Current rates, real cost examples and what lenders look at when they price a deal
Commercial mortgage rates in the UK currently start from around 4.5% for owner-occupied cases at low LTV with a strong trading business behind them. Most deals land between 5.5% and 7.5% depending on the property type, loan-to-value, tenant profile and how lenders read the income supporting the loan. Investment cases and specialist property types sit higher.
The rate you are quoted is not set in stone – it moves until an offer is issued. It shifts with LTV, lease length, property type and the strength of your application. This page sets out current rates across the main property and borrower categories, real cost scenarios, and exactly what lenders look at when they price a deal.
Current Commercial Mortgage Rates UK – June 2026
Rates are quoted annually on commercial mortgages, unlike bridging finance which is priced monthly. The table below shows where rates currently sit across the main LTV bands for standard commercial property.
| LTV | Owner-Occupied Rate | Investment Rate | Notes |
|---|---|---|---|
| Up to 50% | 4.5% – 5.5% | 5.0% – 6.0% | Best rates, widest lender choice |
| 51% – 60% | 5.0% – 6.0% | 5.5% – 6.5% | Competitive, most mainstream lenders |
| 61% – 70% | 5.5% – 6.5% | 6.0% – 7.0% | Standard tier, challenger banks active |
| 71% – 75% | 6.0% – 7.5% | 6.5% – 8.0% | Specialist lenders, higher arrangement fees |
Rates shown are indicative for Q2 2026. Your actual rate will depend on property type, lease terms, borrower profile and lender appetite at the time of application. Arrangement fees typically add 1% to 2% of the loan on top of the rate.
How Property Type Affects Your Rate
Not all commercial property is priced the same. Lenders assign risk by how liquid the asset is – how quickly it could be sold or re-let if things go wrong. Standard commercial property attracts the widest lender pool and the sharpest rates. Specialist property narrows the field.
Standard Commercial – Lower Rates
Offices, retail units, light industrial, and warehouses in established locations. These are well-understood assets with active sales markets. Most mainstream commercial lenders are comfortable here. A well-let office in a regional town at 65% LTV with a solvent tenant is a straightforward deal – and priced accordingly.
Semi-Commercial – Mid Range
Mixed-use property combining residential and commercial elements – a ground-floor shop with flats above is the most common example. Lenders assess the commercial and residential elements separately. Most require the commercial element to produce income in its own right. Rates sit between standard commercial and specialist depending on the income split.
Specialist Property – Higher Rates
Care homes, hotels, pubs, petrol stations, and leisure properties. These assets are harder to value and harder to sell. Lenders need specialist knowledge and a smaller pool have it. The rate premium reflects reduced competition and higher underwriting cost. Some specialist assets require lenders who understand the trading business behind the property, not just the bricks.
Owner-Occupied vs Investment – How Rates Differ
Owner-occupied commercial mortgages are secured against a property the borrowing business trades from. The lender is assessing the strength of the business as much as the property. A business with three years of clean accounts, growing turnover, and low existing debt is a different proposition to one with losses and director loans. When the business is strong, owner-occupied rates can get close to residential mortgage levels at low LTV.
Investment commercial mortgages are secured against property let to tenants. Lenders care about the lease – its length, the break clauses, and whether the tenant covenant is worth the paper it is written on. A ten-year lease with a FTSE-listed tenant and five years to the next break is the ideal. A six-month rolling tenancy with a newly-formed limited company is not. The income coverage ratio matters here: most lenders want the rent to cover the interest payment at a stressed rate by at least 125%, sometimes 140%.
Worked Cost Examples
Numbers make this real. Here are three scenarios based on current market rates.
Owner-Occupied Office Purchase
A professional services firm buying their own premises for £600,000. Deposit: £180,000 (30%). Loan: £420,000 at 65% LTV. Rate: 5.75% over 20 years on a capital repayment basis. Monthly repayment: approximately £3,050. Arrangement fee at 1.5%: £6,300. Total first-year cost including arrangement fee: approximately £42,900. At 65% LTV with a trading business behind it, this sits in the competitive tier. The same deal at 75% LTV would see the rate move to around 6.5% and the monthly payment rise to approximately £3,200.
Investment Property – Retail Unit
A property investor purchasing a high street retail unit let to a national chain for £450,000. Deposit: £157,500 (35%). Loan: £292,500 at 65% LTV on interest-only. Current rent: £22,000 per annum. Rate: 6.25%. Annual interest: approximately £18,280. Rental coverage at stressed rate: 120% – marginal for some lenders, workable for most. Arrangement fee at 1.75%: £5,115. The 35% deposit gets this into the competitive tier. At 25% deposit (75% LTV), this deal narrows to specialist lenders and the rate moves above 7%.
Industrial Unit – Refinance
An owner-occupier refinancing an industrial unit valued at £800,000 with an existing mortgage of £400,000 at 50% LTV. Rate: 5.0%. Monthly payment on capital repayment over 15 years: approximately £3,160. At 50% LTV with a strong business and clean credit, this is the best tier available in the current market. The same borrower at 70% LTV would see the rate move to 6.0% and monthly payments rise to approximately £3,850.
What Lenders Actually Look At
Commercial mortgage underwriting is manual. No automated decision engines. Every case goes to a human underwriter asking one question: does this deal hold up if things do not go perfectly?
