Current Rates, Real Cost Examples and What Lenders Look At When Pricing a Deal
Owner-occupied commercial mortgages currently start from around 5.5% at low LTV, provided there is a solid trading business behind the application. Most deals settle between 6.0% and 8.0%, with the exact figure set by the property type, the LTV, the tenant, and how the lender reads the income backing the loan. Investment purchases tend to cost more than owner-occupied deals, and specialist property costs more again.
No quoted rate is final until an offer has actually been issued. It moves with LTV, with lease length, with property type, and with the overall strength of the application. Below is where rates currently sit across the main property and borrower categories, three cost examples worked through in full, and a look at what an underwriter is actually checking before they price a deal.
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Current Commercial Mortgage Rates UK – November 2026
Commercial mortgages price annually rather than monthly, unlike bridging finance. The cards below show where rates sit now across the main LTV bands for standard commercial property.
These figures are indicative. Rates last reviewed 1 November 2026 by Daniel Yorke, Founder. What you are actually offered will come down to property type, lease terms, your own profile, and which lenders have appetite at the time you apply. On top of the rate, expect arrangement fees of roughly 1% to 2% of the loan.
How Property Type Affects Your Rate
Commercial property is not priced as one homogeneous asset class. A lender’s starting point is liquidity: could this property be sold, or re-let, quickly if a deal went wrong? The more liquid the asset, the wider the pool of lenders willing to touch it, and the sharper the pricing. Specialist assets narrow that pool fast, and the rate reflects it.
Standard Commercial
This covers offices, retail units, light industrial space and warehouses in reasonably established locations. These markets are active and well understood, which is exactly why most mainstream commercial lenders are comfortable lending against them. A well-let office in a regional town, 65% LTV, a tenant who pays on time, is about as straightforward as a commercial deal gets, and the pricing reflects that.
Semi-Commercial
A ground-floor shop with flats above is the classic semi-commercial deal: residential and commercial use in the same building. Lenders assess the two parts separately rather than treating the building as a single unit, and generally want to see the commercial portion producing its own income rather than relying on the residential side. Pricing sits between standard commercial and specialist, and where exactly depends on how the income splits across the two uses.
Specialist Property
Care homes, hotels, pubs, petrol stations and leisure assets are harder to value and harder to sell if things go wrong, so only a smaller pool of lenders has the knowledge to price them properly. Fewer lenders competing for the business, and more underwriting work on their side, is what pushes the rate up. Some of these cases need a lender with a genuine grasp of the trading business, not just the property itself.
Owner-Occupied vs Investment – How Rates Differ
An owner-occupied commercial mortgage is secured against a property the borrowing business actually trades from, so the lender is really underwriting the business almost as much as the building. Three years of clean accounts, turnover moving in the right direction and manageable existing debt is one picture. Losses on the books and unresolved director loans is another, and it shows in the rate. Where the business is genuinely strong, owner-occupied pricing at low LTV can come surprisingly close to residential mortgage territory.
Investment mortgages work on a different basis: the security is a tenanted property, so it is the lease that gets priced, not the borrower. Term remaining, break clauses and whether the tenant covenant actually means anything all matter here. A ten-year lease to a FTSE-listed tenant with five years to the next break is close to the ideal case. A rolling six-month tenancy to a company incorporated last month is close to the opposite. Underpinning all of it is the coverage test: most lenders want rent to cover the interest payment, at a stressed rate, by at least 125%, and some push that to 140%.
Quick Cost Estimate
A rough monthly-payment snapshot using the current bands above. For a full breakdown with fees, stamp duty and rental cover, use the commercial mortgage calculator.
Your deal
Worked Cost Examples
Three scenarios, built on the current rates above, to make the numbers concrete.
Owner-Occupied Office Purchase
A professional services firm is buying its own premises for £600,000, putting down a £210,000 deposit (35%) and borrowing £390,000 at 65% LTV. At 6.75% over 20 years on capital repayment, that is roughly £2,965 a month. The arrangement fee at 1.5% comes to £5,850, which puts the total first-year cost, fee included, at around £41,435. That 65% LTV sits comfortably within the standard tier. Push the same purchase to 75% LTV instead – the loan rises to £450,000 – and the rate moves up to around 7.75%, taking the monthly payment to roughly £3,694.
