London Commercial Mortgage FAQ

A commercial mortgage is long-term debt secured against income-producing or owner-occupied commercial property: offices, Class E retail, industrial and warehouse space, semi-commercial shop-with-flats buildings, healthcare, hospitality and trading-business premises. In the London market for mid-2026, typical facility size is £150K to £10M, LTV 65 to 75%, term 5 to 25 years and rates 6.0 to 9.0% pa. Repayment is normally monthly capital and interest on a reducing balance. The lender takes a first legal charge over the property and usually a personal or limited company guarantee. See commercial mortgage services for the full eight-product breakdown across owner-occupier, investment, semi-commercial, portfolio refinance and trading-business.

A commercial mortgage is secured against commercial property: offices, Class E units, industrial, healthcare, leisure, semi-commercial shop with flats, trading businesses. Residential buy-to-let is secured against single houses or flats let on assured shorthold tenancies. The underwriting is fundamentally different. Residential buy-to-let leans on the borrower's personal income and the rental yield. A commercial mortgage tests tenant covenant and unexpired lease term on an investment case, or EBITDA cover on an owner-occupier or trading-business case. Most commercial mortgages sit outside the FCA regulated mortgage perimeter. Do not apply for a buy-to-let against a shop with a flat above: it will decline, because that is a semi-commercial mortgage.

Three primary audiences, and our London week splits fairly evenly across all three. Owner-occupier business buyers, buying or refinancing the freehold of the premises their own business trades from: dental partnerships, accountancy firms, light-industrial trades, food producers, retail operators. Commercial property investors and landlords, buying or refinancing let commercial assets, single-let or multi-let, sometimes a portfolio of five or more across several boroughs. Trading-business owner-operators, running pubs, hotels, care homes, day nurseries and MOT centres, buying the operational property and the going concern together. The product, the lender pool and the underwriting style differ across the three. The broker discipline does not.

No. Commercial mortgages are unregulated lending and fall outside the FCA's regulated mortgage perimeter. We do not hold FCA authorisation, because the products we arrange are unregulated. We arrange unregulated commercial finance only: owner-occupier, commercial investment, semi-commercial where the borrower does not occupy the residential element, portfolio refinance, trading-business, commercial remortgage, commercial bridging and second-charge commercial. Cases that do require authorisation, including semi-commercial where the borrower or an immediate family member occupies a flat, regulated bridging and residential mortgages, are referred to a regulated firm. We say so on the first call rather than three weeks in.

London is 33 separate planning authorities and 222 postcode outcodes, and lending appetite tracks the local market rather than the M25 as a whole. Central boroughs are dominated by office and prime retail stock where lot sizes are large, yields are compressed and the affordability test binds long before the LTV cap. Outer boroughs carry more industrial stock, more high-street Class E and more semi-commercial parade buildings, where 75% leverage is genuinely achievable. Three practical differences move a credit decision: the Article 4 directions in force in that borough, whether the site sits in the Central Activities Zone or one of the 47 Opportunity Areas designated by the 2021 London Plan, and how much comparable evidence a RICS valuer can find nearby. Browse all London areas.

Typically 25 to 30% for owner-occupier, commercial investment and semi-commercial, corresponding to 70 to 75% LTV. Trading-business cases (pub, hotel, care home, MOT centre) sit tighter at 30 to 40%, reflecting the specialist underwrite. The deposit must be genuine, traceable equity: retained profit in the trading limited company, sale proceeds from another asset, equity released from a separately refinanced property, or a family gift with a written declaration. Lenders will not accept a further loan secured against the same property as the deposit, and a personal guarantee is not equity. Budget separately for Stamp Duty Land Tax, the RICS valuation fee and legal costs on both sides, none of which the lender will finance.

