Business Mortgage: Owner-Occupier Commercial Mortgages to Buy Your Own Premises

By Jake Stott, Knox Mortgages. Reviewed by an adviser authorised under Fort Advice Bureau, FCA FRN 972730. Published 25 September 2026. Last reviewed 25 September 2026.

A business mortgage, properly called an owner-occupier commercial mortgage, is a long-term loan secured on a commercial property that your own trading business will occupy: an office, workshop, warehouse, shop, clinic or unit. The lender assesses the loan on your business’s profits rather than on rental income, most will lend 70% to 80% of the price over 5 to 25 years, and the mortgage replaces the rent you are already paying to somebody else’s pension.

This page is written for the business owner, not the property investor. If you run a company that has outgrown its lease and you are weighing up whether to buy the unit, it covers the ten-year buy-versus-rent arithmetic, exactly how a lender reads your accounts, the published criteria of 14 lenders, rates and fees as at September 2026, the structure question (trading company or a separate property company), using a pension to buy, and why applications get declined. Investment purchases, where a tenant pays the mortgage, are covered on our commercial mortgage page.

What is an owner-occupier commercial mortgage?

An owner-occupier commercial mortgage is a mortgage on premises that the borrowing business uses itself, as opposed to a commercial investment mortgage where the property is let to a third party. The distinction matters because the lender underwrites a completely different risk. On an investment loan the question is whether the rent covers the payments. On an owner-occupier loan the question is whether your business makes enough profit to cover them, so the underwriter reads your accounts the way a buyer of the business would.

The borrower is usually the limited company, LLP or partnership that trades from the building, although sole traders and directors buying personally are accepted by most lenders. Terms run from 5 to 25 years (30 at HSBC and Allica), on capital repayment, interest-only for an initial period, or a mix. Every lender in the table below wants a first legal charge on the property and a personal guarantee from the directors. The property must be used mainly for the business: if more than around 40% of the floor area is residential, you need a semi-commercial mortgage instead.

Should my business buy its premises or keep renting?

Buy if you expect to be in the same premises for 7 years or more, the business is consistently profitable, and you can fund a 25% to 30% deposit without starving working capital. Rent if you are likely to outgrow the space, the business is under three years old, or the deposit would come out of cash you need to trade. Those are the honest answers; the arithmetic below shows why.

Take a 4,000 sq ft unit worth £400,000, renting at £32,000 a year with an upward-only review to £37,000 at year 5. Buying it with a 30% deposit means a £280,000 loan at 6.75% over 20 years, which costs £2,129 a month. Here is where each route leaves the business after 10 years.

Over 10 years	Keep renting	Buy with a business mortgage
Cash paid to landlord or lender	£345,000 rent	£255,480 mortgage payments
Cash in at the start	Rent deposit, returned at lease end	£120,000 deposit plus £18,200 costs (SDLT £9,500, 1.5% arrangement fee £4,200, valuation £1,500, legal £3,000)
Total cash out	£345,000	£393,680
Loan balance at year 10	Not applicable	£185,419 (£94,581 of capital repaid)
Property value at year 10 (2% a year growth)	Nothing owned	£487,597
Equity in the building at year 10	£0	£302,178
Tax treatment	Rent fully deductible	Interest deductible; capital repayments are not; capital allowances on plant and fixtures
Net position versus renting	Baseline	Roughly £253,000 better off, before tax and before any rent rise beyond year 5

Two caveats. Repairs and buildings insurance sit with the owner, but on a full repairing and insuring lease they sit with the tenant anyway, so they broadly cancel out. And a 2% growth assumption is deliberately dull; some industrial estates in Greater Manchester have done far better than that since 2020, and some secondary retail has gone backwards. The point is not that buying always wins. It is that after 10 years of renting you have paid for most of a building and own none of it.

How do lenders assess a trading business for a mortgage?

