Guide to Commercial Mortgages

Last updated: 10 August 2026

Most guides to commercial mortgages stop at the definition. This one starts after it.

If you already know you need a commercial mortgage, the questions that actually matter are different: what it will cost you all in, which lenders will look at your case, how long the whole thing takes, and what tends to go wrong between an agreement in principle and money in the account.

Commercial lending is a negotiated market rather than a shelf of products, which is good news and bad news at once. The good news is there is room to improve your terms. The bad news is that nobody hands you the terms unprompted.

What a Commercial Mortgage Costs, All In

The rate is the part everyone asks about and rarely the part that decides the deal. Commercial rates are priced to risk, so they move with the property, the covenant behind it and how well the case is put together, which is why there is no advertised number to compare against.

Around it sits a stack of costs worth budgeting for from day one. An arrangement fee, commonly 1% to 2% of the loan, usually added to the facility rather than paid up front. A valuation fee, which on commercial property is a full inspection and report rather than a drive-by, so it costs more and takes longer than a residential one. Legal fees for both sides, because you pay the lender’s solicitor as well as your own. A broker fee where one applies. And on some facilities, early repayment charges if you refinance inside the term.

Add those up before you compare two offers. A slightly higher rate with a 1% fee often beats a sharper rate with a 2% fee and a five-year tie-in, particularly if you expect to refinance once the property or the business has moved on.

Who Actually Lends on Commercial Property

The lender market splits into rough tiers, and knowing which tier your case belongs in saves weeks.

High street banks offer the keenest pricing and the tightest criteria. They want established trading history, clean accounts and a property they consider standard. If you fit, start here.

Challenger and specialist banks take a broader view, particularly on trading businesses with a shorter track record, unusual sectors or properties with a story attached. Pricing is a step up from the high street and the underwriting is more human.

Non-bank and specialist lenders go further still on complexity: heavier assets, mixed use, portfolio structures, borrowers with past credit issues. You pay for that flexibility.

Short-term lenders sit alongside all of the above rather than beneath them. If the property is not yet lettable or the deal has a deadline, bridging finance buys the time to get it onto a commercial mortgage properly.

The practical point is that these tiers do not compete for the same cases. A case declined at tier one is not a bad case, it is a case in the wrong tier, and the search for the right lender is most of the work.

How the Application Actually Runs

Six stages, and the order matters.

One, the enquiry. You outline the property, the price, the deposit and the purpose. A lender or broker gives you an early read on whether it is fundable and roughly on what terms.

Two, indicative terms. For commercial property you do not get a high street style instant decision. You get written terms setting out the loan, the rate, the fees and the conditions. These are indicative, not committed, and they are negotiable.

Three, the full pack. This is where cases are won. Two to three years of accounts, up to date management figures, bank statements, the lease and tenant details for an investment, a business plan where the case needs explaining. A complete pack answers the underwriter’s questions before they are asked.

Four, valuation. The lender instructs a surveyor, who assesses the value and, quietly, how easily the property could be sold if things went wrong. On specialist buildings this is the single most common point of failure.

Five, credit approval. A human, or a committee, reads the case. This is where presentation earns its keep.

Six, legals and drawdown. Solicitors handle title, searches and the security, then funds are released.

Allow six to twelve weeks end to end on a straightforward case. Faster is possible; assuming it is unwise. If your purchase has a fixed deadline, either start early or fund it short term and refinance.

Owner-Occupier and Investment Cases Need Different Paperwork

Both are commercial mortgages. They are assessed on different evidence, so gather the right pile.

For an owner-occupier purchase, where your business buys the premises it trades from, the lender is underwriting the business. Accounts, management information, sector experience and the effect of owning rather than renting on your cash flow.

For an investment purchase, the lender is underwriting the income. The lease length, the break clauses, the strength of the tenant, the rent against the loan payment, and what happens at the end of the term. A strong tenant on a long lease is a genuinely different proposition from a rolling monthly agreement, and the terms will say so.

Semi-Commercial and Awkward Buildings

Mixed use property, the shop with a flat above being the classic, sits in its own corner of the market. Some lenders like it, more tolerate it, and a few decline it on sight. The ones who like it will look at the split between the commercial and residential parts, the income each throws off and how saleable the whole thing is.

The same applies to specialist buildings with one obvious use, such as a pub, a nursery or a care facility. They are fundable, often on a trading business basis, but the lender pool narrows sharply and the valuation carries more weight.

Refinancing and Commercial Remortgages

Plenty of commercial lending is not a purchase at all. A commercial remortgage can lower the rate, release equity for the next acquisition, or move you off a facility that is coming to term.

Two situations come up constantly. Exiting short-term finance, where a property was bought or refurbished with a bridge and now needs a term facility to replace it. And exiting a completed scheme, where development finance is repaid by refinancing onto a commercial mortgage rather than by rushing a sale.

Both are far easier when the exit was planned at the start. Retrofitting an exit onto a loan that is nearly due is the expensive way to do it.

What Makes Commercial Cases Fall Over

The valuation. Comes in below the purchase price, or the surveyor flags a use that is hard to resell. Fixable sometimes, fatal others.

Incomplete or late information. The single most common cause. A pack that arrives in pieces over six weeks reads as a borrower who is not on top of the deal.

The wrong lender. A case put to a lender who was never going to take it, costing a valuation fee and a month.

Changes mid-application. A dip in trading figures, a tenant serving notice, a new borrowing commitment.

No credible exit on short-term funding. If the plan was to refinance onto a term loan, the term lender needs to be interested before the bridge completes, not after.

The Clever Way to Get a Commercial Mortgage Agreed

Nothing about commercial lending is automated, which is exactly why the outcome depends so heavily on where the case goes and how it arrives.

That is the work we do: reading the deal, putting it to lenders who actually want that shape of case, and packaging it so the underwriter has no reason to hesitate. Buying your own premises, adding to a portfolio, taking on a mixed use building, or refinancing off a bridge or a finished scheme, the route is rarely the one shouting loudest.

Tell us what you are buying and when you need to complete, and we will come back within 24 business hours with a straight answer on where you stand. Send it over and do the Clever thing.

Commercial mortgages are not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.