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Commercial Mortgage – how to get better rates and terms

30th November 2023

By Alex Walker

If you know how lenders think, it improves your chances of getting the best commercial mortgage deals

How to get the best from the commercial mortgage market. Since recording the rates will have changed but the principles remain the same

For more up to date insights to rates and how to get the best commercial mortgage deals specific to you, click the links below

Commercial mortgages for business owners – how lenders assess your affordability

Commercial mortgages for investment property – does the rent stack up?

Borrowing against the goodwill of the business – up to 100%

Semi commercial mortgages – how to get the best rates

Affordability on a commercial mortgage

Affordability is a crucial consideration so you are recommended to watch the video below, which explains how different commercial mortgage lenders and rates are available.

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Commercial mortgage for owner occupied businesses

The commercial mortgage market for owner occupying business owners has been strong throughout COVID and far beyond with rates from around 2.25% plus base.
We are placing most cases that come our way with LTV’s up to 75% LTV and a sweet spot of 65%
The most critical common factor is that the business can demonstrate it has recovered from poor trading during COVID.
So recent accounts and management accounts are important – but so is the story and intention.

Commercial mortgages for business owners – how lenders assess your affordability

Borrowing against the goodwill of the business – up to 100%

Mortgages for investment property

Residential blocks

Lenders generally love these – for the high street lenders the challenge has been getting the rental yield to stack up for their affordability requirements which results in them only being able to raise circa 55 to 60% LTV because the deal won’t stand any higher due to affordability.
However we now have lenders with far easier affordability criteria quoting on residential blocks quoting around 3% plus base on capital and repayment or interest-only loans. LTV’s are typically 70% – 75% LTV at a push.

Commercial mortgages for investment property – does the rent stack up?

Semi commercial – Mixed residential and retail/flats over shops

Before Christmas there was a move to 70% LTV by one lender even if a good proportion of the rental income was from retail. However the rates were very much in the specialist sector – 5% upwards. (Some lenders still won’t use rent from retail)
From this week we have a lender accepting a mix of residential and retail or restaurants/bars at rates around 1.5% to 2.5% plus base – this is a massive shift and the affordability stacks up fine with yields of circa 6 to 6.5%. Look at 65% to 75% LTV for these rates.

Semi commercial mortgages – how to get the best rates

Leisure/pubs and restaurants. (with no residential element)

This has been a tough area for obvious reasons. Again from this week we have lenders looking at these with rates starting from 3.5% to 4%. Where there is no residential income they will be looking closely at the strength of the tenants. If it is a single asset and single tenant it will need to be a strong and established business. 65% LTV is the norm but we will push for higher if needed.

If there is a mix of tenants eg pub, warehouse, office, the risk is spread and criteria is relaxed – even 5 year interest only deals are considered at rates circa 3.5%. For these lower rates the minimum loan is circa £350K but we have lenders offering far lower amounts but at higher rates.

Commercial mortgages on multi units – trading estates

Some lenders love these (some don’t) and we are getting rates under 3% for good sized deals and the yields tend to be higher which helps reach higher loan amounts.

Commercial mortgages for land and other quirky assets.

There is appetite but not really from the mainstream lenders so it’s always worth picking up the phone and explaining what you want to achieve.

Bad credit commercial mortgages.

The lenders you would want us to approach are looking for fairly clean cases but explainable glitches are considered with an acceptable story and evidence.
Heavier adverse can be placed but at rates which may deter investors. For owner occupied tell us the story and we will see what’s available.

Affordability summary

For the best rates from high street lenders they will be looking for capital interest repayments and apply a heavy ICR and a higher stressed rate – so only the stronger cases get through. Having said that the vast majority of our owner occupied business applications go with a high street lender with rates below 3%.
Where the affordability is more challenging we have Tier Two lenders offering decent rates at 3% – 4% and they have much easier affordability criteria.
Then, of course, there are numerous Tier Three lenders with very generous affordability calculations to sweep up the rest of the business with rates from circa 3% to 5% plus base

Commercial Loan size

We can get small loans placed below £100K without a problem. However to get good rates (3% to 4%) they need to be an owner occupied business. In the investment sector there is also good appetite but rates will be around 5.5% to 6.5%.
Once we get to £125K to £150K there is more choice.
However most of the business we are writing is between £350K and £2.5 million where we have a massive choice and strong appetite from lenders.

Development and Bridging

This sector remains very strong and we have placed some great quirky cases recently that 6 months ago would not have happened.
The scenarios are so varied that it’s always best to pick up the phone and chat it through.

We continue to give a great personal service going that extra mile for our brokers and their clients.
Get in touch and see what we can do for you?

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    Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status.

    More than 50% of borrowers receive offers better than our representative examples

    The %APR rate you will be offered is dependent on your personal circumstances.

    Mortgages and Remortgages

    Representative example

    Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66

    Secured / Second Charge Loans

    Representative example

    Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20

    Unsecured Loans

    Representative example

    Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.



    Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774
    Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG

    Authorised and regulated by the Financial Conduct Authority – Number 681423
    The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages


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