Commercial Mortgages UK 2026: Rates, Lenders & Criteria
Looking for a commercial mortgage? Compare current UK rates, LTVs and lender criteria for owner-occupied and investment property, and see how a whole-of-market broker places hard cases.
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Commercial mortgage rates, terms and lender appetite vary widely, and most deals are negotiated case by case around your specific borrowing needs. That is why finding the right lender, at the best rate, can be difficult without a whole-of-market broker who knows which lenders to approach.
In this market, high-street banks usually prefer to focus on institutional borrowers with established accounts and conventional property types. A separate market of lenders exists for those who need specialist sectors or complex ownership structures.
In these scenarios, a whole-of-market broker who understands the requirements and knows which lender to approach is vital, especially if your case involves adverse credit, a start-up business, semi-commercial property, or any structure that high street banks will not finance. At ABC Finance, we work across the full spectrum of commercial mortgage lenders to place your case with the lender most likely to say yes, on the best terms possible.
Commercial Mortgages at a Glance, Updated April 2026
Typical LTV
60% to 75% of property value (up to 80% in exceptional cases)
Rate bands
Fixed rates from 5.5% to 7.5%; variable rates from 5.2% to 7.0% (owner-occupied, April 2026)
Decision times & fees
Credit-backed terms in 24 to 48 hours; full completion in 4 to 8 weeks; arrangement fees typically 1% to 2%
What is a Commercial Mortgage?
A property intended for commercial use, either for your own business or as an investment for rental income, requires a commercial mortgage.
Unlike residential mortgages, where rates depend largely on property location, the borrower’s income and credit worthiness, a commercial mortgage is assessed on the potential income the property is likely to generate, or the performance of the current business occupying the premises.
There are two main types. It could be a business buying property for its own use (owner-occupied), or an investor purchasing property to let out for rental income (commercial investment). Rates, eligibility and documentation vary for each.
Loans usually run for terms of 3 to 25 years, and in most cases lenders offer no more than 60% to 75% of the property value. Depending on your preferences and eligibility, the lender may offer an interest only or a capital repayment plan. While most high street lenders offer commercial mortgages, they tend to lend only to established borrowers with a strong credit history, and only for simpler property types. If a high street bank has declined you, it does not mean the deal cannot be done. Whole-of-market brokers like ABC Finance serve the rest of the market, matching borrowers with specialist lenders who want these cases.
Commercial Mortgage Rates UK 2026
Commercial mortgage rates in the UK are affected by the type of loan (fixed or variable) and the property use (owner-occupied or investment). For owner-occupied mortgages, fixed-rate loans are offered at about 5.5% to 7.5% as of April 2026, while variable-rate mortgages are normally priced at a margin above the prevailing Bank of England base rate (3.75% at the time of writing).
Standard Variable Rates sit between 6.25% and 8.5%, while tracker rates typically sit at about 6.25% to 6.75% for strong borrowers. Investment properties are generally priced higher for both fixed and variable rates due to their greater risk profile.
Current Commercial Mortgage Rate Ranges, April 2026
| 60% LTV | 70% LTV | 75% LTV | |
|---|---|---|---|
| Owner-Occupied, Fixed | 5.5% – 6.5% | 5.8% – 7.0% | 6.0% – 7.5% |
| Owner-Occupied, Variable | 5.2% – 6.2% | 5.5% – 6.7% | 5.8% – 7.0% |
| Commercial Investment, Fixed | 5.8% – 6.8% | 6.0% – 7.3% | 6.4% – 7.8% |
| Commercial Investment, Variable | 5.5% – 6.5% | 5.8% – 7.0% | 6.2% – 7.5% |
Indicative for April 2026. Rates vary by lender criteria, borrower profile and property type, and are not a mortgage offer. In each band, the lower end is for simple property types and strong borrowers; specialist sectors such as pubs, petrol stations, care homes or agricultural land tend towards the higher end.
