Purchasing premises for your business can be expensive but it will give your business security and flexibility to grow and develop so finding the right mortgage that works for your business is essential.
Commercial mortgages can also be used to refinance against the property to release capital to help your business’ working capital or expand your premises. There are a variety of commercial mortgage lenders in the market so we have looked at what they can offer you below.
The table below gives a quick comparison of the top UK providers for commercial mortgages.
| Company | Min Loan Amount | Max Loan to Value (LTV) | Max Term |
|---|---|---|---|
| NatWest | £35,001 | Not stated | 25 |
| RBS | £35,001 | Not stated | 25 |
| HSBC | £25,001 | 75% | 30 |
| Barclays | £25,000 | Not stated | 25 |
| Lloyds bank | £25,001 | 70% | 25 |
| TSB | £25,001 | 70% | 25 |
| Bank of Scotland | £25,001 | 70% | 25 |
| Clydesdale Bank | £25,000 | 70% | 25 |
| Shawbrook Bank | £75,000 | 75% | 30 |
| Cynergy Bank | Not stated | 70% | 10 |
| Assetz Capital | Not stated | 75% | 20 |
| White Oak UK | £25,000 | 70% | 25 |
| Together | £26,000 | 65% | 30 |
| Aldermore Bank | £25,001 | 75% | Not stated |
| Satellite Finance | £50,000 | 85% | 30 |
| Wesleyan Bank | £100,000 | 80% | 25 |
| Rangewell | £50,000 | 80% | 20 |
* The facts and figures included here come from each company’s website and were accurate at the time of writing but may have since changed. Also, please keep in mind these may not be apples to apples comparisons as each provider offers different solutions. This guide should be used as a starting off point for more research on your part.
Below we profile each of the companies’ services and features in a bit more detail.
Note companies are ranked in no particular order and this no way indicates one solution is better than another. Moreover, SmallBusinessPrices.co.uk is not regulated by the FCA and so we can’t recommend any particular product/company as being better than any other.
Topics
1. NatWest
Some of the features and benefits of NatWest’s commercial mortgages.
- Fixed or variable rate mortgages
- Terms up to 25 years
- A minimum £35,001 loan with no upper limit
- New borrowers don’t pay arrangement fees
- Repayment holidays available
- No early redemption charges
- Dedicated relationship manager
- Excludes Commercial Property Investment and Development Finance
- Available to non-NatWest customers
- Offer expert property advice
NatWest is a well-known UK high street bank that offers a range of business services that includes commercial mortgages. They provide mortgages with a minimum value of £35,001 with terms up to 25 years on fixed or variable rates. They do not provide Commercial Property Investment and Development Finance.
NatWest offers new mortgage customers competitive rates and no arrangements fees. Their commercial mortgages are flexible and offer customers repayment holidays in the early part of their mortgage term. You do not have to be a NatWest business customer to access their commercial mortgages. They also give customers a dedicated relationship manager and offer expert property advice.
2. RBS
Some of the features and benefits of RBS’ commercial mortgages.
- Mortgages for new premises or to develop and expand existing premises
- Terms up to 25 years
- Choice of fixed or variable rates
- Borrow from £35,001
- No early redemption charges
- Repayment holidays available at the beginning
- No arrangement fees for new customers
- Also offer buy-to-let mortgages
- Dedicated relationship manager
- Support to help you choose premises and moving advice
RBS is an established UK bank that offers businesses a wide range of products including commercial mortgages. Their commercial mortgages can be tailored to suit your needs with a choice of fixed or variable rates and length of the term up to 25 years.
RBS’ commercial mortgages allow you to borrow from £35,001 with no upper limit, however, they do not offer Commercial Property Investment and Development Finance, but it can be used to buy premises or develop existing premises. They also offer buy-to-let mortgages. You do not need to be an RBS business customer to access their commercial mortgages.
3. HSBC
Some of the features and benefits of HSBC’s commercial mortgages.
- Mortgages for buying, expanding or improving your premises
- Terms from £25,001
- Repayment terms from 2 to 30 years
- Can borrow up to 75% of the property value
- Choice fixed or variable rates
- Offers a range of repayment options
- Option to defer payments
- Repayment holidays are available in the first 2 years
- Has a repayment indication tool online
- Offers LIBOR linked rates for loans over £100,000
HSBC is an established international banking provider that offers a wide range of business products which includes commercial mortgages. Their mortgages are available from £25,001 and they have no upper limit subject to status and application. Mortgage values cannot exceed 75% of the property value.
