Owner-Occupier Commercial Mortgages London
Long-term debt funding the purchase of the property your business trades from. Up to 75% loan-to-value. EBITDA cover at 1.3x to 1.5x. Interest rates 6.0 to 7.5% pa for strong covenants. 5 to 25 year repayment terms. Active across professional services, medical and dental, creative, light industrial and independent retail in all 33 London boroughs.
LTV
Up to 75%
Rate
6.0 to 7.5% pa
Term
5 to 25 years
Facility
£250K to £5M
What is an owner-occupier mortgage and how does it differ from investment?
An owner-occupier commercial mortgage is long-term secured debt funding the purchase of the property your business trades from: a dental practice freehold, an accountancy office floor, a design studio in Clerkenwell, a food producer's unit on the Park Royal estate. The lender takes a first charge over the building, you fund a deposit of typically 25 to 30%, and the facility is amortised over 15 to 25 years on monthly capital-and-interest repayments. Most owner-occupier deals are taken out by a limited company trading entity with a personal guarantee from the directors, though sole traders, partnerships and LLPs are equally accommodated.
The lending test is fundamentally different from an investment mortgage. Where investment lenders test rent against interest cost, owner-occupier lenders test EBITDA cover: trading profit, meaning earnings before interest, tax, depreciation and amortisation, measured against the mortgage payment, with a typical comfort threshold of 1.3x to 1.5x. Two years of clean filed accounts is the standard minimum, though specialist desks flex that for established sectors such as dental, GP and pharmacy on 12 to 18 months of trading.
It is also different from a residential mortgage, and that distinction carries legal weight. Owner-occupier commercial lending falls largely outside the Financial Conduct Authority's regulated mortgage perimeter, because the borrower is a business buying business premises rather than an individual buying a home. We do not hold FCA authorisation because the products we arrange are unregulated. The exception is where a sole trader uses the property partly as a residence, which can pull the deal inside the regulated perimeter, and we flag that at outset and refer it to a regulated firm.
In London the typical owner-occupier facility is £250K to £5M, with most volume between £750K and £2.5M. Loan-to-value of 70 to 75% is routine for established businesses and interest rates currently run 6.0 to 7.5% pa for strong covenants. The London-specific pressure point is valuation. On a Zone 1 office floor or a west London industrial unit, a Red Book figure can land several hundred thousand below the agreed price, and the deposit has to absorb the gap, so we stress that scenario before you exchange rather than after. Term length is the most useful affordability lever, and extending repayment from 15 to 20 years often clears the EBITDA test where rate alone will not. Stamp duty land tax on a commercial purchase applies at up to 5% on the slice above £250,000, and we factor it into the deposit-and-fees model before submission.
Lender appetite and pricing for owner-occupied premises across the capital
1. Initial appraisal
Send the property details, the last two years of accounts and current management figures. We assess affordability, sector appetite, likely loan-to-value and which lender desks will engage.
2. Indicative terms in 48 hours
Three to six lender quotes covering interest rate, LTV, term, fees and conditions. On a clean London case the spread between the best and worst quote is wide enough to be worth the exercise.
3. Application packaging
Full credit pack: filed accounts, business plan, property details, deposit proof, professional team. A clean pack shortens the run to credit committee.
4. RICS Red Book valuation
The critical-path item, typically 2 to 3 weeks. The lender instructs from a panel. London valuations are more contested than most, so we model a down-valuation scenario in advance.
5. Credit approval
Most well-presented owner-occupier cases approve within 1 to 2 weeks of valuation. Clean covenant, clean property, clean numbers, minimum friction.
6. Legal completion and SDLT
Standard freehold conveyancing plus debenture and personal guarantee. Stamp duty land tax payable by the buyer at completion. 3 to 4 weeks typical.
Sectors where London owner-occupier lending is deepest
- Dental, medical and veterinary practice principals buying their freehold
- Accountancy, legal, financial services and consultancy firms buying their office floor
- Creative agencies, studios and production companies acquiring City fringe or Southwark space
- Light industrial, engineering and food producers buying Park Royal and west London units
- Pharmacy operators acquiring trading premises on borough high streets
- Independent retailers and hospitality operators buying the unit they lease
- Professional services partnerships moving from leasehold to freehold ahead of a partner buy-out
Why the capital carries more owner-occupier lender choice than anywhere else
London is Europe's largest city economy, generating a GDP of £617.9 billion in 2023 and roughly 22% of total UK economic output, with a labour force of 4.7 million and more than 85% of it employed in service industries. That concentration is why every commercial lender in the country maintains London appetite, and why a clean owner-occupier case here usually attracts five or six credible quotes rather than two. Allica, Shawbrook, Hampshire Trust, Cambridge and Counties, Aldermore, YBS Commercial, Cynergy Bank and Recognise all run active programmes, and NatWest, Lloyds, Barclays, Santander and Handelsbanken compete on the larger end. Sector clusters worth knowing: professional services and creative firms buying floors around Shoreditch, King's Cross and Southwark; medical and dental across Camden, Bromley and Croydon; light industrial and food production across the Park Royal estate behind Brent and Ealing, an area significant enough to sit under its own development corporation. Refinancing volume is strong on premises bought between 2019 and 2021 where current valuations support a better loan-to-value than the original draw.
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Exploring Owner-Occupier Commercial Mortgage for your London property?
Free-of-charge scheme assessment. Indicative terms within 48 hours.