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At ABC Finance Ltd we work with lenders across the market to secure the best possible terms for our clients. Read through our in-depth hub to find out everything you need to know when searching for a commercial mortgage. Whether you’re taking the first steps to understand the process and criteria, or looking to proceed and want to compare the latest products, we can help.

What Is A Commercial Mortgage?

A commercial mortgage is a type of loan used to fund the acquisition or refinance of commercial property. They can be used to fund a wide variety of property types including full commercial or mixed-use properties and even land.

Commercial mortgage lenders tend to take an individual view to assessing applications, meaning criteria is often more flexible. This allows lenders to consider a wide variety of ‘out of the ordinary’ scenarios without issue.

What is your Process & Criteria?

Enquire online or call us now to talk to a commercial mortgage expert. We’ll ask some basic questions and send you terms within 2 hours.

We work with lenders across the market to secure you the best deal. Working with a wide range of lenders allows us to be as flexible as possible in our criteria. Most lenders will assess applications based on your credit history, income and the deposit you have available.

Find out more here.

Latest Products

Compare commercial mortgage rates from the leading lenders across the whole market.

Product CM0001 - Apply Now
Interest Rate
2.75%
Rate Type
Variable
Lender Fee
1.50%
Max LTV
80%
Min-Max Loan
£2,000,000 - £80,000,000
Property Type
Mixed Use Or Commercial
Own Occ/Investment
Owner Occupied
Max Term (Years)
20
Repayment Or Int Only
Repayment
Product CM0002 - Apply Now
Interest Rate
2.85%
Rate Type
Variable
Lender Fee
1.50%
Max LTV
65%
Min-Max Loan
£1,000,000 - £80,000,000
Property Type
Mixed Use Or Commercial
Own Occ/Investment
Investment
Max Term (Years)
15
Repayment Or Int Only
Repayment
Product CM0003 - Apply Now
Interest Rate
3.00%
Rate Type
Variable
Lender Fee
1.50%
Max LTV
80%
Min-Max Loan
£500,000 - £2,000,000
Property Type
Mixed Use Or Commercial
Own Occ/Investment
Owner Occupied
Max Term (Years)
20
Repayment Or Int Only
Repayment
CLICK HERE TO COMPARE MORE MARKET LEADING PRODUCTS

Everything You Need To Know About Commercial Mortgages

Navigate below to find out more about commercial mortgages. We cover everything from guides, calculators, FAQs and jargon busters, to information on rates and criteria, and everything in between.

Key Benefits of Commercial Mortgages

There are several key benefits to taking out a commercial mortgage, including:

  • The interest paid on your commercial mortgage is tax-deductible.
  • Commercial mortgage lending is much more flexible than it was a few years ago due to the rise of challenger banks.
  • Using a commercial mortgage to purchase commercial property could see you benefit from increases in the property value.
  • Investing in commercial property could produce higher yields than investing in residential property.

Commercial Mortgage Rates

We offer market-leading terms for almost every situation:

Owner-Occupied

  • Rates from 2.25%
  • No broker fees for loans over £100,000
  • Borrow up to 80% Loan To Value (LTV)
  • Fixed and variable rates available
  • Interest-only or capital repayment

Commercial Investment Mortgages

  • Rates from 2.85%
  • No broker fees for loans over £100,000
  • Up to 75% LTV
  • Commercial or mixed-use properties
  • Borrow for up to 25 years
  • Interest-only or capital repayment

We offer a totally transparent service, providing expert advice and giving you the information that you require to compare the latest rates and choose the right product.

What Fees Will I Have To Pay?

We work hard to save you money on your commercial mortgage application. It’s not usually possible to avoid all fees, below are some of the common fees you can expect to pay:

Lender Arrangement Fee

Arrangement fees are often charged as a percentage of the loan. Lender arrangement fees range from 1-2% but are usually between 1.5-2%. Although some lenders will expect some of the fee to be paid on offer, it is usually possible to add the fee to the loan.

Broker Fees

Most brokers will charge broker fees for arranging a commercial mortgage – often upwards of 1% of the loan. We don’t usually charge a broker fee for loans over £100,000.

Some brokers will also charge an upfront administration fee before working on your application. We never charge upfront fees to work with you on your application.

Valuation Fees

As with a residential mortgage, a valuer will inspect the property and produce a report for the lender. The fee is usually paid partway through the process, before the offer and the cost will vary based on the type, value and location of the property.

