Commercial mortgage FAQs
What is commercial finance?
Commercial finance is a wide category of financial products and services designed for businesses, including
commercial mortgages, development loans, bridging loans,
working capital loans and more.
What is a commercial finance broker?
A commercial finance broker is an expert who acts as an intermediary between businesses seeking funding and
lenders who provide financial products. Our brokers can help you secure commercial finance by:
- Using their extensive market knowledge to help you find the right solution for your needs
- Providing you with access to more options through our huge network of lenders
- Helping you prepare for and submit your application, improving your chances of approval
Are commercial property loans regulated?
Mortgages for business property are typically not regulated by the Financial Conduct Authority (FCA),
unlike residential mortgages. This gives lenders greater flexibility to set their rates and terms, reflecting the
variety of businesses and commercial properties their mortgages can cater to.
Can you get a commercial loan on a residential property?
Commercial mortgages are typically used for business properties, rather than properties people will live
in. If you want to secure a loan under your business for a property you will rent, it would be more appropriate to
take out a limited company buy-to-let mortgage instead.
However, a commercial mortgage may be appropriate
for certain transactions relating to dwellings. For example, if you were seeking to purchase a block of flats,
including the freehold, it may be more appropriate to use a commercial loan on the entire block, rather than
individual mortgages on each flat.
This type of mortgage will be taken out in the name of the business,
although lenders will typically require personal undertakings from the business owners in the event of default.
Can I get a commercial mortgage as a first-time buyer?
Yes, you can get a mortgage for a business property as a first-time buyer. However, lenders will likely
demand stricter criteria, including a large deposit, strong credit and a profitable business. Our expert brokers can
help you maximise your chances of approval.
What deposit is required for a commercial mortgage?
The deposit required for a commercial property loan varies case-by-case but is higher than the typical
5% minimum needed for many residential mortgages. You can generally expect to put down 25-30% of the
property's value for a commercial mortgage.
In general, being able to afford a larger deposit can improve
your chances of approval.
What documents do I need for a commercial mortgage application?
The exact documentation you will need to apply for a commercial property mortgage depends on the purpose of
the loan. However, documentation that is required for almost all applications includes:
- Basic information about you and your business
- Assets, liability, income and expenditure (ALIE) summary
- 3-6 months' bank statements
How much commercial property loan can I get?
The amount of funding you can secure through a commercial property loan will depend on your specific
circumstances and lenders' criteria.
In general, the maximum loan-to-value (LTV) ratio you can get is 75%
of the property value. For example, if you wanted to secure a mortgage for a £300,000 commercial property, the
maximum amount of funding you could get would be £225,000.
How are commercial mortgage rates decided?
Each lender sets the interest rates on commercial property loans using their pricing structures. However,
factors that lenders are likely to evaluate include:
- The value of the loan
- The loan-to-value (LTV) ratio
- The loan term length
- The property value, type and location
- The financial strength and credit score of your business
- Your financial standing and credit history
Our commercial mortgage brokers can use their relationships with lenders to negotiate the best rates possible for you.