UK Commercial Mortgage Rates and Options

The UK commercial mortgage market offers a range of rates and options for businesses looking to secure a loan.

Interest rates for commercial mortgages in the UK can be fixed or variable, with fixed rates typically ranging from 3.5% to 5.5% APR.

Businesses can choose from a variety of loan terms, including 2, 5, and 10-year options.

A £200,000 commercial mortgage with a 5-year term and an interest rate of 4.5% APR would result in monthly repayments of approximately £3,700.

Commercial mortgage rates in the UK can vary significantly, ranging from 6.19% to 14% per annum, depending on the lender.

To get a lower commercial mortgage rate, it's essential to settle any adverse credit you've suffered, as this will help you secure a better deal.

Presenting yourself in the best possible light is also crucial, as some lenders price their applications to risk. A strong application pack can make a big difference in securing a lower rate.

You can use our commercial mortgage calculator to find out interest rates currently available for your specific borrowing scenario.

Commercial mortgages are often variable rate, meaning they follow a financial indicator, such as the Sterling Overnight Index Average (SONIA).

If you believe interest rates will remain stable or decrease, a variable rate might be a good choice for you, but be aware of the risk of rates going up.

Here are some key facts to consider when it comes to commercial mortgage rates:

If you're looking to find the right commercial mortgage for your needs, you'll want to consider your borrowing scenario and use a commercial mortgage calculator to get an idea of the interest rates available.

You'll also want to work with a lender that has specialist expertise in landlord finance solutions, which means they'll be able to give you a recommendation based on detailed knowledge of the latest deals available.

Every mortgage comes with monthly mortgage costs based on the mortgage interest rate the lender charges, which can be paid on either an interest-only or capital repayment basis.

To get the best commercial mortgage rates, you'll want to look for a lender that offers market-leading interest rates and no broker fees.

Factors affecting commercial mortgage rates are crucial to understand if you're looking to secure a loan for your business. Your industry experience and the profitability of your company can significantly impact the interest rate you'll be offered.

A strong credit profile is also essential, not just for you as an individual but also for your business. This is especially important if you're an owner-occupier.

The loan size, length and quality of the tenant and lease, type of lender, loan to value ratio (LTV), and your credit history all play a significant role in determining the interest rate.

Here are the key factors that can affect commercial mortgage rates:

Typical commercial mortgage rates can vary depending on several factors. Commercial mortgage rates offered by UK lenders currently range from 6.19% to 14% per annum.

You'll typically be offered a choice between a fixed interest rate or a variable interest rate, also known as a floating rate. Both rates can be beneficial for your business, depending on what your needs are and what your business values the most.

Fixed rates provide stability and a clear idea of how much you'll pay on a monthly basis, while variable rates offer lower introductory interest, but can fluctuate up or down depending on the financial market's effect on the NatWest Bank base rate.

The main considerations in pricing an application are the loan size, the length and quality of the tenant and lease, the type of lender, the loan to value ratio, your credit history, and the financials/ strength of the business.

Here are some key factors that can impact your commercial mortgage rate:

If your business is established and affordability is comfortable, you'll generally benefit from a lower interest rate. If you're planning on using the property as premises for your own business, the interest rate is likely to be lower than if you intend to let the property.

Fixed and variable costs are a crucial aspect of commercial mortgage rates.

Fixed costs are relatively stable, but may be slightly higher than variable rates. Some lenders, like Shawbrook Bank and InterBay Commercial, have set fixed rates.

Variable costs, on the other hand, can fluctuate depending on the financial market's effect on the NatWest Bank base rate. This can be beneficial if you're looking for lower introductory interest rates.

You may be charged a product fee, which can be added to the mortgage, and a broker fee for our work. The broker fee is paid in two parts: a booking fee at application, and the majority at completion of the mortgage.

Here's a breakdown of the costs you can expect:

There are 2 main types of mortgage for business use: owner occupier and commercial investment. The type you need depends on the intended purpose of the property.

If you buy or want to remortgage a trading premises used for your own business needs, you'll need an owner-occupier mortgage. You can use this type of mortgage for your own business needs.

If you want to buy a property to let out to another business or residential tenants, a commercial investment mortgage is the way to go. This type of mortgage is specifically designed for property investors.

Lender arrangement fees are usually between 0.75% and 2.5% of the loan amount, and are often added to the loan.

The lender may also charge a commitment fee, which is usually 0.25% and is deducted from the arrangement fee.

You won't usually pay the valuation fee upfront, but it will be paid once an offer has been issued subject to valuation, with fees typically being higher than residential valuations.

We always give our clients the option of paying the valuation fee as late in the process as possible, to minimize the risk of wasting money.

Most brokers charge fees of 1% or more for arranging commercial mortgages, although some may not charge fees on applications above £100,000 if they are being paid by the lender.

Legal fees tend to be higher for commercial mortgages than residential mortgages, and borrowers will usually pay the legal costs for both themselves and the seller.

Applying for a commercial mortgage can be a bit more complex than taking out a residential mortgage, so it's a good idea to get advice from an experienced commercial mortgage broker. A broker can help you prepare your application to ensure that you meet the specifics of this type of criteria.

Commercial mortgage lenders usually ask for detailed information to support your application, which could include a full business plan. This is more likely if the business is less than 3 years old.

You'll need to provide similar documents to get a commercial mortgage as you would for a residential mortgage, with a few additions. These include proof of ID and address, personal and business bank statements covering at least the most recent 3 months, trading figures and accounts covering around 3 years, and potentially projected income.

Here are some key eligibility considerations for a commercial mortgage:

You're probably curious to know who's eligible for a commercial mortgage. Upper age limits at application are flexible, so it's not just for young business owners.

Low personal incomes are accepted, which is great news for those just starting out or with variable income streams. Property, pension, and employment income are all okay, so you can use a variety of income sources to qualify.

If you lack experience in commercial letting, you'll typically need to put down a bigger deposit than if you were an experienced commercial landlord. This is because lenders are stricter on loan-to-value ratios for those without experience.

Here's a quick rundown of the deposit requirements:

Where your credit profile isn't as good as you'd like, it might affect the interest rate you can get, but it won't necessarily stop you from getting a commercial mortgage.

Applying for a commercial mortgage can be a bit more complex than taking out a residential mortgage, so it's a good idea to get advice from an experienced commercial mortgage broker. A broker can help you prepare your application to ensure that you meet the specifics of the lender's criteria.

You can either go directly to a lender, such as a high street bank, or use a specialist lender. Specialist lenders may have more competitive rates and more flexible criteria.

To get a commercial mortgage, you'll need to provide similar documents to those required for a residential mortgage, with a few additions. This can include proof of ID and address, personal and business bank statements covering at least the most recent 3 months, and trading figures and accounts covering around 3 years.

Here are some key documents you'll need to get a commercial mortgage:

It's worth noting that a business plan is a crucial part of the application process. A broker can help you prepare this to ensure it meets the lender's requirements.