How to get a commercial mortgage

A commercial mortgage is a loan secured on a property used for business, whether you occupy it yourself or let it to a tenant. Getting one is a process rather than a single decision, and it runs from assessing whether the deal stacks up, through choosing the right lender, to valuation, legal work and completion. We arrange commercial mortgages across the UK, and as an introducer rather than a lender we guide the case through each stage and take it to the lenders most likely to say yes on good terms.

This guide explains how to get a commercial mortgage step by step: what lenders look for, how much deposit you need, how the application and valuation work, and how long the whole thing takes. We also answer the questions borrowers ask most often, including whether commercial mortgages are harder to get than residential ones and whether a one hundred percent loan is ever realistic. The aim is to show you what good preparation looks like, because a well-presented case is the difference between a sharp offer and a cautious one.

What do lenders look for in a commercial mortgage application?

A lender assessing a commercial mortgage is judging whether the loan will be repaid, and it builds that judgement from a few clear pillars. The first is the income behind the loan: on an owner-occupier deal the trading profit of the business that uses the building, and on an investment deal the rent the tenant pays and the strength of that tenant. The lender tests whether this income comfortably covers the mortgage repayment with room to spare, because a thin margin is the most common reason a case is declined.

The second pillar is the deposit and the resulting loan to value. A borrower putting in a larger deposit presents less risk, and a lender will lend more readily and at a sharper rate where its exposure is lower. The third is the property itself, because the building is the security: a standard, easily resold asset such as a modern warehouse or industrial unit is preferred over an unusual one that would be hard to sell if the loan failed. The fourth is the borrower, including credit history, sector experience and the credibility of the plan, and where the borrower is a limited company, the lender looks at the company structure and usually takes a personal guarantee from the directors behind it.

None of these stands alone. A lender weighs them together, so a strength in one area can offset a weakness in another, and a borrower with a modest deposit but exceptional income may still secure a deal. Our job is to read which lenders weight these pillars in a way that suits the particular case, then present the proposal so each pillar is shown at its strongest.

How much deposit do you need to get a commercial mortgage?

You usually need a deposit of around twenty-five to forty percent of the property's value, which corresponds to a loan to value of sixty to seventy-five percent. Owner-occupier deals tend to sit at the lower-deposit end because the lender takes comfort from the trading income, while investment deals often need a larger deposit because repayment depends on a tenant continuing to pay rent. There is no minimum fixed in law, so the figure is a commercial judgement that varies from one lender to the next.

The deposit does more than unlock the loan: it shapes the interest rate. A larger deposit means a lower loan to value, which means less risk and a keener rate, and it also opens up lenders whose best products are reserved for lower loan to value lending. A borrower planning a purchase should therefore think about the deposit and the rate together, because finding a little more equity can pay for itself several times over across a long term.

Beyond the deposit, a buyer needs cash for the costs that surround the purchase, including stamp duty land tax on commercial property, legal fees, a valuation fee and the lender's arrangement fee. We set out the full cash requirement early so the deposit is planned alongside the costs, not in isolation, and a buyer who has the deposit is not caught short at completion.

How do you apply for a commercial mortgage step by step?

The process starts with preparation. Before approaching any lender, a borrower should gather recent business accounts, bank statements, details of the property, and a clear note of the deposit and its source. With a tenanted investment purchase, the lease and details of the tenant are central. Good preparation at this stage is the single biggest influence on how smoothly the rest runs, because a lender given a complete, well-ordered case forms a positive view from the outset.

Next comes lender selection and an agreement in principle. We match the case to the lenders most comfortable with the property type, the deposit and the income, then secure indicative terms so the borrower knows the likely rate and loan to value before committing. Once a lender is chosen, a full application follows, the lender instructs a valuation of the property, and an underwriter reviews the case in detail and may ask follow-up questions.

After the valuation supports the loan and the underwriter is satisfied, the lender issues a formal mortgage offer setting out the rate, the loan to value, the term and the conditions. Solicitors on both sides then handle the legal work, including the property searches, the title and the charge the lender takes over the building, before the loan completes and the funds are released. We stay involved through each step, chasing the valuation, answering the underwriter's queries and keeping the solicitors moving, so the case does not stall in the gaps between stages where so much time is otherwise lost.

How long does it take to get a commercial mortgage?

A commercial mortgage typically takes somewhere between six and twelve weeks from application to completion, though a straightforward case with a well-prepared borrower can move faster and a complex one can take longer. The timeline is rarely held up by the lender alone: the valuation, the legal work and the speed with which the borrower returns information all play a part, and a delay in any one of them stretches the whole process.

The valuation is often the first real checkpoint, since the lender will not issue a formal offer until the surveyor has confirmed the property supports the loan. The legal work is frequently the longest single stage, particularly where the title is complicated, there are leases to review, or searches come back slowly. A borrower who responds quickly to requests and instructs a solicitor experienced in commercial property keeps the case moving.

Where speed matters, for example a purchase with a fixed deadline or an auction completion, a commercial mortgage may be too slow and a bridging loan can fill the gap, with the commercial mortgage arranged afterwards to repay it. We flag this early where the timeline is tight, so the funding route matches the deadline rather than the borrower discovering halfway through that the clock will not allow it. Planning the timeline at the outset, and lining up the documents and the solicitor before they are needed, is the surest way to keep a commercial mortgage to the shorter end of the range.

Are commercial mortgages harder to get than residential ones?

Commercial mortgages are not necessarily harder to get, but they are assessed differently, and that difference catches out borrowers who expect a residential-style process. A residential mortgage is largely scored against income and credit using standard criteria, whereas a commercial mortgage is underwritten case by case, with the lender forming a judgement on the business, the property and the deal as a whole. There is more discretion, which cuts both ways: a strong case can be rewarded, but a borderline one needs to be argued.

Because the assessment is individual, presentation matters far more than it does in residential lending. The same deal can be declined by one lender and welcomed by another depending on each lender's appetite for the property type and the way the case is put. A borrower approaching a single bank may conclude that commercial mortgages are difficult, when in truth the case simply landed with the wrong lender for that asset.

This is where an introducer earns its place. We know which lenders are comfortable with a given property and income profile, and we present the proposal so the lender sees the strengths clearly and has its likely questions answered in advance. The difficulty borrowers attribute to commercial mortgages is usually a mismatch between the case and the lender, and that is exactly what good placement removes.

What documents do you need to get a commercial mortgage?

The paperwork behind a commercial mortgage is more involved than for a residential loan, because the lender is assessing a business and a property rather than a salary. For most cases a borrower needs two or three years of business accounts, recent business bank statements, details of the property being bought or refinanced, and evidence of the deposit and its source. Where the borrower is a limited company, the lender will also want to understand the company structure and the directors behind it, and a personal guarantee from those directors is common.

On an investment purchase the lender adds the lease and tenant information to the list, since the rent is what repays the loan. A copy of the lease, details of the tenant and their covenant, and a record of the rent received all support the case, and a property already producing reliable rent is far easier to fund than one standing empty. Where the building is to be owner-occupied, a short note on the business, its trading history and how the premises fit its plans helps the lender see the purpose clearly.

Getting these documents in order before approaching a lender is the single most effective thing a borrower can do to speed up the process and improve the terms. A complete, well-ordered file lets an underwriter form a positive view quickly, while a case that arrives piecemeal invites delay and doubt. We tell each borrower exactly what their particular case needs at the outset, then assemble it into a clean proposal, so the lender receives a finished picture rather than a work in progress.