Business Funding · 12 min read

Commercial mortgage loan to value, deposits and terms in the UK, 2026

Alex BeardsleyFounder & Director

|Updated September 2026

A rent review lands, or the landlord decides to sell, and the numbers on buying get run properly for the first time. Two questions come before all the others: how much deposit, and how much a lender will put in.

This guide answers both with what a lender looks at when it sets a maximum loan to value, and a worked example at an illustrative rate, chosen for the arithmetic and not a rate any lender has quoted. Figures were checked on 8 September 2026, and none of them is an offer to you. The product page, commercial mortgages, covers the process from enquiry to completion.

Typical and maximum loan to value

There is no single figure. Each lender publishes its own maximum loan to value, and they change, so the number to plan around is the one in the criteria of the lender you apply to, applied to its valuation rather than the price you agree. The deposit section below runs the arithmetic at 75% to show how the sum works, not as a typical figure.

Professional practice lending is read differently. A lender that writes criteria for dental, veterinary, medical, accountancy and legal firms reads the registration and the recurring fees before the building, and sets its own maximum for it. Everyone else works inside a ceiling that depends on whether the business will occupy the building.

A lender usually sets a higher maximum for an owner-occupied loan than for a commercial investment purchase, because it has the trading accounts as well as the building to rely on, and the gap between one lender's maximum and another's is where a 20% deposit becomes a 30% one.

Loan to value also sets the price. A loan at 60% should price lower than the same loan at 80%, and the worked example below is set at 70%.

The deposit that implies

As an illustration, chosen for the arithmetic: a 75% loan to value means a 25% deposit, and on a £400,000 unit that is £100,000 before fees. The table runs the same purchase at each loan to value a lender might set.

Fees sit on top of the deposit. Lenders publish their own arrangement fees, and the percentage often differs between an owner-occupied loan and an investment loan. Add the valuation fee and both sets of legal costs, yours and usually the lender's. A deposit can come from company cash, a documented director's loan, the sale of another asset, or equity in another property offered as extra security; what a lender will not take is money whose origin cannot be shown.

Terms in years

Each lender publishes its own maximum term, and they change; a commercial mortgage is held for years rather than months, and the longest terms run to decades. Short commercial loans of five years or less are sold under the same heading, but they are a different thing from a mortgage you would hold for two decades.

The term and the fixed period are separate things. A fix commonly covers a few years of a much longer term, and at the end of a fix the loan usually reverts to a variable rate for the remainder of the term, with breakage costs if you leave early.

Repayment terms are the other half of the question. Capital and interest over the full term clears the balance, and interest-only leaves all of it to repay from a sale or a refinance. Interest-only tends to be capped at a lower loan to value and often at a fixed period at the outset. Investors lean towards interest-only for cash flow; owner-occupiers more often repay.

The monthly cost, worked through

Take a £400,000 unit bought at 70% loan to value: £280,000 borrowed, £120,000 deposit, 25 years capital and interest. At an illustrative 7% a year, chosen for the arithmetic and not a rate any lender has quoted, the payment is £1,979 a month, and each extra percentage point on the rate adds about £182. The 7% is a round number for the arithmetic, not a rate anyone is offering you.

Interest-only on the same £280,000 at 7% is £1,633 a month, with the whole £280,000 still owed at the end. Term changes the number more than most people expect: at the same rate over 20 years the loan costs £2,171 a month and £241,001 in interest across the term, against £1,979 a month and £313,695 over 25 years.

The rate itself is built in two parts. Bank Rate is 3.75%, unchanged since 18 December 2025 and held again at the decision published on 30 July 2026 (Bank of England, read 8 September 2026). A lender then quotes either a margin over that or a fixed rate for a set period. Read what a printed rate assumes before comparing it: some lenders build in a discount for moving the business current account to them, and a business that banks elsewhere pays more.

Owner-occupied versus investment, and what recourse means

An owner-occupied mortgage funds premises your own company trades from and is underwritten on your accounts; an investment mortgage funds property let to someone else and is underwritten on the rent. The investment ceiling is usually the lower of the two, and fees and margins on an investment case usually sit higher; each lender's own figures are the place to read how much more an investment case is charged.

For an investor with no track record the field is narrower, because each lender says in its criteria whether it wants commercial landlord experience before it lends on a let building. The tenant matters as much as the building. A covenant with strong accounts on a ten-year lease supports a bigger loan than a start-up with three years left, because the lender is buying the income stream.

Recourse is the question limited company borrowers most often skip. The lender takes a first legal charge over the property and commonly a debenture over the company. On most limited company loans it also takes personal guarantees from the directors. If the company stops paying and the sale of the building falls short, the guarantors owe the shortfall up to the amount guaranteed. Limited liability protects shareholders from the company's debts in general; it does not cancel a guarantee a director has signed. For property-secured lending we work with UK limited companies and LLPs only.