For owner-occupier, two years of clean filed accounts is the comfortable minimum. We routinely place deals with 12 to 18 months of trading where the sector is well understood: dental, GP, pharmacy, established skilled trades and regulated professions. The lender wants growing turnover, stable margins and a credible business case for buying the freehold. For commercial investment the test is tenant covenant and unexpired lease term rather than borrower trading history, so a newly incorporated SPV holding an asset with a strong tenant lease can still price well. InterBay Commercial, Cynergy Bank, Cambridge and Counties and Hampshire Trust Bank hold meaningful flexibility on borrower history that a high-street commercial desk will not entertain on the same case.

Yes, and most commercial mortgages in the UK are written into limited companies. For commercial investment, a special-purpose vehicle is the standard structure: a single asset or portfolio held in a clean SPV, usually with SIC code 68209. For owner-occupier, the borrower is normally the trading limited company itself, with the property on its balance sheet. Trading-business mortgages can be structured either way, into the trading company or into a separate property-holding company that leases the premises back to the operating business. Lenders price both routes. The choice depends on tax position, lender appetite and exit planning, and we model the alternatives at indicative-terms stage rather than after the application has gone in.

Almost always, but the position is negotiable. Most commercial mortgage lenders require a personal guarantee from the directors and majority shareholders of the borrowing entity. The amount is usually 20 to 30% of the facility, sometimes more in higher-risk sectors, sometimes capped at a fixed sum. A few specialist desks offer limited recourse on commercial investment cases where the SPV holds strong tenant covenant and leverage sits below 60%: the lender takes its security from the asset and the rent rather than the personal balance sheet. We benchmark guarantee terms across the shortlist at indicative-terms stage. On the right case a £200K cap is achievable where another lender on the same deal would have asked for £500K.

Clean credit is the default expectation: no CCJs in the last six years, no defaults in the last three, no bankruptcy or IVA in the last six. Real life is not always that clean. Specialist desks accept blemishes where there is a credible explanation, such as an old CCJ from a disputed supplier invoice, a satisfied default following a divorce, or a payment plan settled five years ago. Pricing usually moves up 50 to 150 basis points and the LTV may step down a band. The hard fails are ongoing bankruptcy, an undischarged IVA and recent significant adverse credit. Tell us the credit position on the first call. It shapes which lender desks are worth approaching and which are a waste of three weeks.

Yes, though the lender shortlist narrows. UK-resident non-UK nationals with the right to remain are accepted across most of the panel. Non-UK-resident borrowers face a tighter pool: a smaller group of specialists including InterBay Commercial, Cynergy Bank, Hampshire Trust Bank, OakNorth and a number of private banks actively quote, with pricing typically 50 to 150 basis points wider than the equivalent UK-resident case and materially more intensive source-of-funds work. Companies House filings, the register of persons with significant control, anti-money-laundering checks and tax-residency confirmation all sit on the critical path. London sees more overseas ownership than any other UK market, so this is well-trodden ground rather than an exception.

Mid-2026 ranges by product. Owner-occupier on a strong covenant: 6.0 to 7.5% pa. Commercial investment: 6.5 to 8.5% pa, with the longest unexpired terms and strongest covenants at the sharp end. Semi-commercial shop with flats: 6.5 to 8.5% pa. Portfolio refinance: 6.5 to 8.0% pa. Trading business: 7.0 to 9.0% pa. Commercial remortgage: 6.0 to 8.0% pa. Commercial bridging and second charge: 8.5 to 11.0% pa, bridging often quoted as 0.70 to 0.95% per month. The drivers are LTV, EBITDA or ICR cover, lease length, tenant covenant, sector and borrower track record. Five-year fixes typically price 25 to 50 basis points above two-year fixes.

Most London commercial mortgages are written on a five-year fix inside a longer 15 to 25 year amortisation. Two-year fixes exist, but the rate differential is narrow and the refinance overhead in 24 months is real. Tracker products linked to Bank of England base rate or to SONIA are available from challenger banks and give you the upside if rates fall from here, though the unhedged interest-rate risk needs balance-sheet headroom you may not have. The decision framework is simple. If EBITDA or ICR cover is comfortable and the business or rent roll can absorb a 200 basis point upward move, a tracker is defensible. If cover is tight, fix and remove the volatility. We model both at indicative-terms stage.

