Warehouse purchase and investment finance

How much can you borrow on a warehouse purchase?

Most lenders advance up to around 65 to 75 percent loan to value (LTV) on a commercial mortgage secured on a let warehouse or industrial unit. The exact figure is set by the rental income the building produces and the strength of the tenant. A modern unit let on a long lease to a strong covenant tends to reach the top of that band, while older stock or a short unexpired term sits lower.

The headline LTV is only half the test. A lender also sizes the loan so the rent covers the payments with a margin, often looking for interest cover of around 130 to 160 percent of the debt service. Where the yield is keen and the income thin against the price, the debt service test, not the LTV, sets the final loan. We model both so you know your real ceiling before you offer on the asset.

What deposit do you need?

Because the commercial mortgage usually tops out around 65 to 75 percent LTV, you should plan to put in roughly 25 to 35 percent of the purchase price as a deposit. On a let industrial unit bought for investment, a stronger tenant covenant and a longer lease push the advance up and the deposit down, while a weaker income or older building works the other way.

Remember the deposit is not the only cash you need at completion. Stamp duty on commercial property, legal fees, valuation, the arrangement fee and any survey costs all sit alongside it. We set out the full cash requirement early so there are no surprises, and where you hold other property we can look at whether equity there reduces the deposit on the warehouse.

What does a lender want to see?

A lender underwrites the income first. It will want the lease or tenancy schedule, the passing rent, the unexpired term and any break clauses, plus a read on the tenant covenant. For a multi-let estate it looks at the spread of tenants and the weighted lease length, since one strong occupier carrying the whole rent is riskier than several.

Alongside the asset, the lender assesses you as the borrower. It will look at your experience holding or running industrial property, the structure you are buying through, and your wider assets and income. A clear plan for the warehouse, whether you are letting it as an investor or trading from it as an owner-occupier, makes the commercial mortgage straightforward to place.

Which warehouses and industrial units qualify?

Lenders fund a broad range of standard industrial and logistics property: single-let distribution warehouses, multi-let trade estates, light industrial units, last-mile logistics boxes and yards. What matters most is that the building is lettable and the location supports ongoing tenant demand, since both underpin the rent and the eventual remortgage.

More specialist assets, very old stock, heavily contaminated sites or single-purpose buildings designed around one occupier can narrow the field of lenders and the LTV on offer. We know which funders lean into which asset types, so we steer each warehouse to the lender most comfortable with it rather than testing the market blind.

Can you refinance or remortgage later?

Yes. A purchase today is rarely the end of the story. Once you hold the warehouse and the income is settled, you can remortgage onto a keener commercial mortgage, release equity to fund the next acquisition, or move from a short fixed period onto a new rate and term. We arrange these refinances as readily as the original purchase.

A remortgage is sized the same way as a purchase, on tenant covenant, lease term, yield and loan to value (LTV). If the rent has grown or you have re-let the industrial unit on stronger terms, the building may now support a larger advance or a lower rate. We review the whole market at each refinance rather than rolling onto whatever the existing lender offers.