Investment Property – Retail Unit
An investor is buying a high street retail unit let to a national chain for £450,000, with a £157,500 deposit (35%) and a £292,500 interest-only loan at 65% LTV. The unit brings in £30,000 a year in rent. At a rate of 7.5%, annual interest runs to about £21,940, which puts rental coverage at the mortgage rate itself at 137%, comfortably inside most lenders’ 125% to 140% bracket. The arrangement fee at 1.75% is £5,119. It is worth flagging that lenders will also run coverage at a higher notional stress rate before they commit, and that second test can pull the maximum loan back below the headline LTV, so it pays to build in a margin rather than pricing a deal right to the edge. Take the same purchase to 75% LTV and the loan climbs to £337,500, which pushes the deal into specialist-lender territory and rates north of 8%.
Industrial Unit – Refinance
An owner-occupier is refinancing an industrial unit valued at £800,000, with £400,000 already owed – 50% LTV. At 6.0%, capital repayment over 15 years works out to roughly £3,375 a month. With a strong business behind it and clean credit, 50% LTV is about as good a tier as the current market offers. Take the same borrower to 70% LTV instead – the loan rises to £560,000 – and the rate climbs to 7.0%, with monthly payments moving up to around £5,033.
What Lenders Actually Look At
There is no automated decision engine in commercial mortgage underwriting. Every application lands on a human underwriter’s desk, and the question they are really asking is simple: does this deal still hold up if things do not go perfectly?
Income Coverage
On investment cases, rent has to clear the interest payment – at a stressed rate, typically 5.5 to 6.5 points above the actual mortgage rate – by at least 125%, with some lenders wanting 140%. Miss that hurdle and there are really only three options: bring the LTV down, put in a bigger deposit, or find a different lender. This is where most declined investment applications fall over first.
Lease Profile
How much term is left, when the break clauses fall, and how solid the tenant actually is – all three feed directly into pricing. A lease with three years left carries a different risk profile to one with fifteen. Lenders frequently apply a haircut to income backed by a short lease or a weak tenant before they even run the coverage numbers. A stronger lease, in general, pulls a better rate.
Property Condition and Planning
Every deal gets an independent valuation. If the valuer flags condition issues, planning complications, or an unusual use class, the lender will either price around it or decline outright. Properties that need significant capital spending, or that come with a messy planning history, tend to attract only the more cautious lenders, and higher rates when they do.
Borrower Profile
Business accounts, personal credit, existing debt and track record all feed into the rate a borrower ends up with. An experienced investor with a clean history and several successful exits behind them will get better pricing than a first-time commercial buyer at the identical LTV. On owner-occupied cases specifically, trading accounts carry roughly as much weight in the decision as the valuation of the property itself.
How to Improve Your Commercial Mortgage Rate
The first rate you are quoted is rarely the best one available. Here is what actually moves it.
Cut your LTV. This is the single biggest lever. Dropping from 70% down to 60% opens up more lenders and noticeably sharper pricing – on a £500,000 loan, the difference between 50% and 75% LTV can run to 1.5 to 2.0 percentage points, which works out to somewhere between £7,500 and £10,000 a year in interest.
Strengthen the lease. This matters most on investment purchases: a longer unexpired term or a more solid tenant covenant changes how a lender prices the deal directly. Buying something with a short lease already in place? Build the re-letting cost and any void period into your numbers before you commit, not after.
Get the accounts in order. Lenders generally want two years minimum for an owner-occupied case, and three years puts you in a stronger position. If the most recent year shows profitability dipping, have an explanation ready. The same goes for director loans sitting on the balance sheet or gaps in the accounts – both will get questioned.
