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What mortgage options are available for commercial properties? And how can you finance one? Here, we answer the top FAQs on commercial investment mortgages.

Is there such a thing as mortgages for businesses?

Yes! There are different types of commercial mortgages, and your circumstances and property investment plans will impact which is best for you.

An owner-occupier property investment is when you own premises from which your business operates. Essentially, your business becomes the tenant within the building you own. How much you can borrow will be based on your trading business’ financial strength, with lenders typically offering up to 70-75% loan to value (LTV) mortgage products.

On the other hand, a commercial investment is where you purchase a commercial property where an unrelated party or business is already on a formal lease as the tenant.


Are business mortgages cheaper?

You will typically find that commercial mortgages are slightly more expensive than both buy to let and homebuyer mortgages. Furthermore, rates are often lower for banks’ favoured sectors, such as those in the ‘professional’ categories (i.e., doctor’s surgeries, dental surgeries, and solicitors’ offices). Commercial lenders usually charge higher rates for hospitality and leisure sector businesses.

However, all commercial loans are based on your individual circumstances, so our team of experts may be able to negotiate a better mortgage rate than you could access elsewhere.

Commercial mortgage rate pricing mayalso vary depending on whether you apply in your personal name or through an SPV or Trading Limited Company. Again, it’s best to chat through the different options with an MFB commercial broker.


How much of a deposit do you need for a commercial mortgage?

Lenders generally like to see you put down a minimum deposit of 25%. However, some may offer mortgage products at higher LTV’s if additional security is available.


Can I buy a commercial property without a deposit?

As with buy to let, all lenders will want you to put down a deposit for your commercial property investment purchase although as mentioned above, we have seen 100% funding if suitable additional security is pledged. They will also want to see a certain level of experience, potentially within property investment and the sector relating to the business. 


What’s next?

To learn more about the commercial investment mortgage process, read our blog here for what lenders will be looking for on your application.

Our team of commercial mortgage makers have a wealth of experience and knowledge of the market and the lenders in this sector. Our brokers can discuss the different options available to you and talk you through your next steps. To get in touch, submit an enquiry to the team here or call us on 0345 345 6788.  

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