Property finance
Commercial Mortgages for UK Limited Companies
A commercial mortgage is a long-term loan secured on commercial property, such as an office, shop, warehouse or industrial unit. Limited companies use them to buy the premises they trade from, to buy property to let to business tenants, or to refinance property they already own.
Like a home mortgage, it’s repaid over an agreed term. Unlike a home mortgage, the lender looks closely at the business or the lease behind the property, as well as the property itself.
Wize Finance can help your limited company see whether a commercial mortgage, or another type of finance, may suit the property you’re planning to buy or refinance.
Tell us about the property, how it will be used and the amount you need. The team reviews your enquiry and discusses the mortgage options that may fit.
How a commercial mortgage works
-
The company finds the property
and agrees a price, or identifies the property it wants to refinance.
-
The company puts money in.
Lenders usually expect the borrower to contribute part of the price from its own funds.
-
The lender assesses the application:
the property (usually through a valuation the lender arranges), and the income that will cover the repayments.
-
A legal charge is taken
over the property as security. Legal work is needed, and the lender may also use its own lawyers.
-
The company repays over the term,
usually monthly. Depending on the lender and product, that’s either capital and interest, or interest only for some or all of the term, with a plan to repay the balance at the end.
-
At the end of the term,
the loan must be repaid. The company may be able to refinance, but that’s a new lending decision, made on the lender’s criteria at the time.
Owner-occupied or investment?
There are two common kinds of commercial mortgage, and lenders assess them differently.
Letting homes to residential tenants is a different kind of investment, covered by Property Investment Finance. Some properties combine a commercial unit with flats above. Lenders treat mixed-use property in their own way, so it’s worth raising early.- Trade from it
Owner-occupied
Your company buys premises to trade from: a shop, office, workshop or warehouse. The lender mainly looks at whether the business’s trading income can support the repayments, so your accounts and trading history matter. Owner-occupied commercial mortgages have their own guide.
- Let it
Investment (let to business tenants)
Your company buys commercial property to let to another business. The lender mainly looks at the rent, the strength of the tenant and the length and terms of the lease.
What lenders look at for a commercial mortgage
Security and guarantees are separate things. The mortgage is secured by a legal charge over the property. Some lenders may also ask directors for a personal guarantee, which is a separate promise to repay if the company can’t. It’s worth being clear on exactly what you’re being asked to sign, and Wize Finance can help you understand what lenders may ask for.
The property:
- its value and condition, from a valuation the lender instructs
- its use, location and how easily it could be re-let or sold
- for investment property: the lease, the rent and the tenant
The company and its people:
- trading history and accounts (especially for owner-occupied property)
- existing borrowing and how the new repayments fit
- the directors’ experience and credit history
Buying, refinancing or releasing money from commercial property
For refinancing other business debts, see Business Refinancing & Debt Consolidation.
-
Buying premises or an investment. The most common use. The company’s own contribution and the valuation shape what’s possible.
-
Refinancing an existing commercial mortgage. Replacing a current loan, for example at the end of a fixed period or to change the structure. Compare exit fees on the old loan with the costs of the new one.
-
Releasing money from property you own. Some companies borrow against premises they already own. If the money is for the business rather than the property, Secured Business Loans may be the closer fit.
When a commercial mortgage may not be the right fit
A commercial mortgage is designed for owning commercial property over the long term. Another route may fit better if:
-
you need to complete quickly or cover a gap before long-term finance is in place → Bridging Finance
-
you’re building, converting or carrying out major works → Development Finance
-
the property is residential and let to tenants → property investment finance
-
the money is for the business, not the property → a secured business loan
Found the property?
Tell us about the premises and what your company plans to do with them, and see which types of finance may suit it.
What to check before you commit
Commercial mortgage FAQs
What is a commercial mortgage?
It’s a long-term loan secured on commercial property, such as an office, shop or industrial unit, used to buy or refinance that property. It’s repaid over an agreed term, usually monthly.
Can a limited company get a commercial mortgage?
Yes. Many commercial mortgages are made to limited companies, both to buy premises they trade from and to buy property to let to business tenants. Lenders look at the company, the property and the directors.
How much deposit do I need for a commercial mortgage?
It depends on the property, how it will be used, the company’s finances and the lender. Lenders usually expect the borrower to put some of its own money in. Tell us about the property and your plans, and we can talk through what lenders may look at.
Is commercial property finance the same as a commercial mortgage?
Usually, yes. “Commercial property finance” is often used to mean a commercial mortgage, although it can also include short-term options such as bridging finance.
What’s the difference between owner-occupied and investment commercial mortgages?
With owner-occupied, your company trades from the property and the lender focuses on your trading income. With investment, the property is let to another business and the lender focuses on the rent, the tenant and the lease.
Can I get a commercial mortgage on a property with flats above?
Some lenders consider mixed-use property, but they treat it in their own way. Raise it early, so the property’s mix of uses is clear from the start.
Will I need to give a personal guarantee?
Some lenders may ask directors for a personal guarantee as well as the charge over the property. Requirements vary, so check what’s being asked before you agree to it.
How Wize Finance works
Wize Finance uses the information you give us to understand the property and your company’s plans. Where appropriate, it introduces the business to a finance provider, which assesses the application and makes the decision.
After you submit your details, the Wize Finance team reviews your enquiry and contacts you to discuss your funding needs and next steps. Where appropriate, your details can then be shared with a suitable funding provider.
It helps to tell us: the property and its use, whether you’re buying or refinancing, roughly how much you need, and whether the company will trade from it or let it.
- The business
- Wize Finance understands the property and your company's plans
- Finance provider assesses the application and makes the decision
Ready to look at a commercial mortgage?
Tell us about the property and your company, and see which types of finance may suit it.