Use a broker who actually covers the whole market. Commercial mortgage rates are not published anywhere comparable to a comparison site, and a lot of the best pricing through specialist introducers never reaches a borrower going direct. A broker with genuine commercial lender relationships gets access to products and pricing a direct applicant will never see.
Commercial Mortgage vs Bridging Finance
Pound for pound, a commercial mortgage almost always beats bridging finance on price – the annual rate on a commercial mortgage currently runs 6.0% to 8.0% for most deals, against bridging loan rates that start from 0.55% a month at the sharpest end (roughly 6.6% annualised) and more typically sit between 0.65% and 0.95% a month, climbing further depending on LTV and how complex the deal is.
Bridging earns its place on speed and flexibility, not on price. Where a property is not mortgage-ready yet – vacant, in poor condition, tangled up in planning – bridging finance gets the deal over the line while those issues get sorted, with the exit onto a commercial mortgage arranged once the asset actually qualifies. See our full comparison of commercial mortgage vs bridging finance for more detail on when each one makes sense.
Frequently Asked Questions
What are current commercial mortgage rates in the UK?
Most deals currently land between 6.0% and 8.0% annually depending on LTV, property type and the borrower’s profile. Owner-occupied cases with low LTV can start from 5.5%. Specialist property and high-LTV investment cases sit above 8.5%.
What LTV is available on a commercial mortgage?
Most lenders offer up to 70% to 75% LTV on standard commercial property, and owner-occupied cases can sometimes reach 75% to 80%. Past 70%, the lender pool narrows and arrangement fees tend to rise. Simply put, the stronger the deal, the higher the LTV a lender will offer.
How do commercial mortgage rates compare to residential rates?
Commercial rates typically run 1% to 3% above equivalent residential mortgage rates. That gap is really about risk: commercial property is less liquid, tenancy arrangements are more layered, and the whole asset class is more exposed to economic conditions.
Do commercial mortgage rates vary by property type?
They do, and by a meaningful margin. Standard offices, retail and industrial space get the widest lender choice and the sharpest pricing. Semi-commercial and specialist assets – care homes, hotels, pubs – carry a rate premium because fewer lenders have the appetite for them.
What is the income coverage requirement for commercial mortgages?
Most lenders want rent to cover interest, at a stressed rate, by at least 125% to 140%. Fall short of that and either the LTV needs to come down or a different lender is needed – it is the single most common reason investment deals get declined.
Can I get a commercial mortgage with bad credit?
Often, yes, though the pool of lenders narrows and the rate goes up. Specialist lenders tend to weight property income and LTV more heavily than personal credit history, so a strong asset at a conservative LTV with solid rental coverage can still get financed even against adverse credit.
How long does a commercial mortgage application take?
Roughly four to eight weeks from application through to completion for a straightforward case. Specialist property, complex deals, or anything needing extra information can take longer – valuations and legal work are usually what sets the pace.
What fees are involved in a commercial mortgage?
Expect arrangement fees of 1% to 2%, plus valuation fees, legal costs, and in some cases an exit fee. On a £500,000 loan, total upfront costs before legal fees typically land somewhere between £8,000 and £15,000 – model the full cost of the facility, not just the headline rate.
Speak to a Commercial Mortgage Broker
Commercial Finance Network is a whole-of-market FCA authorised commercial finance broker working with property investors, developers, and businesses across the UK and internationally. We work across the full specialist commercial mortgage panel and will tell you which lenders will engage with your deal, what LTV and rate to expect, and how to structure the application before anything is submitted. Call us on +44 1494 622 111 or email info@cfnuk.com to speak to a specialist directly.
We are authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Commercial and business-purpose lending secured against investment property is not regulated by the Financial Conduct Authority.
Related Pages
- Commercial Mortgages UK – whole-of-market commercial mortgage advice for businesses and property investors
- Bridging Loan Exit Strategies – how to structure a bridging-to-commercial-mortgage refinance exit
- Commercial Mortgage 75% LTV UK – what lenders want once you go past 70% LTV
- Bridging Loan Calculator – model the full cost of short-term finance before you commit
- Bridging Loans UK – fast short-term property finance for investors and developers