Lenders assess an owner-occupier commercial mortgage on the business’s ability to service the debt from profit, measured as EBITDA (earnings before interest, tax, depreciation and amortisation) against the annual mortgage payment at a stressed interest rate. The standard requirement is a debt service cover ratio (DSCR) of 1.25x to 1.5x: your adjusted EBITDA must be at least 125% to 150% of the stressed annual repayment. Allica publishes 130%, YBS Commercial publishes 125% at a 6% rate, and the high street banks work to similar figures without publishing them.

The underwriter will want two to three years of filed accounts (Barclays asks for three; Allica and Shawbrook accept two; Cambridge and Counties will consider twelve months), the latest management accounts, six months of business bank statements, a statement of the directors’ assets and liabilities, and personal credit checks on every guarantor. Three adjustments work in your favour: the rent you currently pay is added back, because it stops on completion; one-off costs can be added back if you can evidence them; and directors’ remuneration above a market salary is often treated as profit rather than cost. Projections help on a growing business but nobody lends on a forecast alone.

Worked example: how much can a Manchester agency borrow?

A digital marketing agency in Ancoats with £1.1m turnover wants to buy its office for £600,000. Its accounts show profit before tax of £70,000 after £4,000 of interest and £8,000 of depreciation, and it pays £36,000 a year in rent. The lender offers 75% LTV, so the loan is £450,000 over 20 years at a pay rate of 6.5%, stressed at 8.5%.

Step	Calculation	Result
EBITDA	£70,000 profit + £4,000 interest + £8,000 depreciation	£82,000
Add back rent that stops on completion	£82,000 + £36,000	£118,000 adjusted EBITDA
Stressed annual payment	£450,000 over 20 years at 8.5% = £3,905 a month	£46,860 a year
Debt service cover	£118,000 divided by £46,860	2.52x (passes a 1.3x test comfortably)
Maximum loan affordability would allow at 1.3x	£118,000 divided by 1.3 = £90,769 of stressed payments a year	About £871,000
Maximum loan the LTV cap allows	75% of £600,000	£450,000 (this is the binding limit)

For a profitable business the deposit, not affordability, is usually what caps the loan. Reverse the numbers and the picture changes: if adjusted EBITDA were £50,000, the 1.3x test would allow £38,461 of stressed payments and a maximum loan of about £369,000, so the agency would need a £231,000 deposit on the same unit or a cheaper building. Knowing which limit binds before you make an offer is the single most useful thing a broker does at the start of a purchase.

How much deposit do I need for a business mortgage?

You need a deposit of 20% to 30% of the purchase price for an owner-occupier commercial mortgage. Allica, Barclays and Cambridge and Counties lend to 80% LTV, so 20% down; HSBC, Shawbrook, Aldermore, YBS Commercial and Atom cap at 75%; Together and Recognise cap at 70%. NatWest states a typical 25% deposit. The deposit must be your own or the company’s cash, or equity in another property the lender can take as additional security.

Two groups do better. Healthcare professionals with NHS income (dentists, GPs, pharmacists, opticians) can borrow up to 95% and occasionally 100% from Atom and the high street banks, because the income is contract-backed. And any business that owns another property unencumbered can offer it as a second charge to reach 100% funding: Together will lend the full price where the additional security covers the shortfall. Deposits that come from a director’s loan, a family gift or the sale of another asset all work, provided the lender can trace them. A deposit from a new business loan usually does not, because it inflates the very debt the underwriter is testing.

Stamp duty land tax also comes out of cash. Non-residential rates are 0% to £150,000, 2% from £150,001 to £250,000 and 5% above that, so a £600,000 unit carries £19,500 of SDLT on top of the deposit.

Can I use my pension to buy my business premises?

Yes. A SSAS (small self-administered scheme) or SIPP (self-invested personal pension) can buy commercial property and lease it back to your trading business, and this is one of the most tax-efficient ways for a business owner to own their premises. The pension pays no tax on the rent it receives or on the gain when it sells, the rent your company pays is a deductible expense, and the building sits outside your estate. A SSAS can also borrow up to 50% of its net assets to fund the purchase, and Cambridge and Counties Bank is a specialist in exactly that lending.

