What is the maximum term for a commercial mortgage?

The maximum term for a commercial mortgage is usually up to 25 years, but this can vary depending on several factors, including the type of mortgage, the borrower’s profile, and the property itself.

For owner-occupied commercial mortgages, where a business is purchasing premises to trade from, lenders are often willing to offer the full 25-year term especially if the business is financially stable and the property is standard, such as an office, shop, or light industrial unit.

For commercial investment mortgages, where the property is being let to a tenant, the length of the lease can directly impact the loan term offered. Lenders generally prefer the lease to run for at least as long as the mortgage term, or close to it, to ensure there’s sufficient rental income to cover repayments. If the lease is short or close to expiry, lenders may limit the loan term or request additional security.

Another important factor is the borrower’s age. For sole traders, partnerships, or director-led companies, lenders often consider the age of the individual borrowers or directors when setting the term. In many cases, lenders want the mortgage to be repaid by the time the borrower reaches age 70 or 75, which can shorten the term available, especially for older applicants.

While 25 years is generally the upper limit for a commercial mortgage, in practice, the actual term offered may be shorter depending on the lease, property type, borrower’s age, and overall risk.