A guide to commercial mortgages

A commercial mortgage is a loan secured against a non-residential property. This includes offices, retail units, warehouses, factories, pubs, restaurants, care homes, and land. It can also cover mixed-use properties where part of the building is used for business and part is residential, such as a flat above a shop.

Commercial mortgages are available to limited companies, sole traders, partnerships, LLPs, and sometimes individuals buying commercial property as an investment. The structure of the borrowing depends on who is buying and for what purpose.

Unlike residential mortgages, commercial lending is not regulated by the FCA in most cases. This means there are fewer standardised protections, which makes independent broker advice especially important to ensure you understand the terms and obligations. If you are also considering residential investment, our buy-to-let mortgage guide covers the key differences.

Lenders look at two main factors: the income the property generates (or the business trading from it) and the borrower’s personal financial position. For investment properties, the rental yield must typically cover 125–150% of the mortgage payments, similar to the criteria used for buy-to-let mortgages. For owner-occupied premises, the business must demonstrate sufficient turnover and profitability.

You will need to provide business accounts (usually two to three years), a business plan, cash flow projections, details of existing tenancies or lease agreements, and personal financial information. The more comprehensive your documentation, the smoother the process will be.

Commercial mortgage applications take longer to process than residential ones, often six to twelve weeks. Having your documentation ready and working with a broker who knows the lender’s requirements can speed things up considerably.