Compare Commercial Mortgage Rates

Commercial mortgage rates vary far more than residential. Two applications on similar properties can attract rates 3-5% apart based on the borrower profile and deal structure. Use a commercial mortgage calculator to estimate your monthly costs. These are indicative ranges for standard applications.

Commercial mortgage rates are built from two components: a benchmark rate and a risk margin. The benchmark is typically the Bank of England base rate for variable products or the relevant SONIA swap rate for fixed-rate deals. The lender then adds a margin on top, reflecting the perceived risk of lending to you and against your property.

Several UK-specific factors determine how large that margin will be. Loan-to-value ratio is the single biggest driver. Borrowing 50% of a property's value signals lower risk to the lender, producing a tighter margin. At 75% LTV, the margin widens significantly because the lender's exposure increases.

Your business trading history matters almost as much. Most high-street lenders want at least two years of filed accounts showing stable or growing revenue. Newer businesses, or those with volatile income, face higher rates or may need to approach specialist lenders who charge a premium for the additional risk.

Credit history affects pricing too. A clean personal and business credit file supports a lower margin. Defaults, CCJs, or late payments in the past six years typically push rates up by 0.5% to 2.0%, depending on severity and recency.

The property itself influences the rate. Standard commercial premises such as offices, retail units, and industrial warehouses attract lower margins than specialist assets like hotels, care homes, or HMOs. Lenders view non-standard properties as harder to sell if they need to recover their funds, so they price accordingly. Your commercial mortgage deposit size directly reflects these risk calculations.

Most owner-occupied borrowers prefer fixed rates for budgeting certainty. Investment borrowers sometimes choose variable or interest-only to maximise cash flow, accepting the risk that payments could increase. When rates fall, a commercial remortgage can lock in savings.

Several strategies can reduce your rate:

• Increase your deposit: Every 5% improvement in LTV helps. Going from 25% to 35% deposit can save 1-2% on your rate.
• Improve business financials: Wait until you have 2-3 years of strong accounts before applying. Growing revenue and healthy margins attract better rates.
• Fix credit issues: Settle any outstanding CCJs or defaults. Register on the electoral roll. Check your credit file for errors and dispute them.
• Choose standard property: Offices, retail units and warehouses are easier to finance than specialist properties. If buying specialist, expect a premium.
• Secure a strong tenant first: For investment purchases, having a creditworthy tenant on a long lease before applying improves your rate.
• Use a broker: Commercial mortgage rates are not published like residential. A broker with whole-of-market access can find deals you would not find directly. Some lenders only work through brokers.

The figures below show what you would actually pay each month on a commercial mortgage under three common scenarios. All examples assume a 15-year repayment term with capital and interest payments.

Scenario 1: owner-occupied office at 60% LTV. Property value of £400,000, loan of £240,000 at a 5.25% fixed rate. Monthly repayment: £1,930. Total interest paid over the full term: £107,400.

Scenario 2: investment retail unit at 70% LTV. Property value of £600,000, loan of £420,000 at a 6.50% variable rate. Monthly repayment: £3,655. Total interest paid over the full term: £237,900.

Scenario 3: refinancing an existing commercial property at 40% LTV. Property value of £800,000, loan of £320,000 at a 4.75% fixed rate. Monthly repayment: £2,490. Total interest paid over the full term: £128,200.

The difference between scenario 1 and scenario 2 is 1.75 percentage points in rate, but the total interest cost is over £130,000 higher. Both the rate and the loan size compound over a 15-year term, which is why reducing your LTV has a double benefit: you borrow less, and you qualify for a lower rate.

Many commercial mortgages run on an interest-only basis, which reduces monthly outgoings but leaves the full capital balance due at maturity. On the £240,000 loan at 5.25%, interest-only payments would be roughly £1,050 per month rather than £1,930, but you would still owe the full £240,000 at the end of the term. Interest-only suits investors planning to sell the property before maturity, while capital repayment works better for owner-occupiers building long-term equity.

Getting the most competitive commercial mortgage rate requires preparation across several fronts. Each factor you control can move your quoted rate by 0.25% to 1.0% or more.

Increase your deposit: moving from 75% LTV to 60% LTV can cut your rate by 0.5% to 1.5%. If you can contribute additional funds from business reserves or personal savings, the interest saving over a 15-year term runs into tens of thousands of pounds.

