Commercial mortgages & property finance

No matter if you want to purchase or refinance your existing business property, a single investment property, or a portfolio of investment properties, getting the best commercial mortgage is crucial. Over many years, it could save your business tens or even hundreds of thousands of pounds in fees and interest costs.

Whatever your requirement, Swoop’s team of experts will work with you, using their knowledge, experience and skill to present your deal to lenders in the best shape possible. This reduces a lender’s perceived risk, opens up more options and reduces the interest you’ll be charged.

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Swoop is a credit broker and does not provide capital. We work with a range of companies to offer clear comparisons that allow customers to make choices on financial products & services. Swoop may receive a commission, which may vary by product but typically in the form of a fixed percentage of the loan amount. For certain lenders, we do have influence over the interest rate, and this can impact the amount you pay under the agreement.

Commercial mortgages & property finance
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Commercial mortgage calculator

How much will my loan cost? How much interest will I pay? What can I afford to borrow? Get the answers you need with our simple commercial mortgage calculator.  

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Meet the team

Ann Marie Swift

Ann Marie Swift

Commercial Finance Manager
Ed Brown

Ed Brown

Commercial Finance Manager
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What is a commercial mortgage?

A commercial mortgage is a type of business loan that’s secured against commercial property, such as office buildings, retail spaces, warehouses, or industrial units. Unlike residential mortgages, which apply to personal homes, commercial mortgages are designed for businesses or investors purchasing, refinancing, or developing commercial real estate. These loans are typically offered by banks, building societies, investment groups, or online lenders, with repayment terms ranging from a few years to several decades.

Commercial mortgages can provide essential funding for businesses looking to grow, invest, or improve financial stability. This includes acquiring business premises, unlocking equity for expansion, consolidating debts, or refinancing to secure better interest rates. 

The amount you can borrow, the interest rate you’ll pay, and the repayment terms you’ll need to meet depend on factors such as the property’s value, the borrower’s financial health, and general market conditions. Because commercial mortgages carry significant financial commitments, lenders will typically require detailed business plans, proof of income, and a good credit history to qualify.

Commercial mortgages at a glance:

  • Loan sum – borrow anywhere from £50,000 all the way up to £50 million
  • Term – repay the loan over three to 30 years
  • Cash deposit – a minimum deposit of 25% is usually required. However, 100% finance may be available, subject to the borrower’s collateral or in certain sectors where lenders consider lending against goodwill

What types of commercial mortgages are there?

There are several types of commercial mortgage:

Owner-occupied commercial mortgages 

An owner-occupied commercial mortgage is a loan designed for businesses purchasing or refinancing the commercial property they occupy. These mortgages can help businesses secure stable premises, build equity, and benefit from potential tax advantages while maintaining operational control. 

  • Property financing in action

See how Swoop helped a small business owner grow his property portfolio 

Commercial investment property mortgages 

Commercial investment property mortgages are used to purchase or refinance commercial properties intended for rental income or capital growth. Unlike owner-occupied mortgages, the borrower typically does not occupy the property but leases it to tenants, generating revenue to cover loan repayments and earn profits.

Property portfolio loans 

Property portfolio loans are designed for investors who own multiple commercial properties. The financing allows them to consolidate mortgages into a single loan, simplify management processes and potentially secure better interest rates or terms. This type of loan provides flexibility, enabling investors to refinance, expand their portfolio, or release equity while managing repayments more efficiently across multiple properties.

What can commercial mortgages be used for?

Commercial mortgages can be used to buy or refinance residential and commercial property and/or trading businesses. These types of loans are often the cheapest way to borrow, because the lender takes a legal charge over the property/properties being offered as security. As the repayment profile is much longer than unsecured business loans, a commercial mortgage can also be a better solution from the perspective of managing cash flow.

Use a commercial mortgage to:

  • Purchase property – such as a commercial tenant buying their freehold or relocating their business to larger premises
  • Purchase an existing trading business – such as a hotel, pub,  care home, children’s day nursery or convenience store
  • Expand your business  – release equity in existing property to invest in other assets or businesses
  • Develop property – use structured development loans for the construction of residential or commercial properties
  • Invest in property – buy properties for lease to tenants. Generate income
  • Refurbish existing property – loans for property improvement or significant capital expenditure, such as extending a hotel or care home to create additional bedrooms
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Typical features of a commercial mortgage

Unlike private residential mortgages that are usually standardised ‘off the shelf products’, commercial mortgages are tailor-made solutions designed to meet the needs of the borrower.

