Commercial Mortgages in 2026: What Business Owners Need to Know Before Applying

TLDR

What is a commercial mortgage?

A commercial mortgage is a loan used to buy, refinance or raise money against a property that is used for business purposes.

It works in a similar way to a residential mortgage, but instead of being secured against a home, it is usually secured against a commercial property, such as:

• Office premises
• Shops or retail units
• Warehouses
• Factories
• Restaurants or cafes
• Care homes
• Mixed-use buildings
• Business trading premises

Why This Matters in 2026

For many business owners, property costs are one of the biggest long-term expenses. Buying business premises can create stability, but it also comes with financial responsibility.

Commercial mortgages are different from standard residential mortgages.

Loans secured on commercial premises are not regulated mortgage contracts under FCA perimeter guidance.

What Do Lenders Usually Assess?

Commercial mortgage lenders may look at:

• Business trading history
• Latest accounts
• Profitability and cash flow
• Deposit available
• Property type and location
• Lease terms, if applicable
• Director or personal guarantees
• Credit profile
• Exit and repayment strategy

How Much Deposit Might Be Needed?

Deposit requirements vary depending on the lender, property and business strength. Owner-occupied commercial mortgages may have different requirements from commercial investment mortgages. A stronger business profile, stable income and good property security may help the case.

Common Uses of a Commercial Mortgage

A commercial mortgage may be used to:

• Buy business premises
• Refinance existing commercial property
• Purchase an investment property
• Release equity for business use
• Move from renting to owning

Real life Example

We recently helped a client who approached us with the intention of purchasing a commercial property valued at £8.5 million. The property was occupied as a pharmacy and shopping complex, but the long-term plan was to convert it into a hotel, subject to planning and lender approval. The client had a 35% deposit available, and the proposed ownership structure was through a UK SPV. The client also already had experience in the UK hospitality sector, having previously purchased and operated a hotel through a separate SPV.

As part of the lender discussions, key points had to be clearly presented, including:

• The current bricks-and-mortar value of the property at approximately £8.5 million
• The potential value after planning, estimated at around £9.2 million
• The client’s experience in property purchase, refurbishment and working with builders
• The proposed ownership structure through a UK SPV
• The client’s existing UK hotel ownership experience
• The strength of the deposit and overall exit strategy

This type of case shows why commercial mortgages are rarely assessed on the property value alone. Lenders will usually want to understand the borrower’s background, the ownership structure, planning position, development experience, deposit source, projected income and long-term use of the property.

In complex commercial cases, the way the application is packaged can make a significant difference. A clear explanation of the client’s experience, property strategy and funding structure can help lenders assess the proposal more confidently.

Important Risk

Commercial mortgages can involve higher deposits, arrangement fees, valuation costs and legal work. The property or business asset may be at risk if repayments are not maintained.

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FAQs

1. Can a new business get a commercial mortgage?

Possibly, but it may be more difficult without strong accounts, deposit, security or supporting evidence.

2. Are commercial mortgages regulated by the FCA?

Many commercial mortgages are not regulated in the same way as residential mortgages. The exact position depends on the case.

3. Can I buy my own business premises?

Yes, subject to lender criteria, affordability and property suitability.

Final Thought

A commercial mortgage can be a useful route for business growth, but lenders will want to see that the borrowing is affordable, the property is suitable and the business case is sensible.

What is the role of bridging loans in commercial property purchase? Use the link below to explore our full guide:

Bridging Loan for Commercial Property: UK Guide

FCA Disclaimer

Your property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

This article is for general information only and does not constitute personalised financial advice.

Commercial lending criteria vary by lender and may depend on the structure of the borrowing, property type and business circumstances.

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