Compare Commercial Investment Mortgages

A commercial investment mortgage is a loan secured against a commercial property that you purchase to let to a third-party business tenant. Unlike a residential mortgage, the property generates rental income from companies leasing the space, and the building itself serves as security for the loan.

This type of finance covers offices, retail units, warehouses, industrial estates, leisure premises and other non-residential property. The defining feature is that you act as the investor and landlord rather than the occupier. You buy the building, secure a commercial tenant under a lease, and collect rent that services the mortgage payments.

Commercial investment mortgages differ from owner-occupied commercial mortgages in one fundamental way. With an owner-occupied loan, your own business trades from the premises. With a commercial investment mortgage, a separate tenant operates from the building and pays you rent under a commercial lease. The underwriting focuses on the tenant's ability to pay rent rather than your business's trading performance.

They also sit apart from standard buy-to-let mortgages. A buy-to-let mortgage covers residential property let to tenants who live there. A commercial investment mortgage covers non-residential property let to businesses. The deposit requirements, lease structures, regulatory framework and typical yields are all different.

Typical borrowers include individual investors building a commercial property portfolio, limited companies set up specifically for property investment, pension funds (particularly SIPPs and SSASs) acquiring commercial assets, and experienced landlords diversifying from residential into commercial property. Loan sizes typically start at around £50,000 and can reach several million pounds, with terms usually running between 3 and 25 years. Both repayment and interest-only structures are available, though lenders require a clear exit strategy for interest-only arrangements.

Choosing between a commercial investment mortgage, a buy-to-let mortgage and a semi-commercial mortgage depends on the property type, your tenant base and your investment goals. Each product serves a different market, and using the wrong mortgage type can mean higher costs or a declined application.

A commercial investment mortgage suits pure commercial property: shops, offices, warehouses and industrial units let entirely to business tenants. A buy-to-let mortgage covers residential property let to individuals or families. A semi-commercial mortgage bridges the gap, covering mixed-use properties that combine a commercial ground floor with residential accommodation above.

The deposit and rate differences are significant. Commercial investment mortgages typically require a 25% to 40% deposit, with interest rates starting around 5.5% to 7.5%. Buy-to-let mortgages usually need 20% to 25% down, with rates from around 4.5% to 6%. Semi-commercial mortgages sit in between, typically asking for 25% to 35% with rates from 5% to 7%.

Lease length is another key distinction. Commercial tenants usually sign leases of 3 to 25 years, giving you longer income security and more predictable cash flow. Residential tenancies are shorter, often 6 to 12 months on an assured shorthold tenancy. Semi-commercial properties carry a blend of both lease types.

If your target property is a shop, office or warehouse let to a business, you need a commercial investment mortgage. If the property has a flat above a shop or other mixed-use element, a semi-commercial mortgage is the right product. If the property is purely residential and let to tenants who live there, a standard buy-to-let mortgage applies.

Most commercial investment mortgage lenders offer a maximum loan-to-value of 70% to 75%, meaning you need a commercial mortgage deposit of at least 25% to 30% of the property value. Some specialist lenders may stretch to 80% LTV for particularly strong applications, but 70% LTV is the standard benchmark for competitive rates.

Here is how the numbers work on a typical deal. Take a commercial property valued at £500,000. At 70% LTV, the lender advances £350,000, and your deposit is £150,000. At 75% LTV, the loan rises to £375,000 with a £125,000 deposit. The lower your LTV, the better the rate you are likely to receive.

Rental income is just as critical as your deposit. Lenders assess affordability through an interest coverage ratio (ICR), sometimes called the debt service coverage ratio (DSCR). This measures whether the rent from the property comfortably covers the mortgage interest payments. Most lenders require an ICR of at least 125% to 150%, meaning the annual rent must be 1.25 to 1.5 times the annual mortgage interest cost.

Working through the example: on a £350,000 commercial property investment loan at 6.5% interest, the annual interest cost is £22,750. At a 130% ICR requirement, the property needs to generate at least £29,575 per year in rent, which works out to roughly £2,465 per month. If the property's market rent falls below this threshold, the lender may reduce the loan amount or decline the application entirely.

