Commercial mortgages are one of the most misunderstood products in UK property finance. Many investors and business owners assume they work like residential mortgages — they don't. The criteria, pricing, and lender appetite are entirely different, and navigating the market without specialist guidance often results in poor terms, lengthy delays, or outright declines.
This guide covers everything you need to know about commercial mortgages in the UK in 2026 — how they work, current rates, what lenders look for, and how to position your application for the best possible outcome.
A commercial mortgage is a long-term secured loan used to purchase or refinance a property that is not a standard residential dwelling. The term covers a wide range of assets: offices, retail units, industrial premises, hotels, care homes, pubs, and mixed-use buildings with both commercial and residential elements.
Unlike a bridging loan — which is short-term (typically 1–24 months) — a commercial mortgage provides long-term stability, with terms typically ranging from 5 to 30 years. It is the product most investors use once a property is stabilised, income-producing, and no longer requires short-term finance.
💡 Bridge to mortgage: One of the most common use cases we handle is helping investors exit a bridging loan onto a commercial mortgage once a property has been refurbished, let, or stabilised. Getting your exit in place before your bridge expires is critical.
The two main types of commercial mortgage are assessed very differently:
Used to purchase or refinance a property that is let to one or more tenants. Lenders assess the deal primarily on the rental income — specifically whether the rent covers the mortgage payment by a sufficient margin (the Interest Coverage Ratio, or ICR). Strong tenants on long leases command the best terms. Up to 75% LTV is available on well-let investment properties.
Used when a business wants to buy the premises it trades from. Assessed primarily on the financial performance of the trading business — lenders will want to see at least 2–3 years of accounts. Typically up to 70% LTV. These deals require slightly more documentation but can be highly attractive for businesses paying rent who want to build equity in their own premises.
Commercial mortgage rates are quoted as annual rates rather than monthly (unlike bridging), and vary significantly depending on property type, LTV, and borrower profile.
| Property Type | Indicative Rate (2026) | Max LTV |
|---|---|---|
| Prime retail / office — investment | 5.5% – 6.5% p.a. | 70–75% |
| Mixed-use / semi-commercial | 5.75% – 7.0% p.a. | 65–75% |
| Industrial / warehouse | 5.5% – 6.75% p.a. | 65–70% |
| Leisure (hotel, pub, care home) | 6.0% – 8.0% p.a. | 60–65% |
| Owner-occupied commercial | 5.75% – 7.5% p.a. | 65–70% |
| HMO / multi-unit freehold block | 5.5% – 7.0% p.a. | 70–75% |
📊 Rates shown are indicative as of June 2026. Actual pricing depends on loan size, LTV, property type, tenant covenant, and borrower experience. Loans of £1m+ typically attract sharper pricing due to competition between lenders.
Most commercial mortgage lenders will lend up to 70–75% LTV on standard investment property. The stronger the asset and the tenancy, the higher the LTV available. Specialist lenders can sometimes stretch to higher leverage on a case-by-case basis.
For investment properties, lenders stress-test the rental income against the mortgage payment. A typical requirement is that rent covers the interest payment by 125–145%. The higher your rental yield relative to the mortgage rate, the more comfortable the lender will be.
A long lease to a creditworthy national tenant (a supermarket, a government body, a listed company) is viewed very favourably. Short leases, personal guarantees, or tenants with no trading history are harder to place — though specialist lenders do exist for these scenarios.
Lenders assess the borrower as well as the property. Experience in commercial property, a clean credit history, and a solid net asset position all support a strong application. Limited companies, LLPs, SPVs, and overseas borrowers are all accepted by specialist lenders — though the criteria and pricing may differ from a straightforward individual application.
| Detail | Figures |
|---|---|
| Property value | £2,750,000 |
| Loan amount | £2,000,000 |
| LTV | 72.7% |
| Annual rental income | £165,000 |
| Rate (interest-only) | 6.25% p.a. |
| Annual interest cost | £125,000 |
| ICR | 1.32x ✓ |
| Annual net cashflow | £40,000 |
| Arrangement fee (1.5%) | £30,000 |
In this example, the rental income comfortably covers the interest payment at 1.32x — above the typical 1.25x minimum. The deal works and would be competitive with multiple lenders.
High street banks have tightened their commercial mortgage appetite significantly since 2020. They typically require:
If your deal falls outside any of these criteria — and most complex commercial transactions do — specialist lenders are the right route. These are challenger banks, private lenders, and institutional funders who understand commercial property and price for genuine risk rather than turning away anything that doesn't fit a template.
🏦 Declined by your bank? A high street decline does not mean the deal is undoable. Many of our most successful transactions were declined by mainstream banks before we placed them with specialist lenders at competitive rates.
Unlike residential mortgages, interest-only is widely available on commercial mortgages — and is often the preferred structure for investment properties. It maximises monthly cashflow, which matters when you are managing a portfolio, and the expectation is that the loan will eventually be repaid through sale or refinancing rather than capital repayment over time.
Capital and interest repayment is more common on owner-occupied deals, where the business is building equity in its premises over time — similar in logic to a residential mortgage.
A Decision in Principle can typically be obtained within 48 hours. Full completion depends on the complexity of the deal — 4 to 8 weeks is typical, though we have completed straightforward transactions in under 3 weeks and more complex deals can take longer.
Yes — the majority of commercial mortgage transactions we handle are structured through a limited company, LLP or SPV. This is standard practice for property investors and is well understood by specialist lenders.
We arrange commercial mortgages with flexible loan sizes. Below this threshold, lender choice narrows significantly and pricing becomes less competitive. There is no maximum — we have arranged facilities in excess of £50 million.
Yes — this is one of the most common transactions we handle. We can arrange both the bridging finance and the subsequent commercial mortgage refinance, ensuring your exit is secured well before the bridge term expires.
Commercial mortgages are generally not regulated by the FCA (unlike residential mortgages). This gives lenders more flexibility in their criteria and allows specialist lenders to consider deals that regulated products cannot accommodate.
We arrange commercial mortgages with flexible loan sizes across all UK commercial, mixed-use and semi-commercial property types. 48-hour DIP.
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