Legal Fees

Most lenders will expect you to cover both your own and their legal fees concerning the loan. The cost of legal work is higher than those associated with residential mortgages. The fees charged will vary depending on the loan size, property value and complexity of the transaction. Legal fees are usually quoted on a case by case basis.

What Are The Key Features of a Commercial Mortgage?

We work with lenders across the entire market to secure the best possible deal. As a result, we can offer you the following:

  • A choice between fixed or variable rates
  • We can arrange borrowing for almost any property
  • Choose any term from 1-25 years
  • Interest-only and capital repayment mortgages available
  • Market-leading rates and no broker fees for loans over £100,000

Apply For a Commercial Mortgage Now

When looking to apply for a commercial mortgage it’s best to collect the required information upfront. For most applications, the following documents will be required:

  • 3-6 months bank statements
  • A fully completed application form
  • A detailed assets and liability summary
  • 3-6 months business bank statements (for owner-occupied applications)
  • 2 years trading accounts (for owner-occupied applications)
  • A copy of leases and tenancy agreements (for investment applications)

Are There Different Types of Commercial Mortgage?

Yes, broadly speaking there are 2 different types of commercial mortgage, they are:

Owner Occupied

Owner-occupied commercial mortgages are used when a property is being purchased for the buyers own business to trade from. This includes transactions where a company lets to another company with the same or some shared shareholders or directors.

Commercial Investment

Commercial investment applications are used when a commercial property is being let to another, unrelated business to trade from. Commercial investment mortgages are the commercial equivalent of a residential buy to let mortgage.

Working with ABC Finance Ltd.

At ABC Finance we have an experienced and highly knowledgeable team of specialist advisors. By selecting us as your commercial mortgage broker your application will be in safe hands. We make sure all the enquiries we receive are managed carefully. It’s crucial that every client understands the process, feels comfortable and receives the answers they need quickly and in an easy to understand manner. We’ve been established since the year 2000 and are fully FCA regulated, which means you can rely on us when seeking impartial commercial mortgage advice. Unlike most commercial mortgage brokers, we offer direct access to leading specialist lenders in the market, meaning you can avoid expensive packager fees. Removing that additional layer from the process allows us to pass on the savings directly to you.

TALK TO AN EXPERT NOW

Commercial Mortgage Example

A client is looking to purchase a high-quality office building and intended to relocate his profitable business to trade from the new building. This will allow the client to expand the business and increase profits further.

The building will cost £1,000,000 and he is looking to borrow 70% LTV (£700,000). The client is happy to take the mortgage on a capital repayment or interest only basis over 20 years and wants the lowest possible rate and is not concerned if this it is variable.

Purchase Price£1,000,000.00
Loan Requested£700,000.00
Net LTV70%

Depending on the strength of both the applicant and the business, we would be able to offer this over a term of 20 years on a capital repayment basis without a problem. The lowest rate available for the purposes of this example is 3% per annum, with a 1.5% lender arrangement fee.

The client has asked to add this fee to the loan to reduce his out of pocket expenses while moving the business. This leaves the loan looking like this:

Loan Amount£700,000.00
Arrangement Fee – 1.5%£10,500.00
Loan with Fee Added£710,500.00

The monthly repayments when calculated on a capital repayment basis would be:

Total Loan£710,500.00
Monthly Repayment£3,940.42

The client would also be obliged to pay legal costs and a valuation fee during the application process to progress the application to completion.

Monthly Repayments vs. Total Cost Of Credit

The chosen term will affect the total cost of borrowing the money. If the term is reduced, the monthly repayments will increase, but his total cost would reduce.

This would have to be offset against the affordability of the loan, as if the repayments are too high, they may place a strain on the finances of both the client and the business.

Assuming the interest rate remained the same during the life of the loan and all repayments were made on time, by changing the term, the total interest paid can change dramatically.

Term Chosen5 years10 years15 years20 years25 years
Monthly Repayment£12,766.75£6,860.64£4,906.58£3,940.42£3,369.27
Total Interest (Life of the Loan)£55,505.00£112,776.80£172,684.40£235,200.80£300,281.00

As you can see from the above example, by reducing the term to 15 years from 20 years, the monthly payments increase by £966.16. The flip side to this is that the total interest charged reduced by £64,516.40 over the course of the loan.

The terms of borrowing must be considered carefully to ensure the right balance is reached for your individual circumstances.

about-the-author-gary-hemming

About The Author

This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

Gary Hemming CeMAP CeFA CeRGI CSP  -  
Commercial Lending Director