Commercial-Investment Mortgages – Funding Shops, Offices & Mixed-Use Property
(Buy or refinance trading premises, high-street units or semi-commercial blocks with the right type of loan.)
Quick Summary
What they are: Long-term loans (3-25 yrs) secured on property that’s mainly commercial (or mixed with resi).
Typical LTV: Up to 75 % of purchase price or valuation; some lenders stretch to 80 % on strong covenants.
Rates (July ’25): 6 %-14 % p.a. fixed or variable, plus 1-2 % arrangement fee.
Who funds them: Challenger banks (Shawbrook, Aldermore), building societies (Leeds, Darlington), and niche lenders (Interbay, Octopus).
Good for: Buy-to-let investors moving into retail/office, landlords buying mixed-use (shop + flat), trading businesses wanting to own their premises.
1 | Commercial vs Buy-to-Let vs Semi-Commercial
| Feature | Pure Commercial | Semi-Commercial (Mixed-Use) | Standard BTL |
|---|---|---|---|
| Rental basis | Lease income from business tenant | Shop lease + AST/rent on flat | AST rent only |
| Max LTV | 70-75 % | 75 % (some 80 %) | 80-85 % |
| Tenancy length | 3-25 yr FRI lease | Split: commercial lease + AST | 6-12 m AST |
| Valuation method | Investment yield or vacant value | Dual: yield on shop + bricks-and-mortar on flat | Comparable resi sales |
2 | Lender Criteria Snapshot
| Lender | Max LTV | Property types | Notes |
|---|---|---|---|
| Shawbrook Bank | 75 % GDV | Retail, offices, light industrial | 3-25 yr terms, interest-only up to 10 yrs |
| Interbay (Kent Reliance) | 75 % | Semi-commercial, HMOs above shops | Portfolio landlords welcome |
| Leeds BS | 70 % | Owner-occupied or investment | Manual underwriting; min loan £50k |
| Recognise Bank | 75 % | Mixed-use blocks, up to £10 m | Allows up to 40 % vacant on day one |
3 | Typical Costs
| Cost | Range |
|---|---|
| Interest rate | 6 %-14 % p.a. variable/fixed |
| Arrangement fee | 1-2 % of loan |
| Valuation | £600 – £5,000+ (size/location) |
| Legal (dual rep) | £2,000 – £6,000 |
| Broker fee | 1-1.5 % (often added) |
Rates depend on tenant covenant, lease length, sector (e.g., convenience stores rate lower than bars).
4 | Affordability & Deposit
Debt-Service-Cover Ratio (DSCR): lenders want rent to cover interest 125-150 % at 6-9 % stress rate.
Deposit sources: cash, equity release from other property, or mezzanine finance (up to 90 % stack at higher cost).
If buying semi-commercial, residential element can sometimes be mortgaged on a BTL product; speak to broker for split-charge structures.
5 | Application Timeline
Decision in Principle – 48 h
Full underwrite & valuation instructed – 5-7 d
Valuation / environmental & structural reports – 2-3 wks
Offer issued – 4-6 wks
Completion – 6-10 wks (faster if refinance, titles clean)
6 | Risks & Mitigations
| Risk | Mitigation |
|---|---|
| Vacancy or tenant default | Target strong covenants, take rent deposit, build 3-6 m buffer |
| Down-valuations in weak retail market | Get independent agent appraisal before offer; negotiate price |
| Higher exit fees | Choose products with 0 % or reducing ERCs after year 3 |
| Changing planning regs on mixed-use | Check local plan & Class E uses with solicitor pre-exchange |
7 | Next-Step Checklist 
Gather last 3 years’ accounts for trading tenants (or AST schedule for mixed-use).
Collate property info: floorplan, EPC, lease(s), photos.
Confirm personal/limited-company structure & credit reports.
Speak to a commercial-mortgage broker to match sector appetite and leverage.
Budget for valuation + legal upfront (many lenders insist on funds on account).
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