Commercial mortgages.
A commercial mortgage is secured on business or investment property: premises you trade from, a building you let, or one that mixes the two. For premises you trade from, the lender reads the business before the building. The deposit is usually larger than on a home, and the costs sit on top of it.
Commercial mortgages for business or investment purposes are not regulated by the Financial Conduct Authority.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Written by Nathan Lawes, independent mortgage broker. Figures sourced and dated. Last reviewed .Read them in this order.
Start with what lenders look for, then buying premises, then mixed use and the documents you sign.
- 01 · Start hereCommercial mortgages for small business owners: what lenders actually wantWhat a lender reads first: the business behind the building.Read
- 02 · Buying premisesBuying your business premises with a commercial mortgageThe deposit, the costs on top and the accounts a lender asks for.Read
- 03 · Mixed useSemi-commercial: buying a shop with a flat aboveA shop with a flat above, and what decides whether the loan is regulated.A mixed-use mortgage can be regulated where at least 40% of the property, measured across the floor areas of each storey, is used or intended to be used as a home. In practice that matters where you or a close family member (a spouse or partner, parent, child, sibling, grandparent or grandchild) live there: where the residential part is let to a tenant, the loan is usually an investment property loan, which sits outside the regulated regime for a separate reason. Borrowing through a limited company sits outside it too, because the test applies to credit provided to an individual or to trustees. It turns on the specific building, who is borrowing, and who lives there, so ask us.Read
- 04 · PracticalitiesPersonal guarantees on commercial mortgages: what they meanWhat a personal guarantee is, and the questions for your solicitor.Read
- 05 · DevelopersWhy developers keep hitting the same funding wallHow a funding request is read, and the gaps lenders notice.Read
Is a commercial mortgage regulated?
Commercial mortgages for business or investment purposes are not regulated by the Financial Conduct Authority. A building with somewhere to live in it can be a different matter: whether that loan is regulated turns on the building, who is borrowing and who lives there.
How much deposit will I need?
Commercial lenders usually lend a lower share of the property’s value than on a home, so the deposit is larger. Valuation, legal fees, lender fees and stamp duty sit on top of it rather than inside it.
What will a lender look at first?
For premises you will trade from, the business: your accounts, trading history and profit, and whether the business can meet the payments alongside its other commitments. For a property you let, the lease and the tenant.
Will I have to give a personal guarantee?
When a limited company borrows, lenders usually ask the directors for one. Its scope is sometimes negotiable, and the wording is a legal question: take it to a solicitor before you sign.
Where to go next
- ServiceCommercial mortgages with LawesOwner-occupier, investment and semi-commercial, and how we work.
- Related guideBridging finance: a guide in reading orderWhat bridging costs, how long it takes, development finance.
- Talk it throughA 20-minute call with NathanNo obligation. We’ll look at the business, the building and which lenders fit.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.