Commercial and Semi-Commercial Mortgages Explained
Commercial mortgages are used to purchase or refinance properties used for business purposes — offices, retail units, warehouses, and more. Semi-commercial (or mixed-use) properties combine commercial and residential elements, such as a shop with a flat above. Both require specialist advice.
Owner-Occupied vs Investment
If you are buying a property to trade from, it is owner-occupied. If you are buying to let to a business tenant, it is a commercial investment. Lenders assess these differently — owner-occupied deals focus on your business's trading performance, while investment deals focus on the rental income and tenant covenant strength.
Deposits and LTV
Commercial mortgages typically require a deposit of 25–40%, giving a maximum Loan to Value (LTV) of 60–75%. Semi-commercial properties may attract slightly better LTVs depending on the residential element. The stronger your business financials and the better the location, the more competitive the terms available.
Repayment Structures
Commercial mortgages can be arranged on a capital repayment or interest-only basis. Terms typically range from 5 to 25 years. Some lenders offer interest-only periods followed by capital repayment, which can help with cash flow in the early years of ownership.
The Importance of a Specialist Broker
Commercial mortgage underwriting is far more bespoke than residential. Lenders assess the property, the tenant, the lease, and the borrower's financial position in detail. A specialist broker with strong lender relationships can present your case in the best possible light and access deals not available on the open market.
Looking to finance commercial or mixed-use property? Our commercial mortgage specialists are here to help. Get in touch for a confidential discussion.