The limits are practical. The pension needs enough in it: for a £400,000 unit you need roughly £270,000 of pension assets plus costs, because the 50% borrowing cap is on net assets, not on the property. The rent must be set at a market level by an independent valuer, and your company must actually pay it, on time, like any other tenant. Residential property is prohibited, so a shop with a flat above needs care. And the pension, not you, owns the building, which is the point but also means you cannot draw on the equity without the scheme selling or borrowing against it. Knox does not give pension advice; we arrange the mortgage on the property side and work alongside a regulated pension adviser and a scheme administrator. If you already have a SSAS or a SIPP with a meaningful fund, raise it on the discovery call and we will bring the right specialist in.

Should I buy through my trading company or a separate property company?

Most owner-occupiers should at least consider buying the premises in a separate property company (a PropCo) that leases the building to the trading company (the OpCo) at a market rent, rather than putting the building on the trading company’s balance sheet. Lenders are comfortable with both. HSBC’s owner-occupier product explicitly includes OpCo/PropCo structures, and every lender in our table will lend to a new PropCo on the strength of the OpCo’s accounts, with the trading company as a guarantor.

Question	Buy in the trading company	Buy in a separate property company
Simplicity	One company, one set of accounts, mortgage on the company’s balance sheet	Two companies, a lease between them, rent paid monthly
Protection of the building if the business fails	Creditors of the trading business can reach the property	Building ring-fenced (subject to the guarantee the lender takes)
Selling the business later	Buyer gets the building whether they want it or not, and pays for it	Sell the trade, keep the building and the rent, or sell both
Bringing in a partner or investor	They get a share of the property by default	Trade and property can have different shareholders
Lender’s view	Standard owner-occupier underwrite	Standard owner-occupier underwrite; PropCo needs a lease of at least the mortgage term or the OpCo as co-borrower
Tax	Interest deductible in the trading company	Rent deductible in OpCo, taxable in PropCo; SDLT and CGT positions differ; take advice

The structure has real tax consequences, particularly on a later sale and for business asset disposal relief, so take advice from your accountant before you exchange. What we can tell you is that the mortgage is arranged the same way either route, and that setting the PropCo up before the application is far easier than restructuring after completion, when you would face a second SDLT charge to move the building.

What property types do lenders like and dislike?

Lenders prefer standard, easily re-lettable commercial property in areas with proven demand: offices, light industrial and warehouse units, trade counters, retail on established parades, and healthcare premises. They are wary of anything specialised, single-purpose or hard to value, because if your business fails the building has to be sold to someone else’s.

Lender appetite	Property types	Typical maximum LTV
Strong	Offices, industrial and warehouse units, trade counters, mixed-use with a commercial majority, dental and medical practices, pharmacies, nurseries, professional practices	75% to 80% (up to 95% to 100% for NHS-backed healthcare)
Moderate	Retail units on secondary parades, restaurants and cafes, hotels and guest houses, gyms, car showrooms, vets, hair and beauty	65% to 75%; hotels above 80% at Allica must fully amortise from day one
Cautious	Pubs, nightclubs, petrol stations, care homes without a track record, churches and community buildings, agricultural buildings without a farm business, anything with an EPC below E	50% to 65%, specialist lenders only
Usually declined	Buildings with structural or contamination issues, leasehold under 50 years remaining, properties with no planning for the intended use, purely residential property (use a company director mortgage for that)	Not available as a term loan; bridging may work

Energy performance is now a hard criterion. Since April 2023 it has been unlawful to continue letting commercial property with an EPC below E, YBS Commercial requires A to C (or D to E with a funded improvement plan), Aldermore excludes F and G, and Barclays gives a 0.3% rate discount for B or better. Check the certificate before you agree a price, because a unit rated F is a refurbishment project financed on a commercial bridging loan, not a term mortgage.

Which lenders offer owner-occupier commercial mortgages?

Around 25 UK lenders offer owner-occupier commercial mortgages, split between the high street banks (NatWest, Barclays, HSBC, Lloyds, Santander), the challenger and specialist banks (Allica, Shawbrook, Cambridge and Counties, Aldermore, YBS Commercial, Atom, Recognise, Cynergy, Redwood, InterBay) and the specialist lenders that take adverse credit or unusual assets (Together, Momenta). The table gives each lender’s published criteria as at 25 September 2026, from their websites and the Knox desk lender database refreshed in June 2026. Criteria change; treat this as the shortlist, not the offer.