Arrangement fee: 1 to 2% of the facility, often added to the loan rather than paid up front. RICS Red Book valuation fee: £1,500 to £8,000 depending on complexity, with sector-specialist assets (care, hotel, pub) and large London investment assets at the top of that range and beyond. Legal fees: both sides, typically £2,500 to £8,000 for your commercial solicitor and £1,500 to £4,000 recharged at cost for the lender's solicitor. Broker fee: usually covered within the arrangement fee with no separate charge, though on complex specialist cases a separate fee is sometimes agreed and always disclosed before you commit. Early repayment charges: many five-year fixes carry 3 to 5% in years one and two, tapering. Total fee cost usually lands at 2 to 3% of the facility.

Yes. Stamp Duty Land Tax applies to commercial and mixed-use property in England at the non-residential rates, which are materially lower than the residential scale and carry no additional-dwelling surcharge. There is no first-time-buyer relief on commercial property. A genuinely mixed-use building, such as a shop with flats above bought as an investment, is assessed entirely on the non-residential rates rather than the residential scale, which is one reason semi-commercial appeals to London investors. On a lease grant rather than a freehold purchase there is a separate charge based on the net present value of the rent. Rates and bands are set by the Treasury and change at fiscal events, so confirm the current position with your solicitor or accountant. SDLT is a cost the lender will not finance.

Generally yes. Commercial mortgage rates run 6.0 to 9.0% pa across the standard products in mid-2026, above equivalent residential pricing. Three things explain the gap. Residential mortgage lending is more standardised and far more competitive. Residential property is easier collateral to value and to resell. And commercial underwriting is written case by case, per asset and per sector, from a smaller lender pool. Within the commercial market the spread is wide too: an owner-occupier dental freehold at the bottom of the range prices very differently from a tertiary high-street pub near the top, even though both are technically commercial mortgages. The broker job is to land your case on the correct desk first time rather than the nearest one.

Most five-year fixed-rate commercial mortgages carry early repayment charges in years one and two, tapering through years three to five. A typical structure is 5%, 4%, 3%, 2% then 1% of the outstanding balance. Some lenders allow a 10% annual overpayment without penalty inside the fix; some allow free overpayment from accumulated profit; some allow none at all. Variable and tracker products usually permit free overpayment at any time. After the fix ends, full early repayment is normally penalty-free. The ERC position is the first conversation on every commercial remortgage: sometimes the new rate saving justifies breaking the existing fix, sometimes it does not. We model the break-even precisely rather than assert it.

Indicative terms within 48 hours of a complete enquiry. Completion typically 4 to 8 weeks on mainstream owner-occupier, commercial investment and semi-commercial cases, and 6 to 10 weeks on trading-business cases (care home, hotel, pub, MOT centre) reflecting the sector underwrite, environmental due diligence and the wait for a specialist RICS valuer. The item on the critical path is almost always the RICS Red Book valuation. London adds two delays worth planning for: a leasehold interest needs the landlord's consent, which is outside everybody's control, and the search pack can pick up Crossrail or Underground assets, party wall matters or service-charge arrears. A complete document pack on day one is the single biggest thing a borrower can control.

The Royal Institution of Chartered Surveyors Red Book is the global standard for property valuation. Every commercial mortgage lender requires a Red Book valuation from a RICS-registered surveyor on its own panel before it will release funds. The valuer inspects the property, reads the leases and tenant covenants, examines comparable evidence in the local market, assesses physical condition, and reports market value, vacant possession value and, on a trading business, sometimes a separate goodwill figure. The lender lends against that figure, not against the price you agreed or the price the agent quoted. Aggressive valuation assumptions are the most common reason a London commercial case stalls at credit committee. Budget £1,500 to £8,000 depending on asset and sector.

