Warehouse mortgages

Warehouse mortgages are a form of commercial finance used to purchase, refinance, or raise capital against warehouse and logistics property, including distribution centres, storage facilities, and fulfilment hubs. Warehouses sit within the wider industrial sector and are generally viewed by lenders as low-to-moderate risk assets, supported by strong occupier demand and broad alternative-use potential.

Maximum Loan-to-Value (LTV)

Warehouse mortgages are commonly available at up to 75% loan-to-value, subject to asset quality, location, and income profile. Achievable leverage is influenced by:

• Proximity to major transport links and motorways
• Size, eaves height, loading facilities, and yard space
• Modern specification and ESG considerations
• Lease length and tenant covenant (for investment assets)

Prime logistics warehouses with strong access and modern specifications are most likely to attract maximum LTV.

Affordability and Lending Assessment

Lender assessment varies depending on whether the warehouse is investment-led or owner-occupied.

Investment warehouses are assessed primarily on rental income using Debt Service Coverage Ratios (DSCR), with stress testing applied to ensure rental resilience.

Owner-occupied warehouses are assessed on the trading performance of the business, with lenders reviewing historic accounts, management figures, and forward-looking cash flow projections.

Personal income is typically secondary and used to support the overall credit profile rather than determine loan size.

Valuation Methodology

Warehouse valuations are generally:

• Yield-based for income-producing investment property, reflecting rental tone, lease security, and tenant strength
• Vacant possession-led for owner-occupied facilities, often assuming a 90-180 day marketing period, depending on location and demand

Valuers also consider alternative use potential, ease of subdivision, and re-letting demand.

Interest Rates and Loan Terms

Warehouse mortgage pricing is among the most competitive within commercial property lending due to strong market demand. Pricing is influenced by:

• Loan-to-value ratio
• Income security and lease profile
• Asset quality and location
• Borrower experience and financial strength

Loan terms typically range from 15 to 40 years, with repayment, interest-only, or hybrid structures available depending on lender appetite.

Warehouse mortgage lending criteria

Lenders will closely assess:

• Site access, yard size, and servicing capability
• Planning use class and permitted operations
• Environmental and contamination risk
• Exposure to single-tenant risk on investment assets

Older or highly specialised warehouses may attract more conservative terms.

Warehouse mortgages offer strong lender appetite and competitive leverage, with borrowing commonly available at up to 75% LTV. Well-located, modern warehouse assets with sustainable income profiles are viewed favourably by lenders, making the sector one of the most accessible within commercial property finance.