Income Coverage
For investment cases, the rent needs to cover the interest payment at a stressed rate – typically 5.5% to 6.5% above the actual mortgage rate – by at least 125%. Some lenders require 140%. If the rent does not clear this hurdle, the deal either needs a lower LTV, a larger deposit, or a different lender. Most declined investment cases fail here first.
Lease Profile
Unexpired lease term, break clause dates, and the financial strength of the tenant. A lease with three years remaining is a different risk to one with fifteen. Lenders often apply a haircut to income from short leases or weak tenants before running the coverage calculation. The stronger the lease, the better the rate.
Property Condition and Planning
Lenders order independent valuations. If the property has condition issues, planning complications, or an unusual use class, the valuer will flag them and the lender will price accordingly – or decline. Properties needing substantial capital expenditure or with complicated planning histories attract cautious lenders and higher rates.
Borrower Profile
Business accounts, personal credit, existing debt and experience all feed into the rate. An experienced property investor with a clean track record and multiple successful exits will access better pricing than a first-time commercial buyer, even at the same LTV. For owner-occupied cases, trading accounts carry as much weight as the property valuation.
How to Improve Your Commercial Mortgage Rate
The rate you are quoted first is rarely the only rate available. These are the levers that move it.
Reduce LTV. The single most effective change. Dropping from 70% to 60% opens more lenders and sharper pricing. On a £500,000 loan, the rate difference between 60% and 75% LTV can be 1.0% to 1.5% – worth £5,000 to £7,500 per year in interest.
Strengthen the lease. For investment cases, a longer unexpired term or a stronger tenant covenant directly improves how lenders price the deal. If you are buying a property with a short lease, factor the re-letting cost and void period into the pricing before you commit.
Get accounts in order. Lenders want at least two years of accounts for owner-occupied cases. Three years is better. If the most recent year shows a dip in profitability, be ready to explain why and what has changed. Gaps in accounts or director loans showing on the balance sheet both require explanation.
Use a whole-of-market broker. Commercial mortgage rates are not published on comparison sites. The best rates available through specialist introducers are not available direct. A broker with established commercial lender relationships will access pricing and products a borrower going direct will never see.
Commercial Mortgage vs Bridging Finance
A commercial mortgage is almost always cheaper than bridging finance. The annual rate on a commercial mortgage currently sits between 5.5% and 7.5% for most deals. Bridging loan rates run from 0.72% per month – the equivalent of roughly 8.6% annually – and climb from there depending on LTV and deal complexity.
The case for bridging is speed and flexibility, not price. If the property is not yet mortgage-ready – vacant, in poor condition, or carrying planning complications – bridging finance gets the deal done while the issues are resolved. The exit onto a commercial mortgage is then arranged once the asset qualifies. For a full comparison of when to use each product, see our page on commercial mortgage vs bridging finance.
Frequently Asked Questions
What are current commercial mortgage rates in the UK?
Most deals currently land between 5.5% and 7.5% annually depending on LTV, property type and the borrower’s profile. Owner-occupied cases with low LTV can start from 4.5%. Specialist property and high-LTV investment cases sit above 7%.
What LTV is available on a commercial mortgage?
Most lenders offer up to 70% to 75% LTV on standard commercial property. Owner-occupied cases can sometimes reach 75% to 80%. Above 70%, the lender pool narrows and arrangement fees rise. The stronger the deal, the higher the LTV available.
How do commercial mortgage rates compare to residential rates?
Commercial rates are typically 1% to 3% higher than equivalent residential mortgage rates. The gap reflects the higher risk of commercial property – lower liquidity, more layered tenancy arrangements and greater sensitivity to economic conditions.
Do commercial mortgage rates vary by property type?
Significantly. Standard offices, retail and industrial attract the widest lender choice and sharpest rates. Semi-commercial and specialist property such as care homes, hotels and pubs carry a rate premium due to reduced lender appetite.
What is the income coverage requirement for commercial mortgages?
Most lenders require rent to cover interest at a stressed rate by at least 125% to 140%. If your rent does not clear this hurdle, the LTV needs to come down or a different lender is required. This is the most common reason investment deals are declined.
Can I get a commercial mortgage with bad credit?
In many cases yes, but the lender pool narrows and the rate rises. Specialist lenders focus more on the property income and LTV than personal credit history. A strong asset at low LTV with good rental coverage can often be financed despite adverse credit.
How long does a commercial mortgage application take?
Typically four to eight weeks from application to completion for a straightforward case. Complex deals, specialist property or cases requiring additional information can take longer. Valuations and legal work are usually the critical path.
What fees are involved in a commercial mortgage?
Arrangement fees of 1% to 2%, valuation fees, legal costs and in some cases exit fees. On a £500,000 loan, total upfront costs typically run to £8,000 to £15,000 before legal fees. Always model the full cost of the facility, not just the interest rate.
Speak to a Commercial Mortgage Broker
Commercial mortgage rates are not listed on comparison sites. The deal you get depends on which lenders are currently active in your property type, how your application is structured, and who is putting it in front of the right underwriter. Commercial Finance Network is a whole-of-market commercial finance broker working with property investors and businesses across the UK and internationally. We work with over 350 lenders – including specialist commercial lenders not available on the open market – to source competitive rates across all commercial property types.
Call us on +44 1494 622 111 or email info@cfnuk.com to discuss your requirements. We are authorised and 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 FAQs – common questions on commercial mortgage eligibility, rates and terms
- 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