How to get a commercial mortgage a step-by-step guide

If you want to know how to get a commercial mortgage, it helps to start with what one actually is. A commercial mortgage is a loan secured against a property that isn't your own home, typically business premises, an investment property, or a mixed-use building with a shop or office on the ground floor and flats above.

Some properties sit between residential and commercial. If you're looking at a shop with a flat above it, our guide to semi-commercial mortgages explained covers the differences in more detail. Larger houses in multiple occupation are usually financed differently too, through specialist HMO mortgages rather than a standard commercial mortgage.

This guide focuses on the practical steps involved in applying for and getting a commercial mortgage. For a broader look at how commercial mortgages work, including property types and what affects the amount you can borrow, read our commercial mortgages guide.

Before you apply, it's worth understanding what lenders will look at. Commercial mortgage eligibility criteria differ depending on whether you're buying to run your own business from the property (an owner-occupier) or buying it as an investment to let out.

If you're an owner-occupier, lenders will focus on your business's trading history and profitability, since the mortgage is usually repaid from business income. If you're buying an investment property, lenders instead look at the expected rental income and the strength of any existing lease.

If you're buying through a limited company, lenders will also want to see the company's accounts and may ask directors to provide personal guarantees.

Commercial mortgage deposits are typically higher than residential ones. While a residential mortgage might ask for a 5-10% deposit, commercial lenders more commonly ask for somewhere in the region of 25-40% of the property's value, depending on the type of property, the strength of your application, and the lender's own appetite for risk.

This is expressed as the loan-to-value (LTV) ratio, the amount you're borrowing as a percentage of the property's value. A lower LTV, meaning a bigger deposit, generally gives you access to a wider choice of lenders, since it reduces the lender's risk if the property ever needed to be sold. There's no fixed rule here; it's assessed case by case.

To work out roughly how much you'd need in pounds, multiply the property's value by the deposit percentage a lender is asking for. See our full breakdown of how much deposit you'll need for different property types and borrower profiles.

You'll also need to budget for other upfront costs, including valuation fees, legal fees, and stamp duty land tax on commercial property purchases, which is charged at different rates to residential property.

Not all commercial mortgage lenders work the same way, and the right fit depends on your situation. Broadly, you're choosing between mainstream banks, challenger or specialist lenders, and brokers who compare across both.

If you're not sure where to start, our guide to finding the right commercial mortgage broker explains what to look for and the questions worth asking before you commit to one.

Once you know which lenders might suit you, you'll need to think about how the mortgage itself is structured. This affects your outgoings and how much flexibility you have if your circumstances change, so it's worth understanding what affects your commercial mortgage rate before you commit to a structure.

Most lenders start with a Decision in Principle, an initial indication of how much you might be able to borrow based on an outline of your circumstances. This isn't a formal offer, but it gives you a steer before you commit to a full application.

Once you submit the full application with your supporting documents, the lender carries out affordability and credit checks. An independent valuer assesses the property, and the lender's underwriting team reviews the case in detail. Commercial underwriting is generally more manual and bespoke than residential underwriting, which is part of why it takes longer.

Solicitors acting for you and for the lender handle the legal work, including searches and the transfer of ownership. Realistic timescales vary considerably depending on the complexity of the case, but the process commonly takes a few weeks to several months from application to completion.

Once all checks are complete, the lender issues a formal mortgage offer, contracts are signed and exchanged, and funds are released on completion. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it, so it's worth being confident in your ability to meet repayments before you exchange contracts.

Getting a commercial mortgage is generally more involved than getting a residential one. Underwriting is more manual, lenders assess each case individually rather than relying on automated scoring, and you'll typically need more documentation to support your application.

That said, it's very achievable with the right preparation. Having your accounts, bank statements and business plan ready before you apply, understanding roughly what deposit you're likely to need, and approaching lenders whose criteria genuinely suit your situation all make a real difference. This is also where speaking to an advisor helps, since they can point you toward lenders more likely to say yes to your particular circumstances, rather than leaving you to approach lenders one by one.

A 100% commercial mortgage, where you borrow the full value of the property with no deposit, is rare. Most lenders require some deposit to reduce their risk, and the great majority of commercial mortgages are arranged well below 100% loan-to-value.

Where a 100% or close to 100% commercial mortgage is possible, it usually requires additional security, such as a charge over another property you own, or a personal guarantor with sufficient assets or income to support the application. Even then, lenders look closely at your overall financial position before agreeing.

If you don't have a large deposit available, it's worth speaking to an advisor about realistic options rather than assuming a 100% mortgage is the only route. A smaller deposit combined with the right lender may be more achievable.

We compare a wide range of lenders, from mainstream banks to specialist commercial lenders, to help match you with options suited to your business or investment property. Rather than approaching lenders one at a time, an advisor can narrow down the field based on your eligibility, deposit, and the type of property you're buying.

You'll get access to expert advice with no pressure to proceed, so you can weigh up your options properly before deciding whether to go ahead. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it, so it's worth getting guidance you trust before you commit.

If you're dealing with a wider financial difficulty, or you're not sure a commercial mortgage is the right option at all, MoneyHelper offers impartial money guidance backed by government at moneyhelper.org.uk or on 0800 138 7777.

Ready to see your options? Compare all our mortgage guides or speak to an advisor directly.