HSBC’s commercial mortgages are flexible with a range of repayment options and a choice of fixed and variable rates with loan terms of 2 to 30 years. The mortgage can be used for purchasing, expanding or improving premises. They offer the ability to defer up to 2 repayments or take capital repayment holidays in the first 2 years.
4. Barclays
Some of the features and benefits of Barclays’ commercial mortgages.
- Buying premises or releasing equity from existing premises
- Choice of fixed or variable rates
- Terms from 1 to 25 years
- Fixed interest rates for 1 to 10 years
- Available for amounts over £25,000
- Option to take a capital repayment holiday
- Lending fees may be added
- Flexibility to switch between variable and fixed rates
- Prepayment fees apply for early repayment or cancellation
- You will need 3 years’ worth of accounts
Barclays is an established banking provider who offers a range of business loans which includes commercial mortgages that can be used flexibly to purchase premises or help you release equity from your existing premises. Commercial mortgages start at £25,000 with terms from 1 to 25 years.
Barclays’ offers commercial mortgages with fixed or variable rates. The fixed rate mortgage can be fixed for 1 to 10 years. Their variable rate mortgage can be flexible and switched to a fixed rate at any point. They offer capital repayment holidays subject to your status and a successful application.
5. Lloyds Bank
Some of the features and benefits of Lloyds Bank’s commercial mortgages.
- Designed for those moving or expanding their operations
- Minimum loan of £25,001
- Terms of 3 to 25 years
- Borrowing of up to 70% of the property value
- Choice of Bank of England Base Rate linked or fixed rate
- Arrangement fees may apply
- Capital repayment holidays available
- Early repayment fees may apply on fixed rate mortgages
- A first legal charge will be placed on the property
- Offer other borrowing terms
Lloyds Bank is a well-known UK bank that provides services to businesses including commercial mortgages. Their commercial mortgages are standard products, but they do provide non-standard terms on request. You can choose the interest rates between a Bank of England Base Rate linked or fixed interest rate.
Lloyds Bank’s commercial mortgages are available on amounts over £25,001 for terms from 3 to 25 years for values that do not exceed 70% of the property value. They will place a first legal charge on the property for security so any existing loans against the property must be repaid.
6. TSB
Some of the features and benefits of TSB’s commercial mortgages.
- For purchasing or remortgaging a property
- Borrowing for up to 70% of the property value
- Loan terms up to 25 years
- Available for borrowing from £25,001
- Choice of base rate linked or fixed interest rates
- Arrangement fees up to 1.5% may apply
- Security fees apply
- Capital repayment holidays available on base rate linked mortgages
- Early repayment charges may apply on fixed rate mortgages
- Available to sole traders, partners and directors
TSB is a UK business banking provider that offers commercial mortgages for businesses that want to purchase or remortgage their commercial premises. You can borrow up to 70% of the property value with minimum loans starting at £25,001 over a period of up to 25 years.
TSB’s will place a first legal charge over the property so any loans against the property will need to be repaid. You can choose between base rate or a fixed interest rate. If you chose a base rate linked rate you may be able to take capital repayment holidays. Early repayment of a fixed rate mortgage may occur an early repayment fee.
7. Bank of Scotland
Some of the features and benefits of Bank of Scotland’s commercial mortgages.
- Flexible use mortgages
- Borrow up to 70% of the property value
- Choice of base rate linked or fixed interest rates
- Available on loans from £25,001
- Repayment terms of 3 to 25 years
- Arrangement fees will be added
- Security and valuation charges apply
- Capital repayment holidays may be offered
- Fixed rate mortgages may incur early repayment fees
- Offers other borrowing rates depending on circumstances
Bank of Scotland offers businesses flexible commercial mortgages that can be used for a variety of reasons including purchasing premises, remortgaging, investment in residential property or purchasing a share of a business. A first legal charge will be applied so any secured loans will need repaying.
Bank of Scotland’s commercial mortgages are available for values over £25,001 up to 70% of the property value. They offer fixed or base rate linked interest rates on repayment terms from 3 to 25 years. They also offer commercial mortgages on other borrowing terms which will be assessed and agreed depending on your status and circumstances.
8. Clydesdale Bank
Some of the features and benefits of Clydesdale Bank’s commercial mortgages.