Interest rate

Commercial mortgage interest rates are determined by the riskiness of the deal. Lenders will usually charge interest across a range, for example 2% to 5% above base rate. The higher the risk, the more you’ll pay. Commercial mortgages may be offered as variable rate, fixed rate or, on larger loans, a combination of the two. With a variable rate loan, the interest rate you pay can go up or down. With a fixed rate mortgage, the rate stays the same throughout the life of the loan.

Affordability

Lenders will always consider affordability – which means does the borrower’s business generate sufficient income or profit from sustainable sources to repay the loan? Lenders need to see that the borrower can meet their long-term repayment obligations without suffering financial stress. 

Lenders assess affordability by evaluating business income, expenses, credit history, and existing debt. They analyse financial statements, tax returns, and debt-to-income ratios to ensure borrowers can manage repayments. Stress tests may also be applied to assess resilience against potential interest rate increases or financial changes.

Loan to Value ratio (LTV)

The Loan-to-Value (LTV) ratio measures the loan amount against a property’s value, expressed as a percentage. A lower LTV means lower risk for lenders, often resulting in better interest rates and loan terms. 

Loan duration

Longer term mortgages may be perceived as higher risk, because it may be difficult to confirm that the borrower’s income is sustainable for the duration of the loan. To mitigate risk, long-term loans usually come with higher interest rates than short-term financing.

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What types of businesses can get a commercial mortgage?

Commercial mortgages are available for almost any type of UK business, including:

  • Sole traders
  • Partnerships 
  • Large partnerships
  • Limited companies
  • Limited liability partnerships (LLPs)
  • Trusts
  • Self-invested personal pensions( SIPPs) and Small self-administered schemes (SSASs)

Can I qualify?

Every lender will have their own qualifying criteria but the core factors remain the same:

  • Personal and business credit history – lenders will usually require a personal credit score of at least 650
  • Experience and background of the borrowers and/or the key people involved in the business (such as the management team)
  • The type of property/business you wish to purchase or refinance
  • The proposed loan-to-value (LTV) – typically 75% is maximum, but higher LTVs may be possible subject to providing additional collateral or leveraging goodwill (only available in certain sectors)
  • Affordability – can your business afford to repay the loan? Typically assessed against the last 2-3 years profits and current trade assesment
  • Sustainability – is your income sustainable for the full duration of the loan?

What information or documentation do I need to qualify?

Lenders will typically require the following information: 

  • Proof of income – such as the last three years’ financial accounts for a trading business and/or lease agreements for property investment applications
  • Latest management accounts – cash flow, monthly profit and loss, balance sheet, accounts payable/receivable, etc
  • Last six months’ personal and business bank account statements 
  • Business plan and/or financial forecasts
  • CVs or background summary of the borrowers or management team
  • A&L (asset and liability) and I&E (income and expenditure) statements for all borrowers

Where can I get a commercial mortgage?

The interest rate, fees, and terms and conditions of commercial mortgages can vary significantly, so shopping around is essential. You can do this by approaching banks, building societies and online lenders one by one over days, weeks, or even months, or you could use the services of a commercial mortgage broker who can quickly introduce you to a choice of commercial mortgages from a range of lenders. 

Working with a broker can give you more loan options, an improved application package and faster loan approval.

Top tip: When comparing commercial mortgages, always consider the associated costs, such as:

  • Arrangement fees
  • Valuation fees
  • Legal fees
  • Exit fees
  • Commitment fees
  • Monitoring fees

How long does it take to get a commercial mortgage?

Arranging a commercial mortgage or a property portfolio loan, depending on the purpose of the loan, typically takes between two and six months. The more complex the deal, the longer it takes. For example, a simple refinance of an existing property to release equity can be achieved in six to eight weeks. By contrast, the acquisition of a going-concern can take more than six months to complete because of the level of legal and financial due diligence that may be required.

  • Property finance in action

Discover how Swooped helped a care home business get back to growth.

Other types of property finance

Corporate buy-to-let mortgages

A corporate buy-to-let mortgage is a loan for companies purchasing residential properties to rent out to tenants. This type of financing is tailored for businesses, including limited companies or SPVs, that are seeking investment opportunities. Lenders will usually assess rental income potential, company finances, and director guarantees when approving the loan.