Present strong financials: have at least two years of filed accounts, current management accounts, and a clear business plan. Lenders price more favourably when they can see stable revenue and healthy margins.

Improve your credit profile: check both personal and business credit reports for errors. Settle any outstanding defaults. Even minor improvements can nudge your rate down by 0.25% or more.

Consider the timing: monitor Bank of England Monetary Policy Committee decisions. If a base rate cut is expected within months, a variable or tracker product lets you benefit immediately. If rises are forecast, locking into a fixed deal protects your cash flow.

Negotiate arrangement fees: some lenders will accept a higher rate in exchange for a lower arrangement fee, or vice versa. Calculate the total cost of borrowing over your intended hold period, not just the headline rate, to find the cheapest overall deal.

Compare the APRC: the annual percentage rate of charge includes fees and compounding, giving a truer picture of cost than the headline interest rate alone. Ask every lender to quote an APRC so you can compare on a like-for-like basis.

Going direct to a bank for a commercial mortgage limits you to that single lender's products and pricing. If your profile fits their criteria well, you may get a competitive rate. But if it does not, you will either be declined or offered a rate loaded with risk margin that you could have avoided by approaching a lender better suited to your circumstances.

A whole-of-market broker accesses multiple lenders, including those that do not accept direct applications. They understand each lender's appetite for different property types, LTV levels, and borrower profiles, and can place your application where it will receive the most favourable pricing. Brokers regularly negotiate rate reductions of 0.3% to 0.5% below the standard quoted rate, particularly on larger loans.

The cost of using a broker is typically an arrangement fee of 0.5% to 1.0% of the loan value. On a £400,000 mortgage, that is £2,000 to £4,000. If the broker secures a rate 0.4% lower than you would have achieved directly, the interest saving over a 15-year term on that same loan is approximately £14,400, making the broker fee a strong return on investment.

For straightforward applications to high-street banks at low LTV, going direct may work. For anything involving specialist property, higher LTV, limited trading history, or adverse credit, a broker almost always delivers a better outcome.

If you already hold a commercial mortgage, refinancing to a new deal can reduce your rate and monthly payments, particularly if you took out your current mortgage when rates were higher or your business has strengthened since.

Commercial remortgage rates are broadly similar to purchase rates, though some lenders offer slight discounts for refinance business because the property is already income-producing and the borrower has a repayment track record. If your property has increased in value since purchase, your effective LTV will be lower on a refinance, which should qualify you for a better rate band.

Watch for early repayment charges on your existing deal. Fixed-rate commercial mortgages typically carry ERCs of 1% to 5% of the outstanding balance if you exit before the fixed period ends. Calculate whether the rate saving on a new deal outweighs the ERC cost before committing.

Refinancing also lets you restructure. You might switch from interest-only to capital repayment, extend your term to reduce monthly payments, or release equity from a property that has grown in value. Each change affects your rate, so model the full cost over the new term rather than comparing headline rates alone. Borrowers with small business loans alongside their mortgage can sometimes consolidate both into a single refinanced commercial mortgage at a lower blended rate.

The headline interest rate on a commercial mortgage is only part of the total cost. Several fees apply on top, and failing to account for them can make an apparently cheap deal more expensive than a higher-rate alternative with lower fees.

Arrangement fee: most lenders charge 0.75% to 2.0% of the loan value. On a £400,000 mortgage, that is £3,000 to £8,000. Some lenders let you add this to the loan, but you then pay interest on it for the full term.

Valuation fee: the lender commissions an independent commercial property valuation, costing £1,500 to £5,000. Larger or more complex properties cost more to value.

Legal fees: you pay for your own solicitor and the lender's legal costs. Budget £2,000 to £5,000 in total for both sets of legal work.

Broker fee: if you use a broker, expect to pay 0.5% to 1.0% of the loan value on completion.

Exit fee: some lenders charge £100 to £300 when the mortgage is fully redeemed.

Early repayment charges: fixed-rate deals typically carry ERCs of 1% to 5% of the outstanding balance if you repay before the fixed period ends.

To compare deals accurately, calculate the total cost of borrowing over your intended hold period. Add the interest, arrangement fee, valuation fee, legal costs, and any broker fee together. The APRC captures most of these costs in a single percentage figure, making it the most reliable comparison metric when assessing commercial mortgage deals side by side.