How Much Deposit Do I Need for a Commercial Mortgage?

Most commercial mortgage lenders want a deposit of 25–35%, meaning they will lend 65–75% of the property's value. Where you sit in that range depends on the type of property, whether you will occupy it, and the strength of your business.

Owner-occupier mortgages

If your business will trade from the property, lenders typically go to 70–75% loan-to-value for standard commercial units such as offices, industrial units and retail. That means a 25–30% deposit. Strong, established businesses with several years of profitable accounts sit at the top of that range.

Commercial investment mortgages

If you are buying property to let to a business tenant, expect 65–70% LTV, so a 30–35% deposit. Lenders are relying on the tenant's rent, so a long lease to a strong tenant improves the terms; a short lease or vacant unit reduces them.

Specialist property

Pubs, hotels, care homes, petrol stations and other trading premises are often valued on the business as well as the bricks and mortar. LTVs are typically lower, around 60–65%, and lenders will want to see sector experience.

Semi-commercial and mixed use

Shops with flats above and similar mixed-use property often attract slightly better terms than pure commercial, with some lenders reaching 75% because of the residential element.

Reducing the cash you need

• Additional security: a charge over another property can reduce or replace the cash deposit.
• Vendor gifted deposit or deferred consideration: sometimes negotiable on a business-and-premises purchase.
• Bridging then refinancing: buy below market value, add value, then refinance onto a commercial mortgage at the higher valuation.
• Pension purchase: a SSAS or SIPP can buy commercial property and lease it back to your business.

Other costs to budget for

Valuation, lender arrangement fees (typically 1–2%), legal fees for both sides, and stamp duty on commercial rates. These are separate from the deposit.

Get a clear figure before you view

DNA Finance can tell you the realistic LTV for the property and business you have in mind before you commit to anything, so you know your budget and can negotiate with confidence.