- Competitive commercial mortgages
- Offers repayment or interest-only mortgages
- Fixed or combination of fixed and variable rates
- Available from £25,000
- Borrowing up to 70% of the property value
- Loan terms up to 20 years
- Early repayment charges may apply
- Capital repayment holidays available for up to 5 years
- Available for purchase, remortgaging and those moving providers
- Provide an expert relationship manager
Clydesdale Bank is an established Scottish bank that is part of a larger group which operates throughout the UK offering businesses products such as commercial mortgages. Their commercial mortgages are available for a variety of uses including purchasing premises, remortgaging and those seeking a new mortgage provider.
Clydesdale Bank’s commercial mortgage is available for loans from £25,000 up to 70% of the property value on repayment terms of up to 20 years. They offer mortgages that can be interest only or repayment mortgages. You can choose between a fixed rate mortgage of up to 5 years or combined variable and fixed rate.
9. Shawbrook Bank
Some of the features and benefits of Shawbrook Bank’s commercial mortgages.
- Mortgages designed for investment properties or refinancing
- Available to limited companies, landlords, developers and SMEs
- Property can be semi-commercial and mixed-use properties
- Loans from £75,000 to £15 million
- Borrowing up to 75% of the property value
- Repayment terms from 3 to 30 years
- No limit on the number of properties mortgaged
- Discounts available for existing customers
- Also offers buy-to-let mortgages, development finance and short-term refurbishment finance
- Has a national network of professional intermediaries
Shawbrook Bank offers a range of property finance products that are only available through brokers. They specialise in finance for property investors and those wishing to refinance their portfolio. Their typical customers are limited companies, landlords, developers and SMEs who require capital for semi-commercial and mixed-use properties such as retail units, offices and industrial units.
Shawbrook Bank’s commercial mortgages are available on loans from £75,000 to £15 million with a maximum value of 75% of the property value on terms from 3 to 30 years. They reward repeat business with discounts for existing customers and they have no limit on the number of properties you can mortgage with them.
10. Cynergy Bank
Some of the features and benefits of Cynergy Bank’s commercial mortgages.
- Designed for investors, developers and property managers
- For purchase or refinancing purposes
- Available for commercial and resident properties
- Offers buy-to-let mortgages
- Repayment terms up to 10 years
- Borrowing of up to 55% of the commercial property value
- Residential borrowing up to 70% of the property value
- Available to new customers
- Commercial property can be purchased through SIPP and SSAS pension schemes
- Dedicated relationship manager
Cynergy Bank offers commercial mortgages that are suited to investors, developers and those who deal in properties. The mortgages are available for borrowers that want to purchase property or for refinancing purposes for properties that are commercial or residential on repayment terms up to 10 years.
Cynergy Bank’s commercial mortgages are available for buy-to-let purposes. They provide two levels of finance depending on the property type, residential property mortgages can be for up to 70% of the property value whereas commercial properties can only be for up to 55% of the property value. They will provide customers with their own relationship manager.
11. Assetz Capital
Some of the features and benefits of Assetz Capital’s commercial mortgages.
- Tailored mortgages
- Designed for offices, industrial or mixed-use properties
- Decisions made within 24 hours
- Repayment terms up to 20 years
- Borrowing up to 75% of the property value
- Fixed interest rates
- Arrangement fees apply
- Covers mainland UK and Northern Ireland
- Will consider all property types
- Experienced relationship directors
Assetz Capital is a peer-to-peer lending business that offers a range of business lending products which include commercial mortgages. They have designed their commercial mortgages for those wanting to purchase offices, industrial or mixed-use properties, although they will consider all types of properties.
Assetz Capital’s commercial fixed rate mortgages offer repayment terms up to 20 years with the preferred borrowing amount of £200,000 to £2.5 million with a borrowing cap of 75% of the property value. They offer finance for properties within mainland UK and Northern Ireland and they will make the lending decision within 24 hours.
12. White Oak
Some of the features and benefits of White Oak’s commercial mortgages.
- Simple and fast commercial mortgages
- Tailored finance agreements
- For purchasing or refinancing premises
- Loans from £25,000
- Borrowing for up to 70% of the property value
- Repayment terms up to 25 years
- Tax-deductible interest payments
- Can receive funds as soon as 24 hours
- Reduced red tape
- Dedicated advisors
White Oak is a non-bank business finance provider that has been operating for over 30 years across the UK. They claim to offer lending solutions that are simpler and easier than other commercial lending providers as they have removed the red tape, they will give you a decision quickly and will release the funds quickly.