Lender	Loan size	Max LTV	Term and rate	Published criteria worth knowing
NatWest	£25,001 to £10m fixed, no cap variable	75% (25% deposit typical)	Up to 25 years; fixed or variable over NatWest base	No set-up fees and no early repayment fees on standard commercial mortgages; new businesses welcome to apply; no current account required
Barclays	£25,001 upwards	80%	1 to 25 years; fixes 1 to 10 years	Three years’ certified accounts plus management figures; 0.3% green discount for EPC B or above; capital repayment holidays
HSBC	£25,001 to £25m (£10m fixed)	75% of price or valuation, whichever is lower	2 to 30 years; fixes to 10 years; variable over Bank Rate	Owner-occupied trading premises only; capital holidays to 24 months; arrangement fee negotiated per deal; OpCo/PropCo accepted
Lloyds	Priced per deal	Per deal	Fixed or variable	Owner-occupier trading businesses via the broker desk; full bank underwrite
Santander	£25,001 upwards	Per deal	Up to 25 years; interest-only options	Owner-occupier trading businesses only, no investment; minimum turnover £250,000; declined cases can be appealed to an independent team
Allica Bank	£150,000 to £10m	80%	To 30 years capital and interest; 5 years interest-only to 75% LTV	130% DSCR (pay rate on fixes, pay rate + 2% on variable); two years’ accounts; 1.5% arrangement fee; ERCs 5% to 1% on 5-year fixes
Shawbrook	£150,000 to £2.5m (commercial trading)	75%	3 to 25 years; 2, 3, 5 and 10-year fixes; variable over Shawbrook Base Rate with 0.75% floor	Loan amount based on trading history; personal guarantee minimum 25% of loan; expats and trusts accepted
Cambridge and Counties	£150,000 to £15m	80%	To 25 years; variable or 3 and 5-year fixes	Manual underwriting, no valuation fee until approved; trading businesses with 12 months’ accounts considered; SSAS/SIPP lending specialist; VAT loan to 90% combined LTV
Aldermore	£500,000 to £3m standard; CRE desk to £100m	75% (offices 60%)	2 to 20 years; variable margins around 2.5% to 3% over base	2% arrangement fee; EPC F and G excluded; broker panel currently closed to new members
YBS Commercial	£500,000 to £3m owner-occupied	75%	5 to 25 years; 2 and 5-year fixes, examples around 6.5% with 2% fee	125% DSCR at 6%; personal guarantee £175,000 or 10% of loan; EPC A to C; England and Wales entities only; minimum property value £135,000
Atom bank	£100,000 to £10m	75%; healthcare to 95% (dentists, pharmacists), 100% including goodwill for low-risk healthcare	2 to 10 year commitment; amortisation to 25 years; fixes to 7 years	2% arrangement fee; light adverse tolerated; UK nationals or ILR; no 50%+ non-resident shareholding
Recognise Bank	£250,000 to £3m	70%	Commitment to 5 years, repayment profile to 25 years	Fixed and variable; relationship-led SME lender
Cynergy Bank	Criteria on application	Per deal	Fixed and variable	Relationship bank for owner-managed businesses; underwritten case by case through the Knox desk
Together	£50,000 to £5m	70%; up to 100% with additional security	Priced on LTV and credit history	Adverse credit considered; minimum property value £50,000; non-UK residents accepted; land and semi-commercial too

Hampshire Trust Bank, Redwood, InterBay and Momenta also lend on owner-occupied commercial property, mostly where the case is semi-commercial, the borrower has credit history, or the timeline needs a bridge-to-term structure. InterBay’s owner-occupier range priced at roughly 6.59% to 8.24% in June 2026, and Momenta prices owner-occupied commercial from SONIA plus 7%, which tells you where the market sits for businesses the banks will not touch.

What are business mortgage rates in 2026?

