Why this use case matters
Owning rather than renting commercial premises converts a recurring cost into a long-term asset and a hedge against rent rises. For an established SME, a commercial mortgage payment is often comparable to the previous rent, with the principal paid down over time and any capital appreciation accruing to the business. For property investors, commercial mortgages unlock larger portfolio plays than residential buy-to-let.
Commercial mortgages are slower than working capital products. Underwriting includes legal, valuation, environmental and trading reviews and typically runs 6–12 weeks. They are also the most security-heavy product in UK SME finance — the property is charged, directors usually give a PG, and rental covenants apply to investment cases. None of this is unusual, but it sets the expectation for timeline and paperwork.
Finance types that usually fit
Based on how UK lenders typically underwrite this use case, the following finance categories are the most common fit:
Commercial Mortgage
Long-term commercial property purchase/refinance funding.
Bridging Finance
Short-term property-backed finance.
Finance types that usually don't fit
These categories are mentioned for completeness but typically aren't appropriate for this use case:
- Merchant Cash Advance — Cash advance repaid as a share of card/POS/platform sales.
- Invoice Finance — Funding advanced against unpaid B2B invoices.
- Revenue-Based Finance — Growth capital repaid flexibly against future revenue.
Eligibility questions UK lenders typically ask
- Do you have a deposit of at least 25–35% of the purchase price?
- Is the property suitable for commercial use under the current planning class?
- Can you evidence affordability — trading profits or rental cover of 125–150%?
- Are 2+ years of filed accounts available (or strong rental case for investment)?
- Is the business UK-registered with directors prepared to give a PG?
- Is the property location and tenant profile acceptable to mainstream lenders?
Documents to prepare
- Heads of terms or purchase memorandum
- Last 2 years of filed accounts
- Recent business bank statements
- Director ID, proof of address, asset and liability statement
- Existing tenancy and rental information for investment cases
- Property details, EPC and any valuations
UK lenders that often look at this use case
The lenders below publish criteria consistent with this use case. Final approval is always subject to lender underwriting.
Allica Bank
Asset finance
- Amount
- £25k–£2.5m
- Speed
- Not disclosed
- Security / PG
- Asset-backed; up to 100% advance
- Data confidence
- High
Shawbrook
Commercial mortgage
- Amount
- £150k–£35m; trading range £150k–£1.25m
- Speed
- Not disclosed
- Security / PG
- Up to 75% LTV
- Data confidence
- Medium
NatWest
Invoice discounting
- Amount
- Not disclosed
- Speed
- Not disclosed
- Security / PG
- Debtor book security
- Data confidence
- High
Metro Bank
Commercial mortgage / loan
- Amount
- Commercial mortgage up to £5m at 85% LTV
- Speed
- Not disclosed
- Security / PG
- Security likely
- Data confidence
- Medium
Redwood Bank
Commercial mortgage
- Amount
- £250k–£10m
- Speed
- Not disclosed
- Security / PG
- Property-backed; c.71–76% LTV depending product
- Data confidence
- High
Frequently asked questions
- How much deposit do I need for a commercial mortgage?
- Typically 25–35% for owner-occupied commercial property and 30–40% for investment property. Some specialist lenders may go higher LTV for prime properties with strong tenants, but mainstream UK commercial mortgage criteria sit in that range.
- What's the difference between owner-occupied and investment?
- Owner-occupied means your business trades from the property. Lenders underwrite on business affordability. Investment means you let to a third party. Lenders underwrite on rental cover — typically 125–150% of the mortgage payment.
- How long does a commercial mortgage take to complete?
- Typically 6–12 weeks from agreed terms to completion. Specialist or complex cases can take longer. If timing is critical, a bridging loan can complete in 2–4 weeks and refinance to a commercial mortgage later.
- Can I use my pension or SSAS to buy commercial property?
- Yes, this is common for owner-occupied premises and usually involves specialist lenders. Lendrly does not cover pension advice — speak to a regulated adviser before structuring a SSAS or SIPP purchase.
- Will I need a personal guarantee on a commercial mortgage?
- Almost always for SMEs. Some lenders cap PG exposure at a percentage of the loan; some take a full recourse PG. Larger, well-established borrowers can sometimes negotiate this down on a case-by-case basis.