White Oak’s commercial mortgages are tailored agreements that are designed to meet your needs to purchase or refinance your premises. You can borrow from £25,000 up to 70% of the property value over repayment terms up to 25 years. They will give you a dedicated point of contact that will support you.
13. Together
Some of the features and benefits of Together’s commercial mortgages.
- Caters for a broad range of businesses and circumstances
- Will consider most property types
- Choice of repayment and interest-only mortgages
- Borrowing up to 65% of the property value
- Loans from £26,000 to £500,000
- Repayment terms from 7 to 30 years
- Interest only mortgages available up to 10 years
- Offer both first and second charge loans
- Finance properties many other lenders wouldn’t
- Discounted rate product for the first year
Together provides lending solutions and mortgages to businesses with a broad range of circumstances which include start-up businesses, variety of income types and credit profiles including those with CCJs and Defaults. The property can be for investment, leasing, leisure premises, residential care, warehousing or light industrial, complex developments and land with no planning permission.
Together’s commercial mortgages are available as repayment or interest only products which are for terms from 7 years with up to 30 years on repayment mortgages and 10 years on an interest only. They are available for values between £26,000 to £500,000 which is capped at 65% of the property value.
14. Aldermore Bank
Some of the features and benefits of Aldermore Bank’s commercial mortgages.
- For investors and business owners
- Flexible repayment terms
- Choice of fixed and variable rates
- Minimum 25% deposit
- Loans from £25,001
- Available for a range of commercial uses
- Bespoke terms available for larger loans
- Offer fair rates to all
- Will individually assess each application
- Expert advisors
Aldermore Bank offers commercial mortgages that are available for business owners wanting to purchase a property to operate from or property investors. They provide finance for offices, warehouses, industrial units, factories and retail units. They provide the same rates to individuals and limited companies.
Aldermore Bank’s commercial mortgages offer flexible repayment terms with the choice of fixed or variable interest rates. They require businesses to provide a 25% deposit for the property with mortgages available for up to 75% of the property value. They provide bespoke terms for larger loans that are over £1 million where they tailor the loan to your needs.
15. Satellite Finance
Some of the features and benefits of Satellite Finance’s commercial mortgages.
- Competitive and flexible terms
- Loans from £50,000 to £40 million
- Borrow up 85% of the property value
- Repayment terms between 5 and 30 years
- Fixed interest rates
- Regular monthly payments
- Will find the best mortgage for you
- Has a panel of lenders to draw from
Satellite Finance is a financial broker who has direct relationships with over 40 lenders and banks to offer a variety of lending products. They claim to offer competitive and flexible terms as they can source the best commercial mortgages through their direct relationships with banks and lenders.
Satellite Finance’s commercial mortgages can offer loans from £50,000 to £40 million depending on your circumstances. They limit the borrowing to up to 85% of the property value. Their mortgages offer fixed monthly repayments that are based on fixed interest rates on terms from 5 to 30 years.
16. Wesleyan Bank
Some of the features and benefits of Wesleyan Bank’s commercial mortgages.
- Competitive rate mortgages
- Terms from 10 to 25 years
- Loans from £100,000
- Borrow up to 80% of the property value
- 5% cash deposit required
- Designed for new purchases or those changing provider
- They lend to a variety of professions
- Minimum 1% arrangement fee
- Requires proof of being able to cover 1.25 of the cost of monthly repayments
- Dedicated account manager
Wesleyan Bank is a financial advice and products provider that has been operating since 1841 and they deliver services to select professional groups. These professions include but not limited to lawyers, accountants, architects, surveyors, doctors, dentist and vets. Their commercial mortgages are designed for businesses purchasing a property or wanting to change providers.
Wesleyan Bank’s commercial mortgages are available for loans over £100,000 up to 80% of the property value although a 5% cash deposit is required. They offer repayment terms from 10 to 25 years. To be eligible for their mortgage you must be able to prove you can afford 1.25 of the cost of the monthly repayments.
17. Rangewell
Some of the features and benefits of Rangewell’s commercial mortgages.
- Available for purchasing or refinancing the property
- Repayment terms up to 20 years
- Minimum borrowing of £50,000
- Borrow up to 80% of the property value
- Repayment and interest-only mortgages available
- Accept those with adverse credit
- Tailored arrangements
- Can purchase premises, land or investment properties
- Available for commercial and residential
- Will help you find the most competitive deal
Rangewell is a financial services provider who is trying to simplify business finance through its range of services. They offer businesses the ability to find the most competitive mortgage for them as they search the market for you. They provide mortgages that can be used to purchase or refinance commercial or residential properties, but you can purchase land or investment opportunities.