For the deposit itself, lenders expect funds from verifiable sources: savings, existing property equity, business profits or pension funds. Gifted deposits are rarely accepted for commercial investment mortgages. Budget separately for additional upfront costs including valuation fees (typically £1,500 to £5,000), legal fees (£1,500 to £3,500), arrangement fees (usually 1% to 2% of the loan) and stamp duty land tax.

Commercial investment mortgage rates in the UK vary significantly depending on the lender, your LTV, the property type and your track record as an investor. As of mid-2026, fixed rates for commercial investment mortgages typically range from 5.5% to 7.5%, while variable rates linked to the Bank of England base rate or SONIA start from around 5.0% to 6.5%. For a detailed breakdown, see our guide to commercial mortgage rates.

Several specialist lenders dominate the UK commercial investment mortgage market. Shawbrook Bank offers fixed rates from around 5.75% on sub-65% LTV deals, with terms up to 25 years and loans from £50,000. Aldermore provides commercial investment mortgages with rates from approximately 5.90%, accepting a range of property types including offices, retail and light industrial. InterBay Commercial, part of the OneSavings Bank group, offers rates from around 6.00% with LTV up to 75% and terms to 25 years. Paragon Bank lends from approximately 5.85% with a focus on experienced investors and portfolio landlords.

The rate you receive depends heavily on four factors: your LTV (lower means cheaper), the strength and length of the tenant's lease, the property type and location, and your experience as a commercial landlord. A fully let office building in a city centre with a 10-year lease to a national tenant will attract a much better rate than a vacant retail unit on a secondary high street.

Most commercial investment mortgage rates are quoted on a fixed basis for 2, 3 or 5 years, reverting to a variable rate afterwards. Some lenders also offer fully variable rates from day one, which can suit investors planning to refinance or sell within a shorter timeframe. Early repayment charges typically apply during the fixed-rate period, usually ranging from 1% to 3% of the outstanding balance.

Qualifying for a commercial investment mortgage requires meeting criteria across several areas. Lenders assess both you as a borrower and the commercial property as security for the loan.

Experience: Most lenders prefer borrowers with property investment or business experience. First-time commercial investors can still qualify, but the pool of available lenders narrows and you may face higher deposit requirements or slightly higher rates.

Borrower structure: You can apply as an individual, through a limited company, a partnership, or via a SIPP or SSAS pension fund. Limited company structures are common for tax efficiency, and many specialist lenders actively support SPV applications.

Income and affordability: The property's rental income must meet the lender's ICR threshold, typically 125% to 150% of the annual interest cost. Some lenders also consider your personal income or other portfolio income as supporting evidence of affordability.

Credit history: A clean credit history strengthens your application. Some specialist lenders work with applicants who have minor historic credit issues, but significant adverse credit such as recent CCJs or defaults will limit your options considerably.

Property requirements: The building must be in a lettable condition, hold a clear title, and ideally have an existing commercial lease or strong evidence of tenant demand. Lenders pay close attention to lease length, tenant covenant strength, the property's condition and its location.

Documentation checklist: Prepare at least 3 months of business and personal bank statements, 2 to 3 years of accounts or tax returns, a property schedule if you own other investments, the heads of terms or existing lease agreement, proof of deposit funds, and identification documents for all applicants.

Commercial investment property can deliver strong yields, but the risks differ from residential buy-to-let and need careful planning before you commit.

Vacancy risk: When a commercial tenant vacates, finding a replacement can take months or even years depending on the property type and location. Unlike residential property, where re-letting is relatively quick, commercial voids can be extended. Budget for at least 6 months of mortgage payments as a cash reserve to cover void periods.

Market and valuation risk: Commercial property values are more volatile than residential and are closely tied to the local economy, business confidence and sector-specific trends. A downturn in retail, for example, directly affects shop valuations and achievable rent levels. Diversifying across property types and locations helps manage this exposure.

