How commercial mortgages work
Commercial mortgages fund business premises or commercial investment property, assessed largely on the business's or property's ability to afford repayments. Terms are often bespoke rather than off-the-shelf. The best commercial mortgage depends on whether you'll occupy the property or let it, and the strength of the income.
1. Owner-occupier commercial mortgages
For buying premises your business will trade from. Best for established businesses wanting to own rather than rent — assessed on your business's trading performance and affordability. Often more cost-effective than leasing long term.
2. Commercial investment mortgages
For buying commercial property to let to tenants. Best for investors — assessed mainly on the rental income and tenant strength, similar in principle to buy-to-let but for commercial premises.
3. Semi-commercial (mixed-use) mortgages
For properties combining commercial and residential (e.g. a shop with a flat above). Best for mixed-use investors — a specialist area with lenders who understand the blend.
4. Commercial mortgages for specific sectors
Pubs, care homes, surgeries and other trading businesses often need sector-specialist lenders. Best for sector-specific premises — the right lender understands the business model.
What lenders assess
- Business performance (owner-occupier) or rental income (investment)
- Deposit — typically 25–40%
- Experience and the strength of the business or tenants
- Property type and sector
How to find the best commercial mortgage
Commercial lending is bespoke and relationship-driven, with the best terms negotiated rather than advertised. A specialist broker can present your case well and access the right lenders. Find a business finance specialist through Nesto — free, no obligation.
Frequently asked questions
What's the difference between owner-occupier and investment commercial mortgages?
Owner-occupier is for premises your business trades from (assessed on business performance); investment is for letting to tenants (assessed on rental income).
How much deposit for a commercial mortgage?
Typically 25–40%, depending on the property, sector and strength of the business or tenants.
Can I get a mortgage for mixed-use property?
Yes — semi-commercial mortgages cover mixed-use property like a shop with a flat above, via specialist lenders.
Are commercial mortgage rates fixed?
They can be fixed or variable, and terms are often bespoke rather than off-the-shelf. A broker will negotiate the best structure.
Is it better to buy or lease premises?
Buying builds an asset and can be cheaper long term, but ties up capital. It depends on your business's cash flow and plans — weigh both.