Owner-occupier commercial mortgage rates in September 2026 run from about 5.25% to 7.5% at the banks and challenger lenders, and from 8% to 12% at specialist lenders for weaker cases, with the Bank of England Bank Rate at 3.75% (held on 17 September 2026). Commercial rates are quoted as a margin over Bank Rate or SONIA on variable products, or as a fixed rate for 2 to 10 years, and the margin is set on the strength of your accounts, the LTV and the property, not on a rate sheet you can compare online.

Lender tier (as at 25 September 2026)	Variable margin over Bank Rate 3.75%	Indicative pay rate	Fixed rates	Arrangement fee
High street banks (NatWest, Barclays, HSBC, Lloyds, Santander)	1.75% to 3.25%	5.5% to 7.0%	Similar to variable, 1 to 10 years	0% to 1.5% (NatWest: none on standard products)
Challenger banks (Allica, Shawbrook, Cambridge and Counties, Aldermore, YBS Commercial, Recognise, Atom)	2.5% to 3.75%	5.25% to 7.5% (Shawbrook headline from 5.24%; YBS examples 6.54% to 6.64%; Aldermore 2.5% to 3% over base)	2, 3, 5 and 10-year fixes, 6% to 7.5%	1.5% to 2%
Specialist and adverse (Together, InterBay, Redwood, Momenta)	4% to 7%+	7.75% to 12% (InterBay owner-occupier 6.59% to 8.24%; Momenta SONIA + 7%)	2 and 5-year fixes at the lower end	2% to 5% (Redwood offers a 5% fee for a lower headline rate)

Three things move your rate more than shopping around does. A DSCR above 2x and three clean years of accounts put you in the bottom of the range. An LTV of 60% or less gets a better band at almost every lender. And a standard property (office, industrial) prices a full point below a pub or a hotel at the same LTV. Fixed or variable is a judgement: with Bank Rate having come down from 5.25% and most forecasts flat to lower, a 5-year fix around 6% buys certainty for the business plan at the cost of early repayment charges (Allica’s step from 5% to 1%) if you sell or refinance inside the term.

What fees and costs come with a business mortgage?

Budget 3% to 5% of the purchase price for the costs of buying commercial premises with a mortgage, on top of the deposit. The largest single item is usually stamp duty, then the lender’s arrangement fee, then professional fees. All of them are payable before or at completion and none can be added to the loan at most lenders, although some will allow the arrangement fee to be capitalised.

Cost	Typical amount	On a £600,000 unit with a £450,000 loan
Stamp duty land tax (non-residential)	0% to £150k, 2% to £250k, 5% above	£19,500
Lender arrangement fee	0% to 2% of the loan	£6,750 at 1.5%
Valuation (Red Book commercial)	£1,200 to £4,000 depending on value and type	£2,000
Your solicitor	£2,500 to £6,000 plus searches	£3,500
Lender’s solicitor (you pay)	£1,000 to £2,500	£1,500
Building survey (recommended)	£1,000 to £3,000	£1,500
VAT on the purchase if the seller has opted to tax	20% of price, recoverable if you are VAT registered but must be funded on the day	£120,000 cash flow (Cambridge and Counties offers a VAT loan)
Total excluding VAT		About £34,750 (5.8% of price, driven by SDLT)

The VAT line catches people out. If the seller has opted to tax the building, you pay 20% VAT on completion and reclaim it on your next return, which is a cash flow gap of a fifth of the price for up to three months. Ask the agent on day one whether the property is opted, and if it is, ask us about a VAT bridging loan or a lender that will fund it.

How does the process work and how long does it take?

An owner-occupier commercial mortgage takes 8 to 12 weeks from application to completion at a bank, and 6 to 8 weeks at a challenger lender with a broker managing the case. The timeline is longer than a residential mortgage because there is a full commercial valuation, a business underwrite rather than a credit score, and commercial conveyancing with searches and a lease review. The steps below are what actually happens.