Because a Red Book valuation reports market value on evidence, while an agreed price only reports what one buyer agreed to pay on one day. Three causes account for most London down-valuations. Thin comparable evidence, where a specialist asset or a district with little turnover forces the valuer to reach further out or discount for a lack of directly comparable transactions. A short unexpired lease term, because a building with two years left on its main lease will not value like the same building with ten. And a quoting price that reflects competitive bidding rather than the underlying investment arithmetic. You then have four options: increase the deposit, renegotiate the price, challenge the valuation with better evidence, or move to a lender using a different panel valuer. We would tell you on the first call which of those is realistic.

Yes, and you need one who does commercial property and commercial finance every week rather than a residential conveyancer taking on an unusual file. The lender instructs its own solicitor on the loan documentation; you instruct yours on the purchase or refinance. Between them they negotiate the facility agreement, the first legal charge, any debenture, the personal guarantee, the security pack, the conditions precedent and the CPSE replies. Standard commercial conveyancing runs three to four weeks from instruction, longer on multi-asset or leasehold cases. Legal fees on both sides typically total £4,000 to £12,000. We can point you towards London commercial property solicitors already familiar with the lender desks on our panel, which materially helps the timeline.

Owner-occupier: two years of filed accounts, current management figures, the EBITDA workings, a forward projection, proof and source of deposit, ID and proof of address for every director and beneficial owner above 25%, and the sale memorandum. Commercial investment: the leases, a full tenancy schedule showing each tenant, passing rent, lease start and expiry, break and review dates and any arrears, tenant covenant evidence, and the SPV pack where a limited company is borrowing. Portfolio: an asset schedule listing each property's value, debt, lender, rate, product end date and ERC position. Trading business: the sector pack, so CQC reports for a care home, Ofsted for a nursery, DVSA approval for an MOT centre, licensing and trading figures for a pub. We send a document checklist on the first call.

On completion day your solicitor and the lender's solicitor exchange satisfied conditions precedent. The lender remits funds to your solicitor's client account. Your solicitor pays the seller on a purchase or redeems the existing facility on a refinance, pays the Stamp Duty Land Tax to HMRC, and registers the transfer and the lender's first legal charge at HM Land Registry. Drawdown of a commercial mortgage is a single tranche: the full facility pays out at completion. Your monthly repayment cycle starts the following month on a fixed payment date. The lender issues a completion statement showing the facility, the fees deducted, the net advance and the first repayment date. Keep it: it is the document your accountant will ask for.

Yes, and it is usually the right approach for owner-occupier and trading-business buyers scoping the freehold market. Based on your accounts or business case, your deposit and your sector, we can map the LTV and rate band you would expect to be quoted on a purchase up to a stated price ceiling. It is not a binding offer, but it gives you a credible position to bid from and a clear sense of what you can afford to pay before you spend money on a valuer or a solicitor. Investment buyers usually need a specific property, lease and tenant before a lender will quote, because covenant and unexpired term are too case-specific to scope in advance.

A panel of 90+ lenders. The eight we name and display marks for are Shawbrook, InterBay Commercial, LendInvest, Cynergy Bank, Lloyds, NatWest, Barclays and Santander. Behind those sit Allica, Hampshire Trust Bank, Cambridge and Counties, YBS Commercial, Aldermore, Together, Paragon, OakNorth, Recognise, Reliance, Handelsbanken and a long tail of specialist commercial desks, plus private credit on structured deals above £2M. We are not a bridging-only broker and we do not fund ground-up construction schemes. Those are separate product families with separate lender pools, and pretending otherwise wastes a borrower's time.

High-street commercial desks (NatWest, Lloyds, Barclays, Santander) price keenest on prime owner-occupier and prime investment: strong covenant, defensive sector, low to moderate leverage. They are slower to credit-approve, less flexible on covenants, and decline anything their credit policy reads as non-vanilla. Challenger banks (Allica, Shawbrook, Hampshire Trust Bank, Cambridge and Counties, YBS Commercial, Aldermore) price 25 to 75 basis points wider on prime but materially better on the cases the high street declines: stretched leverage, sector-specific underwriting, 12 to 18 months of trading history, semi-commercial. Specialists (InterBay Commercial, LendInvest, Cynergy Bank, Together) sit further out again and fund cases nobody else will.