Lease expiry risk: If your mortgage term extends beyond the tenant's lease expiry date, the lender may require you to demonstrate how the loan will be serviced during any rental gap. Aligning your lease and mortgage terms, or securing tenants on longer leases, reduces this concern.

Tax considerations: Stamp duty land tax on commercial property follows different bands to residential SDLT. Purchases up to £150,000 attract 0% SDLT, the portion from £150,001 to £250,000 is taxed at 2%, and anything above £250,000 at 5%. If the property is VAT-elected, VAT at 20% applies on top of the purchase price, and you may need to register for VAT. Capital allowances may be available on certain fixtures and fittings within the building, reducing your tax liability.

Exit strategy: Lenders want to know how you plan to repay the loan at the end of the term. Common exit strategies include selling the property at market value, refinancing with a commercial remortgage, or repaying from other assets. Planning your exit from day one strengthens your application and reduces future risk.

Interest-only commercial investment mortgages allow you to pay only the interest each month, with the full loan balance repaid at the end of the term. This structure is popular with commercial investors because it keeps monthly outgoings low and maximises cash flow from the property.

On a £350,000 loan at 6.5%, monthly interest-only payments would be approximately £1,896, compared to around £2,680 on a 15-year capital repayment basis. That difference of roughly £784 per month can significantly improve your net rental yield and free up capital for further investment or building cash reserves. Use our commercial mortgage calculator to run your own figures based on your loan amount and rate.

However, you must have a credible exit strategy for the capital balance. Lenders will ask how you intend to clear the loan at term end. Acceptable strategies typically include selling the property at market value, refinancing onto a new commercial mortgage, or using proceeds from other asset sales or pension drawdown.

Not all lenders offer interest-only on commercial investment mortgages, and those that do may cap the interest-only period at 5 to 10 years within a longer overall term. Some require partial capital repayment from the outset, blending interest-only with a small element of capital reduction. Your broker can identify which lenders match your preferred repayment structure and confirm the terms available for your specific property and circumstances.

Yes, you can purchase a commercial property with an investment mortgage and let it to your own business, but this arrangement requires careful structuring. Most lenders treat a self-occupied tenancy differently from a third-party letting, and some may reclassify the mortgage as owner-occupied rather than investment.

To keep the arrangement within commercial investment mortgage terms, lenders typically require a formal lease between you (or your property-holding company) and your trading business at a market rent. The lease should be on arm's length terms, meaning the rent reflects what an independent tenant would pay for equivalent premises. An independent RICS valuation confirming the market rent strengthens the application.

The structure works best when the property is held in a separate limited company or SPV, and the trading business is a different legal entity. This clean separation satisfies lender requirements and can also provide tax advantages, since the trading company deducts the rent as a business expense while the property company receives it as taxable income.

Not all lenders permit self-letting on commercial investment terms. Some will only offer owner-occupied rates, which may differ. Your broker can identify lenders who accept this arrangement and confirm the lease structure needed to secure commercial investment mortgage terms for your deal.

Commercial investment mortgages are not sold on comparison websites the way residential deals are. The market is less transparent, with many lenders quoting rates on a case-by-case basis rather than publishing standard products. This makes working with a specialist commercial mortgage broker particularly valuable.

A whole-of-market broker has access to lenders you cannot approach directly as an individual borrower. Many specialist commercial lenders, including several offering the most competitive rates, only accept applications through intermediaries. Going direct to a single bank limits you to that bank's criteria and pricing, with no way to benchmark against the wider market.

Brokers also add value through deal structuring. They understand each lender's appetite for different property types, tenant profiles and borrower circumstances. A broker can present your application in the way most likely to secure approval and position the deal to attract the best commercial investment mortgage rate, something that is difficult to replicate when approaching lenders without specialist knowledge of their underwriting preferences.

Expect to pay a broker fee of around 1% of the loan amount, typically payable on completion. Many brokers charge no upfront fees, meaning you only pay if the mortgage completes. Weigh this cost against the interest savings and higher approval likelihood that a well-placed broker can deliver over a 15 to 25 year commercial mortgage term.