Commercial mortgages for London business buyers, landlords and operators.

How a commercial mortgage works in London: the broker, the lender and the borrower.

A commercial mortgage is a long-term loan secured against a commercial property, either a business property your company occupies or one you let to a tenant. In London the eligible commercial properties cover an office floor in the City, a shop with flats above on a borough high street, a warehouse on the west London industrial belt, a care home in an outer borough, a surgery in Marylebone, and the house in multiple occupation blocks that fill so much of the inner-borough stock. The product works differently from a buy-to-let mortgage on a residential property. A lender tests the rental income or the business's trading profit against the monthly payments, not your salary. The headline number is the loan to value ratio, usually 60 to 75% of property value, backed by ICR or DSCR on investment deals and EBITDA cover on owner-occupied ones. You repay capital and interest over 15 to 25 years as a rule, with interest-only available on prime investment over five to ten years.

London is not one commercial property market, and this is the single most important thing to understand before you apply for a commercial mortgage here. It is 33 planning authorities with 33 different pipelines, and postcode-level pricing that moves sharply across a borough boundary. Our own derivation of HM Land Registry Price Paid Data puts the Greater London median at £525,000 across 60,368 open-market sales in the twelve months to May 2026. Underneath that single figure sits Kensington and Chelsea at £1,100,000 and Barking and Dagenham at £385,000. That is residential data and we use it only as a temperature gauge, never as a measure of commercial transaction volume, but the spread tells you why a lender's view of the same deal changes with the postcode on the valuation report.

Not all commercial properties lend alike, and the gap between them is wider in London than anywhere else in the country. A let office floor, a trading pub and a shop with two flats above are three different underwriting exercises with three different lender shortlists, even on the same street. Business owners often assume the building is the deal. It is not. The income is the deal, and the building is the security behind it. That is why we ask for the lease or the accounts before we ask for the postcode, and why we would rather refinance an asset you already hold than watch you repay a facility at a rate the market has moved past.

The lending market splits into three tiers and we work all three on every enquiry. High-street commercial desks, NatWest, Lloyds, Barclays, Santander and HSBC, price the sharpest commercial mortgage rates on prime owner-occupied and prime investment business, but they lend inside narrow credit boxes. Challenger banks, including Allica, Aldermore, Cambridge and Counties, OakNorth, Paragon, Recognise and YBS Commercial, cover most of the SME and mid-market segment, with more flexibility for limited companies, SPVs and borrowers with a shorter trading history. Specialist lenders, Shawbrook, InterBay Commercial, LendInvest, Cynergy Bank, Together, Hampshire Trust and Handelsbanken, take the semi-commercial, mixed-use, HMO block and short-lease cases the high street declines. A commercial mortgage lender that says no to your deal is telling you about its credit policy, not about your deal.

Who actually borrows matters as much as what is being bought. Limited companies, trading or SPV, hold the majority of London investment property finance. Owner-occupiers borrow either through the trading company or through a separate property-holding SPV with an intercompany lease, and the right structure is a tax question for your accountant and your solicitor rather than for us. Sole traders and partnerships can and do borrow for business purposes, though the panel narrows. Five and ten-year fixes dominate prime investment. Trading-business deals usually price on a five-year fix inside a twenty-year term. Where the residential element of a semi-commercial property will be occupied by the borrower, the deal falls inside the regulated mortgage perimeter and we refer it to a regulated firm.

Where a purchase has to complete faster than a term facility allows, a bridge does the job. A commercial bridging loan runs three to twenty-four months at 8.5 to 11.0% pa, or 0.70 to 0.95% per month, and exits onto a term commercial mortgage once the asset is let, refurbished or has planning consent. London auction purchases and lease-extension plays are the classic uses. We only recommend a bridging loan where the exit is genuinely identified, because an unplanned bridge is the most expensive money in commercial finance.

Beyond the rate, the economics of a deal turn on fees. Arrangement fees run 1.0 to 2.0% of the facility. Valuation fees run from around £1,500 on a simple single unit to £8,000 or more on a complex or multi-let London asset, and a RICS Red Book valuation is the critical path item on almost every case, which is why we instruct in week one. Legal costs run £4,000 to £15,000 depending on title complexity, and a solicitor who already acts for the chosen lender will save you a week on the title stage. Stamp duty land tax applies at the non-residential rates on a commercial property purchase. Check early repayment charges before you fix, because a five-year fix you break in year two is rarely the cheapest option once the penalty is counted.

Lending criteria across the panel are more consistent than most borrowers expect. Two years of clean filed accounts is the usual minimum for owner-occupied lending, although twelve to eighteen months places comfortably in well-understood sectors such as dental, pharmacy and established trades. On investment the eligibility question is about the tenant, the lease and the cover ratio rather than about you. Clean credit for the company and its directors matters throughout. So does a sensible valuation: a thin desktop report can cost you five to ten percentage points of LTV, so we push for a full inspection on commercial property every time.

On regulation, we want to be exact rather than reassuring. Commercial mortgages on non-regulated property sit outside the Financial Conduct Authority's regulated mortgage perimeter. We are not authorised or regulated by the FCA, because the products we arrange are unregulated ones for limited companies, partnerships, SPVs and business owners borrowing for business purposes. Where an enquiry does need a regulated firm, a residential mortgage, a regulated bridging loan, or a semi-commercial property whose residential part the borrower will live in, we refer it on and document the referral. If you are not sure which side of that line your deal sits on, call us and we will tell you in five minutes at no cost.

One question we field constantly is what separates this from ordinary business borrowing. A business loan is usually unsecured or secured on trading assets, priced short and sized against turnover. A commercial mortgage is secured against a commercial property, runs for 15 to 25 years, and is sized against the building and its income. If you want to get a commercial mortgage rather than a business loan, the test is whether the property will still be there, and still be lettable, in twenty years. That is also why we do not arrange unsecured lending. Property developers building for sale need a different product again, on a different timetable, and we will say so rather than force a term facility onto a scheme it does not fit.

A typical application process runs as follows. A twenty-minute conversation, then indicative terms from three to five lenders inside 48 hours of a complete enquiry. Heads of terms from the chosen lender within about two weeks. Valuation and legals in parallel. Formal offer at four to six weeks and completion at six to eight. Send us the property details, the loan amount you have in mind and either the rent roll or the trading accounts, and we will model the deal lender by lender before you commit to a deposit. We work the same panel repeatedly and the long-term relationships that come from that are the reason a credit-committee question gets answered the same day rather than the same week.

Quick glossary. Commercial mortgage: a long-term loan secured against a commercial property, typically 60 to 75% LTV over 15 to 25 years. Commercial mortgage broker: an intermediary who places the deal across many lenders rather than tying you to one. Buy-to-let mortgage: a residential investment product, a different market to this one. Bridging loan: short-term finance, 3 to 24 months, used to bridge a sale, a refurbishment or a planning decision. Owner-occupied: a business buying the premises it trades from. Semi-commercial: a mixed-use building such as a shop with flats above. LTV: loan as a percentage of the value of the property. ICR: rent divided by interest, tested at 140 to 160%. DSCR: rent divided by the full payment, tested at 130 to 145%. EBITDA cover: trading profit divided by the payment, 1.3 to 1.5 times on owner-occupied deals. SDLT: stamp duty land tax, charged at separate non-residential rates. FCA: the Financial Conduct Authority, which does not regulate commercial mortgages on non-regulated property.