A commercial mortgage funds the purchase or refinancing of non-residential property for business use including offices, warehouses, retail and mixed-use buildings. Minimum deposit is typically 25% to 35%. Terms range from 3 to 25 years. Interest is typically charged at a variable rate above base rate or as a fixed rate. Most commercial mortgages are not FCA-regulated. Commercial mortgage interest is a deductible business expense (UK Finance, HMRC, Companies Act 2006, 2026). |
| By Chandraketu Tripathi | Updated April 2026 | ||||||||||||||||||||||||
| A commercial mortgage is a loan secured against a commercial property — business premises, an office, a shop, a warehouse, or an investment property. Unlike residential mortgages, commercial mortgages are not regulated by the Financial Conduct Authority (FCA) in the same way, meaning fewer consumer protections apply. Rates are typically expressed as a margin above the Bank of England base rate or SONIA. In 2026, with the base rate at 4.50%, commercial mortgage rates typically range from 6-9%+ depending on the lender, borrower, and property type. This guide explains how commercial mortgages work and how to get the best deal. | ||||||||||||||||||||||||
Key Facts 2026 BoE base rate: 4.50% (March 2026) | Commercial mortgage rates: typically 6-9%+ | Deposit required: typically 25-40% | Not FCA regulated: fewer consumer protections than residential | Always use: a specialist commercial mortgage broker | ||||||||||||||||||||||||
Types of Commercial Mortgage UK | ||||||||||||||||||||||||
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Commercial Mortgage Rates UK 2026 | ||||||||||||||||||||||||
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How Commercial Mortgages Are Assessed UK | ||||||||||||||||||||||||
| Commercial mortgage lenders assess applications very differently from residential mortgages. Key factors: business profitability (typically need 2-3 years of accounts showing sustainable profit); the property as security (location, condition, lettability, value); loan-to-value ratio (typically maximum 65-75% LTV — requiring 25-35% deposit); the borrower's experience in the sector; existing debt commitments; and rental income yield for investment properties (typically assessed at 125-150% of mortgage payment). Newer businesses and those with complex income structures (self-employed, multiple companies) face more scrutiny. Most commercial mortgages require a specialist broker as many products are not available directly. | ||||||||||||||||||||||||
Commercial Mortgage Lenders UK 2026 | ||||||||||||||||||||||||
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Frequently Asked QuestionsWhat deposit do I need for a commercial mortgage UK? Commercial mortgages typically require a deposit of 25-40% of the property value — meaning you can borrow up to 60-75% LTV. Owner-occupier mortgages (where your business uses the premises) tend to require 25-35% deposit; investment commercial mortgages (letting to tenants) typically require 30-40%. Stronger applications with established businesses and good profitability may secure better LTV ratios from mainstream lenders. What are typical commercial mortgage rates UK 2026? Commercial mortgage rates in 2026 typically range from 6-9%+ depending on the lender, borrower profile, and property type. Most commercial mortgages are priced as a margin above the Bank of England base rate (4.50% in March 2026). High street banks offer the lowest rates (base + 1.5-2.5%) but have the strictest criteria. Challenger banks offer slightly higher rates with more flexible underwriting. Do I need a broker for a commercial mortgage UK? Yes — a specialist commercial mortgage broker is strongly recommended. Many commercial mortgage products are not available directly and require broker introduction. Brokers understand which lenders are most likely to accept your specific profile, can access the full market including specialist and challenger bank products, and can present your application in the most favourable way. Broker fees are typically 1-2% of the loan amount; some charge a fixed fee. How long does a commercial mortgage take to arrange UK? Commercial mortgages typically take 6-12 weeks from application to completion, compared to 8-16 weeks for residential mortgages. Complexity and lender workload affect timescales. Development finance and bridging loans can be arranged more quickly (2-4 weeks) if needed. Have full accounts for the past 2-3 years, management accounts, business plan, and property details ready to speed up the process. | ||||||||||||||||||||||||
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| Sources: Bank of England, Barclays, HSBC, Aldermore, Shawbrook, United Trust Bank, NACFB, Which?. Always compare. April 2026. |