Mixed-use and part-let buildings

A shop with a flat above, or an office block where your firm takes two floors and lets the third, is priced as a mixed-use or semi-commercial asset, and each lender publishes its own maximum loan to value for it. Margins on a part-let building are commonly set in loan to value bands, so a small change in the valuation can move the price.

Which category a building falls into is decided by the majority use, by floor area or by value depending on the lender. If your company occupies more than half, the case is usually run as owner-occupied with the rent from the let part as supporting income. If the let part is the majority, it becomes an investment case with the lower ceiling and the higher fee. One line matters more than the rest: if you or a family member would live in the residential part, it is a property for your own use, and we do not arrange regulated mortgage contracts.

Property types and lender choice

Lenders sort a commercial mortgage by what the building is used for before they look at the borrower. Offices, shops and industrial units are mainstream; a pub, a petrol station or a church is a specialist use that a lender has to write criteria for, and the uses with a guide of their own are linked in the table. A specialist use is priced on the business inside the building as well as the bricks, and that shows up as a larger deposit before it shows up as a higher rate.

Location matters too: each lender publishes the nations it lends in, so a Belfast unit is checked against that before anything else.

Small industrial units

A small industrial unit is read against the same owner-occupied maximum as any other mainstream use, and each lender publishes its own, so the deposit follows from the lender's limit; industrial units and warehouses are a use commercial mortgage lenders commonly accept. What catches a small unit is the minimum loan rather than the loan to value. Minimum loan sizes vary widely from lender to lender, and a £120,000 unit at 75% LTV is a £90,000 loan that clears some minimums and falls under others.

The other check is the energy certificate. Since 1 April 2023 the minimum energy efficiency standard has applied to every existing commercial lease in England and Wales, so a unit rated F or G cannot lawfully be let unless an exemption is registered, and a lender valuing on resale or re-let will discount for it. Some lenders cut the rate for a well-rated building, which is the same rule working in the other direction. The industrial unit finance page covers yards, cranes, mezzanines and the rest of the detail.

Releasing equity from commercial property you already own

A commercial remortgage that raises cash is sized exactly like a purchase: a fresh valuation, the lender's maximum loan to value applied to it, and the existing loan repaid from the proceeds. As an illustration, chosen for the arithmetic: if a lender's maximum were 75% loan to value, a building worth £600,000 with £200,000 outstanding could in principle support a new loan of £450,000 and release around £250,000 before fees. The lender asks what the money is for. Funding another purchase, buying out a partner, repaying a bridge and fitting out the building are all recognisable purposes; an undisclosed one is not. Interest-only, where the lender permits it and within its own loan to value cap, keeps the monthly cost down at the price of leaving the balance in place.

What lenders ask for

Two years of filed accounts is the common floor. Alongside them a lender will want six months of business bank statements, current management figures if the last accounts are more than a few months old, evidence of where the deposit sits, and the property particulars: address, tenure, price, any lease and the tenant's accounts on an investment purchase. Directors giving guarantees supply a personal asset and liability statement and pass identity checks. The lender instructs its own valuer, and the report is usually the slowest single step. From application to completion, each lender publishes its own timescale, and most of the time goes on valuation and legal work rather than credit.

Why applications stall

Nobody publishes an approval rate for UK commercial mortgages, so a page that gives you one is guessing. What can be said is where cases stop. A valuation below the agreed price is the first: as an illustration, chosen for the arithmetic, at 75% of a £380,000 valuation the loan is £285,000, not the £300,000 you budgeted on a £400,000 price, and the £15,000 gap has to come from you. Sector is the second: a pub or a petrol station is read against criteria written for the sector, where an office is mainstream.

Thin profit is the third. An owner-occupier is sized on what the business can afford after paying for the building, and a lender that wants the payment covered with headroom from adjusted profit will cut the loan rather than decline it, which lands as a bigger deposit. On an investment purchase the equivalent is a short unexpired lease. A deposit that cannot be evidenced, an EPC below E on a unit to be let, a valuation report that flags structural work, and a director's credit file with a recent default each add weeks or end the case. None of these is changed by applying to more lenders at once, because each lender reads them against its own published criteria.

Two related pages. What a commercial mortgage broker does explains how the panel is approached and who pays, and the commercial mortgages page carries the sector guides. If the deadline is too tight for a mortgage, or the building needs work before a mainstream lender will value it, bridging finance is the stopgap with the mortgage as the exit.

Sources

• Bank of England, Bank Rate (3.75%, decision published 30 July 2026), read 8 September 2026
• The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, the minimum EPC E standard that applied to all existing commercial leases from 1 April 2023
• FCA Handbook, MCOB, the perimeter for regulated mortgage contracts

Figures checked 8 September 2026. The 7% rate in the worked example is illustrative, chosen for the arithmetic, not a rate any lender has quoted.

CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. We do not provide financial advice.