How Much Can I Borrow? Commercial Mortgage Calculator
There are three main variables that decide your ability to borrow in a commercial mortgage. These are:
- The property value
- Income potential of the property
- Lender’s stress testing criteria
If the property is going to be owner-occupied, the primary factor will be the performance of the business that is going to reside there. It should be able to generate at least 120-150% of the monthly mortgage payment so that the lender is assured their debt will be serviced.
For commercial mortgages, the lender would assess whether the potential rental income is more than 120-150% of the monthly mortgage payment, stress tested at rates that are 1-2% above actual mortgage rates.
Here is a sample commercial mortgages calculator you can use to run some numbers.
Moreover, here are some examples of how it works in practice:
Assumptions
- Interest rate: 6.5%
- ICR requirement: 125% (minimum) to 135% (typical)
- Basis: Interest-only
- LTV: 75%
- Formula: Max loan = (Annual income ÷ ICR) ÷ interest rate
| Annual Net Profit / Rental Income | Max Annual Interest Allowed (÷ ICR) | Max Loan This Supports | Max Loan at 75% LTV | Loan You Can Actually Borrow |
|---|---|---|---|---|
| £25,000 | £18,519 – £20,000 | £285,185 – £307,692 | £300,000 (£400k property) | £285,185 – £300,000 |
| £40,000 | £29,630 – £32,000 | £456,296 – £492,308 | £450,000 (£600k property) | £450,000 – £456,296 |
| £60,000 | £44,444 – £48,000 | £684,444 – £738,462 | £600,000 (£800k property) | £600,000 |
| £80,000 | £59,259 – £64,000 | £912,593 – £984,615 | £750,000 (£1m property) | £750,000 |
| £120,000 | £88,889 – £96,000 | £1,367,890 – £1,476,923 | £1,125,000 (£1.5m property) | £1,125,000 |
As you can see, in the £60,000, £80,000 and £120,000 net profit cases, the LTV cap decides the loan size. But in the first two rows, it is the income test that becomes the key criteria. Typically, on investment properties where rentals are lower, the income constraint becomes the deciding factor.
At ABC Finance, we run these numbers with you before approaching any lender, so you have a clear picture of what’s achievable before the application goes in.
Types of Commercial Property Finance
Commercial property finance broadly splits into two segments, based on how the property is used.
Owner-Occupied Mortgages
When you buy a property to trade from, you take out an owner-occupied mortgage. Examples include a manufacturing unit, a retail shop, a restaurant or a doctor’s clinic. With no rental income, lenders use the revenue of the business to assess the application, usually asking for 2 to 3 years of accounts showing you can comfortably cover payments. A few lenders will lend to new businesses, on less favourable terms. The loan can be interest only or capital repayment; interest only keeps monthly costs lower but leaves the full capital outstanding at the end of the term.
Commercial Investment Mortgages
Commercial investment mortgages apply where you let the property to a third-party tenant rather than using it yourself. Offices, industrial units and mixed-use properties often work this way. The lender looks at the likely rental income and whether it covers payments under stress conditions. Lenders favour a strong tenant covenant, such as a government body or long-established business, and long leases with upward-only rent reviews.
Semi-Commercial and Specialist Property
Some properties do not fit neatly into owner-occupied or investment lending. Semi-commercial, or mixed-use, property combines commercial and residential elements, such as a shop with a flat above it, or an office with flats on the upper floors. Most UK lenders require the residential portion to make up at least 40% of the floor area or rental value to treat the property as semi-commercial rather than commercial.
Semi-commercial property can suit investors who want to spread risk across two income streams, but high street banks often decline it because of the added complexity. Specialist lenders are usually a better fit, which is where a whole-of-market broker matters.
Specialist sectors carry their own rules. Pubs, petrol stations, care homes, places of worship and agricultural land each have a smaller pool of lenders, stricter terms, and more detailed underwriting. We place these cases with the lenders who actively want them.
