Commercial mortgages for business owners and investors

Commercial mortgages cover a wide range of property: offices, shops, warehouses, surgeries, workshops, and buildings with a shop below and flats above. They are used both by business owners buying the premises they trade from and by investors who let property to other businesses.

Commercial lending is assessed differently from a home mortgage. Each lender has its own view on the type of building, the type of business and how much it is willing to lend. Getting the presentation right matters, because a strong case can look weak if the accounts or the rental picture are not explained clearly.

Commercial mortgages and development finance are generally not regulated by the Financial Conduct Authority.

Owner occupied commercial mortgages

If your business will trade from the property, the lender is mainly interested in whether the business can comfortably afford the repayments. That usually means looking at your trading accounts, profit, existing borrowing and cash flow, alongside your own experience in the sector.

Many of our clients are limited company directors and partners in professional firms, so this is familiar ground for us. We understand how company accounts and partnership profits are read, and we can work with your accountant to help the figures lenders see reflect the real strength of the business. For more on how directors' income is assessed, see our page on company director mortgages, and for partners in law and accountancy firms, partner mortgages.

Commercial investment mortgages

If you are buying property to let to other businesses, the focus shifts to the rental income. Lenders will typically consider:

• The rent and how comfortably it covers the mortgage
• The strength of the tenant or tenants
• The length of the lease and any break clauses
• Who is responsible for repairs and insurance
• How easy the property would be to relet or sell

Your own experience as a landlord, and your wider income and assets, also play a part. Mixed use properties, such as a shop with residential flats above, sit between the two worlds and some lenders treat them differently from purely commercial buildings. If you also hold residential lets, our page on buy to let mortgages explains how those are assessed.

All lending is subject to underwriting and valuation, and commercial valuations tend to be more detailed than residential ones.

How the borrowing is structured

Commercial mortgages can be taken in your own name, jointly, through a limited company, or through other structures such as a pension arrangement. Terms and repayment profiles vary by lender. Which ownership structure suits you is a matter for your accountant, and for pension purchases your pension provider and financial planner too. We are happy to speak to them directly so the lending fits the structure you have agreed.

What you'll usually need

• Two or three years' business accounts, plus up to date management accounts
• Recent business bank statements
• A business plan or summary, particularly for newer businesses
• For investment property, the current leases and a rent schedule
• Details of the property, including the sale particulars
• A personal assets and liabilities statement
• Company documents, if borrowing through a limited company

Refinancing commercial property

If you already own commercial property, you may want to refinance to release equity for the business, move away from an existing lender, or bring several properties together. The same principles apply: lenders will reassess the business or the tenants, and the property will be revalued. We can look at whether a change is worthwhile before you commit to the cost of a new application.

How we work with you

We start with a proper conversation, usually 30 to 45 minutes by phone or video, about the property, the business and what you want to achieve. You then upload your documents once through our secure portal, and we research lenders whose criteria suit both the building and the business.

We set out the options in plain English, obtain terms, and package the full application for the underwriter. From there we keep things moving through valuation and legal work to completion. The initial consultation is free. Get in touch to start the conversation.