Development finance

Development finance is a business loan used to cover the costs of building new or refurbishing or enlarging an existing commercial property.

These types of loan are typically drawn down in stages, at various milestones as the work to build the property progresses. Interest is usually capitalised (added to the loan balance), rather than serviced, with the sale or refinance of the property on completion being the source of repayment for the entire debt.

What’s the difference between a commercial mortgage and a commercial bridging loan?

A commercial mortgage is a long-term loan secured against commercial property, typically repaid over several years. It’s used for purchasing, refinancing, or expanding business premises. 

In contrast, a commercial bridging loan is a short-term, high-interest loan designed for quick property purchases, refurbishments, or funding gaps. Bridging loans provide fast access to capital but in most cases must be repaid within months or a few years. Businesses use them as interim financing before securing long-term funding such as a commercial mortgage.

Get started with Swoop

Working with business finance experts can make all the difference when applying for a loan. Contact Swoop to discuss your borrowing needs, get help with your application and to compare high-quality commercial mortgages from a choice of lenders. Buy, build, invest, without putting strain on cash flow. Register with Swoop today.

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Commercial mortgage FAQs

A commercial mortgage broker works on behalf of a company to source affordable and competitive mortgage financing. Typically, this involves:

  • Property purchases
  • Purchasing existing trading business – such as a hotel, warehouse or care home
  • Business expansion
  • Property development
  • Property investments
  • Business refurbishment

Some brokers do not charge fees while others do. Typically, the market average is around 1.5% of the loan amount. Factors that impact this price are the type of finance you need, the complexity of the application and the level of support that your broker provides to get the deal done.

Brokers that don’t charge a fee (or only a nominal fee) will typically use lenders who pay them the highest ‘introducer fee’ and may not be fully transparent on this cost or acting in your best interests.

It is a regulatory requirement for brokers and lenders to provide full transparency to borrowers on the arrangement fees paid.

As a fully authorised and regulated business, Swoop Funding is committed to this transparency and the principle of Treating Customers Fairly.

The short answer is yes. Lenders review loan applications on a case-by-case basis and being turned down by one lender does not mean you cannot get a deal elsewhere. Working with a broker that has access to many lenders increases your chances of approval.

Similar to residential mortgages, commercial mortgages can be obtained on a capital and interest repayment basis, or interest-only repayments.

Capital and interest repayments mean that over the life of the loan the debt and all interest is paid in full. Whereas interest-only repayments mean that the amount you borrow will always be owed and you only pay interest on the loan amount.

Interest-only payments require an exit plan for repaying the original loan balance at the end of the term. This can be accomplished through methods such as remortgaging to a capital and interest repayment basis or selling the property. Additionally, some lenders may provide an initial interest- only period from 6 months to 2 years, then convert the loan to a capital repayment deal for the remainder of the loan term.

Interest-only mortgages are often used if the borrower’s cash flow will be tight during the early years of the loan.

Written by

Chris Godfrey

Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

Swoop promise

At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

Find out more about Swoop’s editorial principles by reading our editorial policy.

Article sources*
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Swoop requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

Commercial mortgage calculator: https://swoopfunding.com/uk/business-loan-calculator/commercial-mortgage-calculator/

Business loan: https://swoopfunding.com/uk/business-loans/

Owner-occupied commercial mortgage: https://swoopfunding.com/uk/commercial-mortgages/owner-occupied-commercial-mortgages/

Business owner expands his property portfolio: https://swoopfunding.com/uk/case-studies/at-your-convenience-swoop-helps-a-business-owner-grow-his-portfolio-of-local-stores/

Commercial investment mortgages: https://swoopfunding.com/uk/commercial-mortgages/investment-mortgage/

Buy a care home: https://swoopfunding.com/uk/sectors/buy-a-care-home/

Base rate: https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate

Swoop: https://swoopfunding.com/uk/

Helping a care home business: https://swoopfunding.com/uk/case-studies/finding-a-new-lender-to-put-their-faith-in-a-growing-care-home-business/

Development finance: https://swoopfunding.com/uk/commercial-mortgages/development-finance/

Bridging loan: https://swoopfunding.com/uk/commercial-mortgages/bridging-finance/

Related pages

Business loans

Equity finance

Grants

R&D tax credits

Insurance

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