you choose the best commercial mortgage??

Since a commercial mortgage is quite complex. it’s a good idea to consider which mortgage to opt for carefully.  Choosing the best commercial mortgage is a critical decision for any business or real estate investor, as it can significantly affect the financial health and success of the venture. Here are a few factors you might want to keep in mind: 

Bad Credit

You can apply for a commercial mortgage even with a bad credit rating, however, paying the interest would mean spending it on a higher end to make up for the anticipated risk lenders take.

Secured Loans

Commercial mortgages are type of secured loan where the property is used as collateral against the loan.


Checking affordability before going on the mortgage journey is essential. Deposits for these mortgages can be expensive so it is a good idea to make sure you will be able to pay the repayments.

What are my alternatives to business mortgages??

There are many alternatives to fund your business if a commercial mortgage is not for you. Some of them include:

  • Bridging Loans – a type of loans to help business owners to complete the purchase of a property before managing to sell their existing property
  • Short-term loans – can help with funding without making long-term commitments and are often used as a financial relief
  • Personal loans – can be used to acquire £1,000 to £25,000

How to find the best commercial mortgage option with Revolution Brokers ?

Getting a commercial mortgage with the help of our experts can be really straightforward. Here’s what you should do:

1.     Apply online

You are just one click away from finding the best mortgage deal for you. Fill out the form on our website and you will get to talk to one of our experts who can guide you through the process.

2.     Discuss offers

Once you fill the form, you can discuss offers and go through some of the mortgage options before you officially accept the offer.

3.     Accept the offer

The last step is to accept the offer and get the needed funds for your business.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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Frequently Asked

The best commercial mortgage broker, or mortgage advisor, works on behalf of businesses to help them find the most affordable and competitive mortgage products.

Here at Revolution, we work with companies looking for the best commercial mortgage for a wide range of reasons, such as:

  • Purchasing a new trading premise or office space.
  • Buying a property to let out as a commercial rental unit.
  • Investing money in property as an asset.
  • Remortgaging an existing commercial mortgage onto a better rate.

UK commercial mortgages are unregulated, which means there are thousands of products offering a vast range of interest charges, arrangement fees and terms, so having a broker on your side is essential if you want to achieve the best commercial mortgage rates going.

Our team assesses your requirements and then scours the market to compare the most appropriate mortgages from our UK-wide network of lenders.

As a whole-of-market broker, we provide access to the best commercial mortgage options out there, including broker-exclusive deals you won't find on the open market.

Familiarising yourself with the fee structure is beyond vital. Before you proceed with a commercial mortgage application, you need to know that you are comfortable with the costs, and the regular repayments or interest you'll be charged.

Mortgage broker fees for a the best commercial mortgage loans are usually about 1%, although that depends on several factors:

  • The value of the commercial mortgage.
  • Whether you're mortgaging or remortgaging.
  • If the mortgage is for one property or an extensive portfolio.
  • The nature of the financing itself.

For example, if you're looking to buy a commercial property at auction, we might recommend bridging finance to ensure you have the funds in place well before the 28-day payment deadline.

You'd then need the best commercial mortgage as your exit strategy, and so facilitating a spliced mortgage product, and aligning the repayment of the original auction finance, would require more work than arranging a standalone commercial mortgage.

If you're interested in comparing the best commercial mortgage broker fees or seeing our indicative charges for your commercial property purchase, please give us a call at your convenience!

However, it's worth noting that with such a vast lending market, you'll almost always save thousands of pounds having a broker negotiate your rates for you, making the cost of hiring an experienced commercial mortgage broker far less than the savings on offer!

The exact payment process for arranging your commercial mortgage really depends on the type of lending you need and the best commercial mortgage suited to your business.

Some lenders include brokerage fees within their product packages, in which case you might not incur any substantial costs to organise your borrowing account.

In other cases, we offer a fixed rate or a set percentage of the total value you need us to arrange for you, which we'll always disclose and agree on up-front before any work begins.

Average UK commissions for the best commercial mortgage products range between one and six per cent of the loan value, again dependent on the size of the borrowing and the complexity of the application.

Deposit requirements vary between lenders, as do their interest rates and the terms on offer.

Mortgage lenders will look at several factors in deciding whether to accept your application. Having a larger deposit is advisable if there are any risk factors, such as a history of bad company credit.

Usually, you'll require at least a 20% deposit as an absolute minimum but will achieve better rates with 40% or above.

The lender won't typically have a fixed deposit requirement but might have a minimum threshold on the best commercial mortgage products, generally around 30% on average.

They will also assess the Loan to Value, which evaluates how much you want to borrow against how much the property is worth.

For example, a commercial building worth £500,000 requiring a mortgage of £300,000 is an LTV of 60%, so a 40% deposit will mean you have negotiating power when it comes to rates.

Yes, you can! Every commercial mortgage lender will assess each application on a case-by-case basis.

The most common reason for mortgage rejection is that you've applied to a bank with criteria you don't meet or where they don't offer a commercial mortgage of the kind you're applying for.

For example, the lender might have a threshold deposit requirement or not sell commercial mortgages for the type of property you wish to buy.

There is no reason a great broker can't help you find the best commercial mortgage after refusal from another bank - one lender might be more than happy to approve an application that another hasn't accepted.

Your commercial mortgage rates won't necessarily increase after one rejection, either.

Working with Revolution is the ideal way to ensure your application for the best commercial mortgage product is structured to mitigate any perceived risks and improve your chances of approval.

The best commercial mortgage products can be either repayment or interest-only. The format works just the same as for a residential mortgage:

  • Interest-only means you pay only the interest in your regular payment and will need an exit strategy to show how you'll pay back the original balance at the end of the term. That could be through remortgaging or selling the property, for example.
  • Repayment means you pay a proportion of the capital and the interest charge every month. When the mortgage term ends, you own the property and have nothing left to pay.

However, fewer lenders offer the best commercial mortgages interest-only and rates can be higher, so it's essential to work with a broker to identify those deals and get your application over the finish line.

Most interest-only commercial loans require a deposit of at least 25%. While your monthly payments will be lower, you will probably end up paying more interest overall across the lifetime of the mortgage.

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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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