Stage	What happens	Typical time
1. Discovery and fact-find	We review your last accounts, management figures and the property, run the DSCR, and tell you the realistic loan, deposit and lender shortlist before you offer	Week 1
2. Indicative terms	Two or three lenders issue heads of terms: loan, rate, fee, conditions. HSBC and Handelsbanken quote inside 48 hours; YBS issues a credit-backed decision in 24 hours	Week 1 to 2
3. Full application	Accounts, bank statements, assets and liabilities, business plan if the premises change the model, ID and company documents	Week 2 to 3
4. Valuation	Red Book commercial valuation instructed by the lender; the valuer also reports on re-letting demand and any environmental risk	Week 3 to 5
5. Credit approval and offer	Underwriter signs off, formal offer issued with conditions (personal guarantees, insurance, debenture in some cases)	Week 5 to 7
6. Legals	Both sets of solicitors: title, searches, lease review, charge documents, guarantees, conditions precedent	Week 6 to 11
7. Completion	Funds released, charge registered, keys, rent stops	Week 8 to 12

The fastest cases are the ones where the accounts are filed and current, the property has a clean title and EPC, and the directors answer the underwriter’s questions the same day. The slowest are the ones where the seller has not opted to tax but cannot prove it, the lease of a sub-let part is missing, or the management accounts contradict the filed ones. If the seller will not wait, a commercial bridging loan completes in 2 to 4 weeks and the term mortgage refinances it, at a cost of roughly 0.85% a month for the interim.

Why do business mortgage applications get declined?

Owner-occupier commercial mortgage applications are declined for five reasons in most cases: the accounts do not support the payments at the stressed rate, the property is unsuitable or overpriced, the deposit source cannot be evidenced, the directors’ personal credit or guarantor strength is weak, or the business is too new. Each has a fix, and most declines are avoidable if the case is packaged properly the first time.

Decline reason	What the lender saw	The fix
DSCR below 1.25x	Profit dipped last year; rent add-back not applied; directors’ loans treated as debt	Present adjusted EBITDA with the rent add-back and one-off costs evidenced; use management accounts for the current year; reduce the loan or extend the term
Valuation down or property unsuitable	Valuer reported weak re-letting demand, an EPC of F, or a specialist use	Renegotiate the price, increase the deposit, or move to a lender with appetite for the asset (Together, InterBay)
Deposit not evidenced	Cash arrived from an unexplained source or from new borrowing	Six months of statements showing the build-up; a director’s loan agreement; sale proceeds documented
Guarantor weakness	Director has a default or CCJ, or personal assets are thin against a £175,000 guarantee	Explain and evidence the credit event; add a second guarantor; use a lender with credit tiers (Redwood, Atom, Together)
Trading history too short	Under two years of filed accounts	Cambridge and Counties on 12 months; NatWest for new businesses with a strong plan; healthcare via Atom; or rent for another year and file a clean set
Concentration risk	One client is 60% of turnover	Show the contract length and renewal history; consider key person insurance and a debenture to give the lender comfort

A decline at one bank is not a decline in the market. Santander runs an independent appeals team; the challengers underwrite manually and will read the explanation a high street credit model cannot. What you should never do is apply to three banks in a row without changing the case, because each search and each decline makes the next underwriter more nervous.

Case study: a Cheshire dental practice buying its unit

An illustrative example, anonymised and simplified. A two-surgery dental practice in Cheshire had rented its ground-floor unit for nine years at £38,000 a year. The landlord offered to sell at £750,000. The practice traded through a limited company with three years’ accounts showing EBITDA of £210,000, with 65% of income from an NHS contract. The principal dentist wanted to buy but had only £110,000 of free cash, which was below the 25% deposit the first bank asked for.

Two routes were available. Atom bank’s healthcare product would lend to 90% for a practice with NHS income, needing £75,000 down. A high street bank would lend 80% at a lower rate, needing £150,000. The principal chose the high street route and funded the gap with a director’s loan from her share of a previous property sale, evidenced with completion statements. The premises were bought in a new PropCo, with the practice company as guarantor and a 20-year lease between them at £38,000, the same rent the practice had always paid. Loan £600,000 over 20 years, 5-year fix at 6.1%, payments £4,330 a month or £51,960 a year against £248,000 of adjusted EBITDA (the rent added back), a DSCR of 4.8x. Completion took 10 weeks. The practice’s occupancy cost went up by £14,000 a year for the first five years, and in return it builds about £15,500 of equity in year one, rising every year as the interest share falls, plus growth in a building it will still be using in 2046. We also placed shareholder protection and key person cover, because a mortgage secured on a business with one principal fee earner needs both.

