Mortgage guide
What is meant by commercial mortgage?
A commercial mortgage is a type of loan specifically designed for purchasing or refinancing property that is used for business purposes.
- Published
- 4 Aug 2026
- Last reviewed
- 4 Aug 2026
- Reading time
- 3 min
What is meant by commercial mortgage?
A commercial mortgage is a type of loan specifically designed for purchasing or refinancing property that is used for business purposes. Unlike residential mortgages, which are for homes people live in, commercial mortgages are used for properties such as offices, retail units, warehouses, factories, or hospitality venues like hotels and restaurants. These loans are typically secured against the property being purchased, meaning the lender can take possession of the property if repayments aren’t made.
Commercial mortgages are commonly taken out by businesses, whether they’re limited companies, partnerships, or sole traders. The loan amounts tend to be much larger than those of residential mortgages, often starting from around £50,000 and going well into the millions depending on the size and value of the property. Loan terms usually range from 3 to 25 years, and interest rates are often higher than residential mortgages due to the increased risk.
There are two main types of commercial mortgages: owner-occupied and commercial investment mortgages. An owner-occupied mortgage is when a business buys premises to operate from, such as a shop, office, or warehouse. A commercial investment mortgage is used when someone buys a property to rent out to other businesses, such as a landlord leasing out a retail unit.
For example, if you run a shop and want to purchase the building your shop operates in, you would apply for a commercial mortgage to help fund the purchase. The mortgage would be secured against the stores premises, and your business would be responsible for making the repayments.
Commercial mortgage calculator
Choose owner occupier for a business buying or refinancing premises it trades from, assessed on adjusted net profit before tax from the latest accounts, or investment for property let to tenants, assessed on lease income.
Commercial mortgage criteria
For context, these are the wider product terms covered by this guide. Availability and eligibility depend on your circumstances and the lender.
| Criteria | Detail |
|---|---|
| Max Loan to Value (LTV) | 80% LTV Care Home Mortgages, 100% LTV Medical Commercial Mortgages, 75% Commercial Investment |
| Max Term | Up to 40 years |
| Completions | From 4 weeks |
| Repayment options | Capital repayment and Interest only |
| Commercial mortgage rates | From 6.19% |
| Rate options | Variable, Base Rate Tracker, 2, 3 or 5 year fixed mortgage options |
| Valuation methods | Going concern/Investment (Market value 1, MV1), MV2, MV3 or bricks and mortar |
| Flexible Leases | Rolling leases, weak covenants and short time remaining accepted |
| Adverse credit | Accepted on some products on a case by case basis |
| Locations | Available in England, Scotland, Wales and Northern Ireland |
| Experience | Not required on certain products |
For context, these are the wider product terms covered by this guide. Availability and eligibility depend on your circumstances and the lender.
| Feature | Detail |
|---|---|
| Max Loan to Value (LTV) | 65% |
| Product fee | 5% (4.74% for existing customers) |
| Fixed rate (5 years) | 6.34% |
Related case studies
Frequently asked questions
Can you get a 90% commercial mortgage?
Yes, 90% loan-to-value commercial mortgages are possible, but only in limited sectors such as healthcare properties, pharmacies, or certain convenience stores with strong trading history. For most other commercial properties, maximum lending is typically capped at around 70% to 75% LTV.
What is a commercial mortgage?
A commercial mortgage is an asset-backed loan secured against commercial, semi-commercial or large-scale investment property. Lenders assess it on income sustainability and asset risk rather than personal income multiples, and pricing is set case by case, usually as a margin over Bank Rate.
What is commercial lending?
Commercial lending refers to loans secured against property used for business purposes, such as offices, retail units, or industrial premises. Terms, rates, and deposits are individually assessed and typically differ from residential mortgages.
What is a commercial bridge?
A commercial bridge is a short-term, property-backed loan used to purchase, refinance, or stabilise commercial or mixed-use property when a standard commercial mortgage is not immediately available. It is exit-driven, typically runs for 3-12 months, uses rolled-up interest, and is repaid through sale or refinance rather than ongoing affordability.
What is a semi-commercial mortgage?
A semi-commercial mortgage is a loan on a property that combines commercial and residential parts, such as a shop with a flat above, and is also called a mixed use mortgage. Lenders assess the combined rental income, the residential proportion and the commercial tenant's lease, or the business where the owner trades from the premises, and it is usually arranged with commercial or specialist lenders. A loan to an individual or trustees is a regulated mortgage contract where at least 40% of the property, measured by floor area, is lived in by the borrower or a related person; otherwise it is usually unregulated business lending.
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