Rangewell’s commercial mortgage is available as repayment or interest-only mortgages that can be repaid over periods up to 20 years. You can borrow from £50,000 up to 80% of the property value. They will tailor their arrangements to your needs and will even consider those with adverse credit.
Also have a look at: Commercial Mortgage Calculator: How Much Can You Borrow?
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Are Commercial Mortgages Cheaper?
When compared to the interest rates on residential mortgages, you will pay higher rates on commercial mortgages – generally between 0.25% to 0.75% more.
Commercial mortgages are considered a higher risk to lenders, especially if it’s a property that requires active management – for example, a hotel, marina, or restaurant.
This way, commercial loans aren’t easy to sell; they are fairly illiquid. You won’t find an organised secondary market for these mortgages, so the loan holders can’t sell them quickly or easily.
You will most likely get a better interest rate on business mortgages than on regular business loans, as these would typically require property as collateral.
Remember that you could also be subject to other fees like broker fees, legal fees, valuation fees, arrangement fees, etc.
How Long Does It Take To Secure A Commercial Mortgage?
After you apply for a commercial mortgage, the time it takes will drastically vary between different commercial investment mortgage lenders and the specific circumstances.
The average application time will take roughly 8-10 weeks or less for a straightforward deal.
A more complex application will take longer as the lender needs to do more stringent checks, especially with very high risks.
What Is A Semi-Commercial Mortgage?
A semi-commercial mortgage is for purchasing a property used for residential and commercial purposes – also known as a mixed-use property.
Here are some examples of semi-commercial properties:
– Pub with flats above them
– Shops with separate living spaces
– Home hairdressing salons
– Guesthouses or bed and breakfasts attached to homes
And any other type of property with both commercial and residential elements
These mortgages are typically handled similarly to business mortgages, so you wouldn’t use a residential mortgage broker to finance your purchase.
How Much Is Stamp Duty On Commercial Property In The UK?
As well as commercial mortgage rates, you’ll also have to consider Stamp Duty as an additional few when applying for a mortgage.
Essentially, Stamp Duty is a land tax payable on all commercial properties over £150,000 regardless if you are purchasing or renting in the UK.
The rate on commercial investment mortgages varies according to purchase price and lease terms, and it’s calculated using the following sliding scale:
– For property purchases less than £150,000, there is no SDLT charge
– Purchases between £150,001 and £250,000 are payable at 2%
– Purchases above £250,000 will be charged at a rate of 5%
For example, a £500,000 property will cost you £25,000 in Stamp Duties.
You can use this official Stamp Duty calculator from the government to assist in calculating what your tax liability would be on your commercial property transaction.
What Are The Requirements For A Commercial Mortgage?
If you are planning on taking out a commercial mortgage to fund your business property purchase, you will usually be required to provide the following documentation:
– Proof of your identity and residency
– Personal bank statements – 3-6 months
– Business bank statements – 6 months
– Your existing lease or agreement
– Your current lease or occupation agreement
– A detailed business plan of how you will repay the loan value
– Audited business financial accounts – 3 years
– Assets and liabilities statements
– The property details
Your business mortgage application has a higher chance of success and with the most competitive rates if you prepare properly and demonstrate to the lender that you are serious.
You want to prove to lenders that you have experience and know what you are doing. This will certainly assist with your application.
Take a look above to compare 2022 rates and find a specialist commercial mortgage broker that is most suitable for you.
What Is The Typical Term For A Commercial Mortgage?
Loan terms can vary significantly depending on the commercial mortgage lender and your financial situation.
The loan term will be anywhere from 5-40 years, and lenders will typically lend up to 70% of the property’s value.
What Is The Difference Between Residential And Commercial Mortgages?
Commercial and residential mortgages are similar in that they are both loans taken out to purchase property or land.
What’s different between them?
Their values
Business premises tend to be bigger and valued higher than residential premises.
Risks
There are more risks involved with business property, resulting in a bigger deposit required by commercial finance brokers (usually between 25% to 50%).
Mortgage terms
Residential mortgage terms tend to be longer than commercial.
Can You Get A Commercial Mortgage On A Residential Property In The UK?
You cannot buy residential properties, like houses, with finances from commercial mortgage lenders.
The same applies to mixed-use properties (being used for both residential and business purposes). These would need to be financed by semi-commercial mortgages.