Yes, and taking a specialist sector to a generalist desk is the most common reason a fundable deal stalls. Care homes rated CQC Good or above sit with Shawbrook, Cambridge and Counties, Hampshire Trust Bank and OakNorth. Free-of-tie freehold pubs sit with Cynergy Bank and the specialist licensed-trade desks. Independent hotels sit with Shawbrook, Cambridge and Counties and OakNorth. Dental sits with Hampshire Trust Bank, Allica and the high-street healthcare teams. MOT and forecourt sits with Together. Day nurseries rated Ofsted Good or above sit with Aldermore, Cambridge and Counties and Allica. Each desk underwrites its sector differently, on occupancy thresholds, EBITDA multiples or barrelage, and the job is to match the deal to the right desk on day one.

An Article 4 direction removes a permitted development right in a defined area, so a change that would be automatic elsewhere needs a full planning application there. Two matter most to commercial borrowers in London. The directions restricting the change between a small HMO and a dwelling house, which most boroughs now operate across all or part of their area. And the directions restricting office to residential conversion in and around the Central Activities Zone. Both bite on lending the same way: a lender underwrites the use the property lawfully has, not the use you intend for it. If your case depends on a change of use, the valuation and the credit decision will be made on the existing lawful use until consent is granted. Check the borough's position before you agree a price.

The clearest broad gauge we have is HM Land Registry residential sold data, which we use as a market-temperature reading and never as commercial transaction volume or commercial pricing. Across the 12 months to May 2026 the Greater London median was £525,000 over 60,368 open-market sales, down 0.9% year on year. The spread inside that is the real story: Kensington and Chelsea at £1,100,000 (down 11.3%) and Westminster at £820,000 (down 9.8%) against Barking and Dagenham at £385,000 (up 3.5%) and Croydon at £428,000 (up 1.4%). Waltham Forest led on growth at 4.6%. Prime central is correcting while outer London holds. That pattern shows up in commercial valuer sentiment too, which is why we read it. See our London commercial property market page.

Yes, where the borough publishes a register we can actually read. On 26 July 2026 we counted 729 commercial-relevant planning applications live across 15 of the 33 borough registers. The remaining boroughs do not publish in a machine-readable form, so we do not quote application counts for them and we do not substitute a neighbour's figures. Where the data exists it is useful for one specific purpose: understanding what a RICS valuer is likely to see as the direction of travel on a street or an estate. A parade with three live change-of-use applications reads differently from one with none. It is context for the valuation conversation rather than a number that decides a credit case.

All 33 London boroughs, organised into five sub-region hubs: Central, North, East, South and West London. Under those sit borough pages for every local planning authority and district pages for the commercial centres that trade as markets in their own right, including the City of London, the West End, Canary Wharf, Shoreditch, Clerkenwell, King's Cross, Paddington, Stratford, Whitechapel, Woolwich, Croydon town centre, Wimbledon, Battersea, Hammersmith and Wembley Park. The lender panel is national, so we also fund deals in the commuter belt beyond the Greater London boundary from the same pool. What changes at a borough boundary is the planning position, the tenant demand and the comparable evidence. Browse every area we cover.

Two reasons. First, even your strongest high-street commercial relationship prices you inside its own credit policy and its own book. Your relationship manager does not benchmark you against the rest of the market, because that is not the role. We do, on every case, across a 90+ lender panel. Second, the cases high-street commercial desks decline (semi-commercial, trading business, stretched leverage, 12 to 18 months of trading history, a complex SPV structure) will often place comfortably with a challenger or specialist at sensible terms, but only if you know which desk to approach and how that underwriter reads a credit paper. With £250M+ arranged and 20+ years of commercial banking behind it, that is the entire job. If your existing bank is genuinely the right answer, we will tell you on the first call.