Calculator
Illustrative example figures. The default values are examples only, not quotes or market rates. Replace them with figures from a lender.
Schedule
Assumptions and definitions
- Mortgage required = property value − deposit. LTV = mortgage ÷ property value. Deposit £ and % are linked: change one and the other updates.
- Interest and the arrangement fee are calculated on the mortgage amount. The fixed rate applies for the whole term, with monthly payments and interest calculated monthly.
- Interest-only: the full mortgage is repaid in one sum at the end. Repayment: equal monthly payments clear it.
- The LTV warning compares your LTV with the typical maximum found in the published lender criteria cited on this page. It is not a lending decision.
- Fees are paid upfront. Stamp Duty Land Tax, broker fees and early repayment charges are excluded.
- Effective annual rate is an APR-like measure: the internal rate of return (IRR) of the cash flows (money received after upfront fees, then every payment and fee), compounded to a yearly figure as (1 + monthly IRR)12 − 1. It is not a lender's quoted APR and excludes costs not entered here.
- Results are rounded estimates for illustration and are not an offer of credit.
Owner-occupier or investor?
The lender first asks where repayments come from. If your business trades from the building, say a dental practice buying its surgery, the loan is owner-occupied and is repaid from trading profit. If the building is let to someone else, it is an investment loan repaid from rent, and the lender also assesses the tenant and the lease. Mixed-use buildings, such as a shop with flats above, are semi-commercial and sit in between.
How much you can borrow
The loan is the lower of two limits: LTV, measured against the valuer’s figure rather than the price, and affordability, which often bites first.
Typical maximum LTV by property type
These are typical maximums from published lender criteria we checked on 17 October 2026. They are not offers, and individual lenders, properties and borrowers vary.
| Property type | Typical maximum LTV | Source |
|---|---|---|
| Owner-occupied | 75% to 80% | 75%: Yorkshire Building Society criteria guide; 80%: Allica Bank |
| Commercial investment | 75% | Yorkshire Building Society; Allica Bank |
| Semi-commercial (mixed use) | 75% | Yorkshire Building Society (at least 50% residential); GB Bank |
| Other or specialist (e.g. hotels, pubs, care homes, land) | No figure given | We have not found consistent published figures. Some lenders exclude these types; others assess them case by case. |
By borrower type: the lenders cited publish which borrowers they accept (for example limited companies, LLPs, partnerships, sole traders and individuals), but we have not found published figures that set different maximum LTVs by borrower type, so we do not give one. Lenders also size loans on affordability (trading profit or rent), which can limit the loan below the maximum LTV.
On affordability, the lender’s credit team tests the payments against the business’s profit or, for investment property, the rent. Lenders differ in how they adjust profit (some add back rent the business will stop paying once it owns the building) and in the cover they require, so one building can support different loans.
See UK lenders offering commercial mortgages →
What it costs to complete
- Valuation: the lender instructs a valuer, usually from its own panel, and you pay for the report. RICS members follow the RICS valuation standards (the Red Book).
- Legal fees on both sides: yours and the lender’s, which is normally passed to you.
- Arrangement fee, usually a percentage of the loan and often added to it.
- Interest, fixed or variable (often a margin over Bank Rate or SONIA), charged on the mortgage amount. Fixed-rate deals often carry early repayment charges.
- Stamp Duty Land Tax on purchases in England and Northern Ireland. Scotland and Wales have their own taxes.
From enquiry to drawdown
- Indicative terms. Heads of terms or an agreement in principle, based on your accounts, the property and the deposit.
- Credit approval. The lender’s credit committee reviews trading history, existing debt, directors’ credit records and, for investment property, the tenant and lease.
- Valuation. Booked once you pay the fee. A down-valuation means a smaller loan or a bigger deposit.
- Legal work. Title, searches, leases and security documents; usually the longest stage.
- Completion and drawdown. Guarantees and any debenture are signed, the charge is registered and funds released.
A simple purchase with clean title can complete in weeks. Complicated leases, planning issues or several owners can stretch that to months.
Security and covenants
The lender takes a first legal charge over the property, sometimes alongside a debenture over the company and personal guarantees from the directors. Covenants commonly include a maximum LTV and minimum interest or debt-service cover, and the lender may revalue the property during the term. A fall in value can breach a covenant even when every payment has been made.
Weighing it up
Pros
- Spreads the cost of property over many years
- Usually cheaper than unsecured borrowing
- You build equity in the property
Cons
- A sizeable deposit is needed
- The property is at risk if you cannot repay
- Valuation, legal and SDLT costs add up
- Interest-only leaves a large sum due at the end
Who lends
High street and challenger banks, building societies, specialist commercial property lenders and, for larger or complex deals, private credit funds. Some loans to individuals can be FCA-regulated; check firms on the FCA Register.
Frequently asked questions
How much deposit do I need for a commercial mortgage?
Lenders advance a proportion of the property value, the loan-to-value (LTV), and you fund the rest. The maximum depends on the lender, the property type, and on whether your business occupies the building or lets it out. The table on this page shows typical maximums from published criteria.
What is the difference between owner-occupied and investment commercial mortgages?
Owner-occupied mortgages fund premises your own business trades from, and the lender judges affordability mainly on your trading profits. Investment mortgages fund property let to tenants, judged mainly on the rent, the lease and the strength of the tenant.
Is a commercial mortgage regulated by the FCA?
Lending to a limited company for business premises is generally not a regulated mortgage. Some loans to individuals, and loans secured on a home, can be regulated. Check with an FCA-authorised adviser and use the FCA Register to check firms.
Should I choose interest-only or repayment?
Repayment (amortising) clears the loan by the end of the term. Interest-only keeps monthly payments lower but leaves the full loan to repay at the end, usually by refinancing or selling, which is a risk to plan for.
What other costs should I budget for?
The lender’s valuation, your solicitor and the lender’s solicitor (you normally pay both), the arrangement fee, and Stamp Duty Land Tax in England and Northern Ireland on a purchase. Check GOV.UK for SDLT rules.
Sources and further reading
- Allica Bank: commercial mortgages (owner-occupied and investment criteria)
- Yorkshire Building Society: commercial product and criteria guide (PDF)
- Yorkshire Building Society: commercial investment mortgages
- Yorkshire Building Society: semi-commercial mortgages
- GB Bank: semi-commercial lending criteria
- British Business Bank: debt finance options
- Bank of England: Bank Rate
- Bank of England: SONIA interest rate benchmark
- GOV.UK: Stamp Duty Land Tax
- FCA Financial Services Register
- FCA: consumer credit (when lending or broking is regulated)
- GOV.UK: finance and support for your business
Links checked 17 Oct 2026. RaiseDebt does not state live market rates; check the source for current figures.