Why arrange a business mortgage through Knox?

Knox Mortgages is a whole-of-market broker with a dedicated bridging and commercial desk, a lender database covering 70 commercial and short-term lenders, and NACFB membership, which is a requirement for placing cases with YBS Commercial and several other banks. Jake Stott, who founded Knox, also runs Business Builders Club, a community of service-business owners, so the advice on this page comes from someone who has sat on your side of the table deciding whether to sign another five-year lease.

Practically, that means we run the affordability before you offer, shortlist the lenders that actually want your sector, package the accounts the way an underwriter reads them, and manage the valuation and legals so a 12-week process does not become 20. If you are a director buying a home rather than premises, our company director mortgage and self-employed mortgage pages cover how lenders read your income for a residential loan.

Frequently asked questions

Is it hard to get a business mortgage?

No, if the business has two or more years of profitable accounts and a 20% to 30% deposit. Around 25 lenders offer owner-occupier commercial mortgages and the high street banks actively want the business. It becomes hard when the business is under two years old, the profit does not cover the stressed payments by 1.25x, or the property is specialised.

How much deposit do I need for a business mortgage?

20% to 30%. Allica, Barclays and Cambridge and Counties lend to 80% LTV, most others cap at 75%, and Together and Recognise at 70%. Healthcare businesses with NHS income can borrow 90% to 100% from Atom and the banks, and any business with another unencumbered property can use it as additional security to reduce the cash deposit.

Can you get a 100% business mortgage?

Only in two situations: a healthcare practice with contract-backed NHS income at lenders such as Atom, or where you offer additional security (another property or a pension-owned asset) that covers the shortfall, which Together and some banks accept. For a standard trading business with no other assets, 80% is the ceiling.

What is the difference between a business mortgage and a commercial mortgage?

A business mortgage is the everyday name for an owner-occupier commercial mortgage, where your own business occupies the property and the loan is assessed on your profits. A commercial mortgage in the wider sense also covers investment property let to tenants, assessed on rent. Same lenders, different underwriting, and often a lower rate for the owner-occupier.

Can I get a business mortgage with one year of accounts?

Sometimes. Cambridge and Counties will consider a trading business with 12 months of accounts, NatWest says new businesses are welcome to apply with a strong plan, and healthcare professionals with NHS contracts can borrow on projections at Atom. Expect a lower LTV (65% to 70%) and a higher rate until you have two filed years.

Is a business mortgage interest tax deductible?

Yes. Mortgage interest on premises used by the trading business is an allowable expense against corporation tax, in the same way rent is. Capital repayments are not deductible, but capital allowances are available on fixtures, plant and integral features in the building. Take advice from your accountant on the structure before you buy.

How long does a business mortgage take to complete?

8 to 12 weeks at a high street bank and 6 to 8 weeks at a challenger lender with a broker managing the case. Indicative terms come in 1 to 2 weeks, the valuation takes 2 to 3, and commercial conveyancing is the long tail. A commercial bridging loan completes in 2 to 4 weeks if the seller will not wait.

Can my pension buy my business premises?

Yes. A SSAS or SIPP can buy commercial property, borrow up to 50% of the scheme’s net assets to do it, and lease the building to your company at a market rent, with the rent and any gain free of tax inside the pension. You need a regulated pension adviser and a scheme administrator; Knox arranges the property finance alongside them.

Speak to a commercial mortgage broker about buying your premises

If you are paying rent on premises you could own, book a discovery call. We will run the buy-versus-rent numbers on your actual accounts and your actual building, tell you which lenders will want the case and at what rate, and give you a straight answer on whether buying is the right move this year or in two years’ time.

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