Lending Criteria and Eligibility
Commercial mortgage lending criteria vary a lot by lenders. That said, the following are some of the most commonly specified requirements.
Deposit and LTV
LTVs for commercial mortgages can go as high as 75%, but the most competitive rates are usually offered at 60% or lower. There is a premium charged for higher LTVs as fewer lenders are willing to accommodate that kind of risk. In exceptional cases, it is possible to find lenders who might even go up to 80% LTV, but at a high interest rate.
Business Financials and Accounts
A minimum of two years of trading accounts showing consistent net profits is the usual criteria for owner-occupied mortgages. In case there were losses or there has been a recent decline in turnover, lenders tend to either decline the mortgage or demand additional security.
Apart from the formal accounts, bank statements, SA302s, and management reports are also required by lenders. For limited companies, the balance sheets, debt obligations, and director loan accounts are also examined by lenders.
Lastly, for commercial investment mortgages, lenders usually require rent schedules, tenancy agreements, and lease terms and evidence of past rent payments (if any). For partly let or vacant properties, lenders often demand a letting agent’s opinion of market rent apart from the income assessment.
Property Type
Standard commercial properties like offices, light industrial units, and retail spaces typically have a large pool of lenders and competitive interest rates. For specialist sectors such as hotels, petrol stations, places of worship or care homes, fewer lenders are available, and mortgage terms are stricter with more detailed underwriting.
Borrower Structure
Sole traders, Partnerships, Limited companies, and LLPs can all access commercial mortgages. The most common is limited company borrowing, especially for investment properties. SPVs set up specifically to hold property are generally preferred by commercial lenders, as they simplify underwriting by isolating the property’s income and debts from other business activities. But, regardless of the borrowing entity, personal guarantees from directors are usually necessary in each case.
Credit History
Any kind of adverse credit history, such as defaults, missed payments, CCJs, or insolvencies, usually restricts your options in the commercial mortgage market to a very limited pool of lenders and materially higher rates. That said, some lenders will consider your case if the adverse credit was historic and the rest of the case is strong.
Decision Timelines
Typically, credit-backed terms subject to full underwriting are issued by lenders within 24 to 48 hours, if the case is straightforward. Of course, the full underwriting and legal work takes another 4 to 8 weeks.
At ABC Finance, we compare commercial mortgage lenders and criteria across the whole market to find the lender best suited to your property type, borrower structure, and financial profile, whether you’re buying your first business premises or expanding a commercial investment portfolio.
Commercial Mortgage Fees and Costs
The headline rate is only part of the cost. Budget for the following when you compare commercial mortgage deals:
- Arrangement fee: usually 1% to 2% of the loan, often added to the balance.
- Valuation fee: based on the property value and type, paid up front.
- Legal fees: you normally cover both your own and the lender’s legal costs.
- Broker fee: varies by case, and is disclosed before you commit. At ABC Finance, we do not charge broker fees for applications over £100,000.
- Other fees: some lenders charge a commitment, non-utilisation or exit fee, and early repayment charges can apply on fixed rates.
We set out the full cost of each option before you apply, so there are no surprises later in the process.
Second Charge Commercial Mortgages
A second charge commercial mortgage lets you borrow against the equity in a property you already own, while keeping your existing first charge mortgage in place. The first lender keeps priority and the second charge lender sits behind them, which is why second charge rates are typically higher than first charge rates.
Businesses use second charge borrowing to raise capital without disturbing a low first charge rate, for example to fund expansion, refurbishment or working capital. Lenders look at the combined loan to value across both charges, your equity, and the income that services the debt.
A second charge is not always the right answer. If your current deal is ending, refinancing the whole facility may cost less overall. We compare both routes before recommending one.
Refinancing a Commercial Mortgage
Refinancing means replacing your current commercial mortgage with a new one, either with your existing lender or a new lender. Businesses refinance to secure a lower rate at the end of a fixed period, to release equity for reinvestment, to move from interest only to capital repayment, or to consolidate borrowing.
