Commercial Mortgages for Start-Up Businesses in the UK: What You Need to Know

Starting your own business is an exciting step, but financing a property for commercial purposes can feel like a bottleneck hurdle — especially for a fledgling business. Whether you’re opening a café, buying your first business premises, or seeking space for investment properties, a commercial mortgage could be the key to your next move.

This guide explains what a commercial mortgage is, how it applies to start-up businesses, and how to improve your chances of success — all from the perspective of an experienced UK mortgage broker.

The article is updated as of April. 9,  2025

Risk Warnings:

The Financial Conduct Authority do not regulate commercial mortgages.

Commercial Mortgages by referral only.

Bridging loans are available through referral only.

What Is a Commercial Mortgage?

A commercial mortgage is a type of loan secured against property for business use. Unlike a residential mortgage, this form of finance applies to buildings used for trade, retail, manufacturing, or services. It’s a well-respected and hugely effective way for business owners to purchase, expand or refinance their business premises.

You might use a commercial mortgage to:

• Buy an office, warehouse or retail space for your company
• Refinance an existing property to raise working capital
• Purchase a building to lease to other businesses
• Acquire commercial property as part of a portfolio

Whether you’re an established company or a start-up with lofty dreams, this funding option gives access to larger sums than a standard business loan.

Can Start-Ups Get a Commercial Mortgage?

Yes, but you’ll face more strict lending criteria. Many commercial mortgage lenders require a solid trading record, which start-up businesses may not have. That said, it’s not impossible — especially if you have a watertight business plan, some capital to invest, and a dedicated team helping with your application.

Eligibility Criteria and Key Factors

Lenders assess applications from businesses based on:

• Business Plan & Proposal: Your direction, market understanding, and projected cash flow
• Trading History: Even 3–6 months can support your case — longer is better
• Credit History: Personal and business credit checks are common; learn more in our guide to credit scoring
• Deposit Amount: Often 25–40% of the purchase price
• Security: The property acts as a legal charge, but some lenders may ask for additional security
• Suitability of the Property: Must be for clear commercial purposes
• Type of Loan: Fixed, variable rate loan, or hybrid

If you have adverse credit or no banking history, certain brokers (like us) can introduce you to alternative business funding options tailored for your situation.

How Much Can You Borrow?

Amounts typically range from £50,000 to several million, depending on your business income, deposit size, and the lender’s risk appetite.

If your company wants to buy a commercial unit valued at £300,000, you might get:

• 70% LTV (£210,000 mortgage)
• 30% deposit (£90,000 capital)

Your monthly repayments will vary based on the contract term, repayment profile, and whether you’ve opted for capital repayments or interest-only.

Some businesses opt for a capital repayment holiday in the early months — this can be helpful for start-up funding but increases long-term borrowing costs.

What Are the Current Commercial Mortgage Rates?

As of early 2025, commercial mortgage rates vary widely depending on risk, deposit, and sector. For context:

• Start-ups can expect interest rates around 6%–9%
• More established businesses may see slightly lower rates
• Many are linked to the Bank of England base rateThe interest rate set by the Bank of England, affects the in..., especially variable interest rate borrowers.

Unlike residential lending, commercial lenders don’t always publish rates publicly. A UK mortgage broker can help you access more competitive terms through private panels.

Don’t forget the application fee, valuation costs, security fees, and potential repayment fees for early exits.

What Documents Will I Need?

A well-prepared loan application increases your chances. Expect to provide:

• A full business proposal with income forecasts and sector research
• Recent business bank statementsA record of a borrower's financial transactions often requir...
• Any existing performance figures
• Director credit reports and proof of income declaration
• A summary of any connected businesses
• Confirmation of registration with Companies House
• Evidence of your source of funds for the deposit

For borrowers with speech impairments or requiring assistance, many brokers now offer a digital assistant or support for customers with hearing difficulties.

Pros and Cons of Commercial Mortgages

Benefits

• Build equityThe difference between the value of the property and the amo... in your own property
• Flexible repayment structures — including one-off balloon payments
• Potential access to grants from charities or green assets funding
• Helps fund essential assets in sectors like agriculture or light industry

Drawbacks

• Higher upfront costs than short-term loans
• Complicated process with legal reviews, application forms, and due diligence
• May require personal guarantees for sole traders or limited companies

Alternative Funding Options

Commercial mortgages aren’t the only route. You might consider:

• Unsecured business finance — no collateral required
• Asset finance — use equipment or vehicles to raise funds
• Buy-to-let mortgages for property investments
• Business grants — e.g. Grants – Free Startup Funding for Niche Businesses
• Lines of credit provide ongoing access to a flexible pool of funds
• Personal loan or credit cards for smaller purchases

Every business is different — what suits one may be an expensive option or bad idea for another.

How a UK Mortgage Broker Helps

We support you through every step of the commercial mortgage application process, including:

• Assessments of eligibility
• Tailoring your repayment terms
• Minimising closure fees, prepayment fee, and administration charge
• Avoiding bad debt situations through sensible structuring
• Introducing you to start-up funding lenders or venture capital where appropriate

Our expert Relationship Managers ensure you get the advice and structure best suited to your business type, whether you’re in farming, tech, or trades.

You also get access to a quick guide to documents and a quick search of lenders best aligned to your goals.

FAQ: Commercial Mortgages for Start-Ups

Can I get a commercial mortgage with no trading history?

Yes, but expect more scrutiny. Some lenders accept business ideas with strong grant application backing and guide to startup funding.

How long does the process take?

Typically 6–12 weeks. Delays can occur around public holidays, asset purchases, or if additional documents are needed.

Can I apply as a sole trader?

Yes, many sole traders use a commercial mortgage for an owner-occupied business or business property.

What’s the difference between this and a personal finance loan?

A commercial mortgage is tailored for commercial purposes and offers longer contract leasing terms, but carries a legal charge on the property.

Can I combine it with other forms of finance?

Absolutely — many start-ups use a combination of loan terms, grants, and asset finance team support.

Need help with a commercial mortgage, understanding your repayment amounts, or figuring out your best source of finance? Speak with one of our specialist advisers — we offer advice shaped to your individual circumstances and the type of asset finance or mortgage term you’re considering.