Commercial Mortgage Rates

Countless businesses, business owners and aspiring business owners contact us with questions about commercial mortgage interest rates, so we’ve compiled this comprehensive guide to business mortgage rates in the UK.

What are the current commercial mortgage interest rates in the UK?

There’s no simple answer to this question. You won’t find many definite rates listed on lenders’ websites because commercial mortgage loan rates are not predetermined.

This may be true of residential mortgages, but commercial applications are always handled on a case-by-case basis, and the rates you end up with will be determined based on a thorough assessment of you and/or your business and the strength of the investment.

Lenders tend to offer their best commercial mortgage deals when the perceived level of risk is low, and what is classed as risky will vary across the board.

How is interest charged on a commercial mortgage?

Like residential mortgages, commercial mortgages can be either fixed or variable rates – although variable rates are more common with this type of borrowing.

With fixed-rate lending, you will pay a discounted rate of interest for a set period of time (usually between 2 and 10 years) before switching to the lender’s standard variable rate (unless you refinance), which will likely be higher.

Meanwhile, interest rates on variable-rate commercial mortgages are based on either the Bank of England’s Base Rate or LIBOR (London Inter-Bank Offered Rate).

Are commercial mortgages more expensive than residential?

They can come with higher rates and fees because commercial mortgages are usually treated as higher risk than residential.

What is the average interest rate on a commercial mortgage?

An average owner-occupier commercial mortgage has an interest rate between 1.5% and 3% above the Bank of England base rate. This may vary considerably based on the factors we’ll discuss in this article.

Commercial investment mortgages are usually considered higher risk and, therefore, have higher interest rates.

How are commercial mortgage loan interest rates determined?

Most business lenders will consider the following when determining interest rates for a commercial mortgage…

• Whether it’s a commercial investment mortgage or an owner-occupier deal
• The loan-to-value ratio (LTV)
• Credit history
• You and/or your business’s financials
• The viability of the investment
• The size of the loan

The section below outlines how each of the above can impact interest rates for commercial mortgage loans, but you can always speak with an expert commercial mortgage broker on the phone for more information and access to the best lenders in the business.

How do I get the best commercial mortgage loan rates?

When customers ask us, “What are the rates for commercial mortgage loans?” we find that it’s more productive to tell them how to get the best rates rather than cite average/typical commercial mortgage rates to them. Interest rates are always in flux and can change at any time, not to mention that business lending is usually bespoke.

The most important thing to remember regarding getting the best commercial mortgage rates in the UK is that finding a broker with access to the entire market is the place to start. All the best deals you qualify for will be within reach.

The specialist advisors we work with are whole-of-market and have the expertise to offer insight on your application and connect you to the provider best positioned to offer a low-interest commercial mortgage to a lender with your needs and circumstances.

What criteria must I meet to qualify for the best business mortgage rates?

Every commercial lender will have different eligibility criteria, but generally speaking, most providers consider the following when deciding which business mortgage rate to offer…

Commercial property mortgage rates and terms

Commercial mortgage terms can vary between three and 40 years, but most tend to fall into the 15-30-year bracket. The length of the term you’re given will affect the total amount of interest you pay throughout the duration of the business mortgage loan.

While a longer term means smaller monthly payments, you will end up paying more in interest if you spread the debt over a longer period. The advisors we work with can help you determine what kind of term length is right for you based on your needs and affordability.

How do I carry out a comparison of business mortgage rates?

Some lenders use a different commercial mortgage rates calculator from others, so the amount you can borrow and the rates you qualify for will differ.

Approaching a number of different providers isn’t the way to go about a commercial mortgage interest rate comparison. Too many hard searches on your credit file can be detrimental to your credit rating, not to mention how much legwork this involves.

Is there a better alternative to using a commercial mortgage calculator?

The best way to search the market for the best rates is to make an enquiry with a whole-of-market commercial broker and have them compare commercial mortgage interest rates for you. That way, you will have access to all the best deals for which you’re eligible.

Get in touch, and the advisors we work with introduce you to the lender offering the best commercial mortgage deals you’re eligible for.

Are small business commercial mortgage rates any different?

Generally speaking, small businesses can access the same commercial mortgage products as larger operations. The rates they will be offered are usually no different as long as the lender is happy with the level of risk. The risk will be assessed much like for larger businesses, based on the same eligibility checks.

Things will only be different if your small business is a start-up or a Limited Company. With new operations, additional security and a strong business plan may be required to make up for the lack of trading history, while Ltd Company borrowers may be asked to present personal guarantees from the directors as well as debentures.

Are commercial mortgage rates any different around the UK?

As commercial lending is bespoke, there are no hard and fast rules about how mortgage rates differ in England compared to Ireland, Scotland and Wales.

Speak to an expert on business mortgage interest rates

If you have questions about mortgage rates for business property and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0330 818 7026 or make an enquiry online.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. They can connect you to the lender offering the lowest commercial mortgage rates you qualify for.

We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.