Timing matters. Early repayment charges on a fixed rate can outweigh the saving, so the figures need running before you commit. We assess your current facility, the available rates and any exit costs, then tell you whether refinancing or staying put leaves you better off.
Alternatives to a Commercial Mortgage
A commercial mortgage is not the only way to fund property or growth. Depending on the timescale and purpose, one of these may suit better:
- Bridging finance: short-term funding to buy quickly or before a sale completes, often refinanced onto a commercial mortgage later.
- Asset finance: funding secured against equipment, vehicles or machinery rather than property.
- Business loans: secured or unsecured lending for working capital and growth, where property security is not needed or available.
- Invoice finance: factoring and invoice discounting to release cash tied up in unpaid invoices.
We arrange all of these across the whole market, so the recommendation is led by your situation rather than a single product.
Regulation and broker framing
ABC Finance is authorised and regulated by the Financial Conduct Authority, and acts as a whole-of-market commercial mortgage broker and adviser. We compare lenders across the entire market, not a limited panel, and we are accountable for the advice we give, whether you are buying your first business premises or expanding a commercial investment portfolio.
Commercial Mortgage FAQs
Rates, fees and borrowing
What fees are involved with a commercial mortgage?
Expect an arrangement fee of around 1% to 2% of the loan, a valuation fee based on the property, and legal fees for both sides. A broker fee may apply and is disclosed up front. Some lenders also charge commitment, exit or early repayment fees.
What interest rate will I pay on a commercial mortgage?
As a guide for April 2026, owner-occupied fixed rates run from about 5.5% to 7.5% and variable rates from about 5.2% to 7.0%. Your rate depends on the loan to value, the property type, and the strength of your business or rental income.
Is there a maximum loan to value on a commercial mortgage?
Most lenders cap commercial lending at 60% to 75% of the property value, with the best rates at lower LTVs. A small number will consider up to 80% in strong cases, at a higher rate.
How much can I borrow?
Borrowing is set by the lower of the LTV cap and the income test. Lenders want net profit or rental income to cover 120% to 150% of the mortgage payment, stress tested 1% to 2% above the pay rate.
Eligibility and options
Can I get a commercial mortgage for a new business?
Yes, though terms are usually less favourable without a trading record. Lenders may ask for a larger deposit, a business plan, or personal guarantees. A broker can identify the lenders most comfortable with start-ups.
Can I get a commercial mortgage on a part-residential property?
Yes. Mixed-use or semi-commercial property is fundable as a mixed use property, usually where the commercial element is at least 60% of the floor area or rental value. Specialist lenders handle these better than high street banks.
What is a second charge mortgage on a commercial property?
It is a loan secured against the equity in a property you already mortgage, sitting behind your first charge lender. Businesses use it to raise capital without disturbing an existing low first charge rate.
Is a second charge mortgage better than remortgaging?
It depends. A second charge protects a good first charge rate, while remortgaging the whole facility can be cheaper overall if your current deal is ending. We compare both before recommending one.
What types of commercial property can be financed?
Offices, retail units, industrial and warehouse space and mixed-use property are all standard. Specialist sectors such as pubs, care homes, petrol stations and agricultural land are fundable through a smaller pool of lenders.
What are the alternatives to a commercial mortgage?
Depending on your aim, bridging finance, asset finance, a business loan or invoice finance may suit better. We arrange all of these across the market.
Will I need an SPV or a personal guarantee?
Many lenders prefer to lend to a special purpose vehicle for investment property, as it isolates the property’s income and debts. Personal guarantees from directors are usually required whatever the structure.
How long does a commercial mortgage take?
Credit-backed terms can come back within 24 to 48 hours on a straightforward case. Full underwriting and legal work then typically takes 4 to 8 weeks to completion.
