A business mortgage is the everyday term for buying the premises your company trades from, using long-term finance secured against that property. Search for it and you will find lenders, brokers and comparison sites using the phrase interchangeably with owner-occupier commercial mortgage. They mean the same thing: a loan, usually over 15 to 25 years, that lets a trading business own its shop, office, workshop, warehouse, surgery or unit rather than rent it.
The terminology trips people up because the residential world has trained us to expect one product called a mortgage. Commercial lending is broader. A business buying its own premises is a different proposition to a landlord buying a property to let out, and lenders price and assess the two differently. This guide covers the owner-occupier version: what it is, what it costs in 2026, how much deposit you need, how lenders judge affordability, and how to decide between renting and buying.
We arrange this type of finance across the whole market, and the questions below are the ones business owners ask us most. Read on for the substance, and use our [commercial mortgage calculators](/calculators) to model your own numbers as you go.
What a business mortgage is, and how it differs from investment
An owner-occupier commercial mortgage funds a property that your own business will occupy and run from. The clue to how lenders think about it is in the security and the repayment source: the loan is secured against the building, but it is repaid out of the trading profits of the business inside it.
That is the key difference from a commercial investment mortgage, where the property is let to a third-party tenant and the rent services the debt. With an investment mortgage the lender underwrites the strength of the lease and the tenant. With an owner-occupier mortgage the lender underwrites the strength of your business. Two loans, secured against near-identical buildings, can be assessed in completely different ways depending on who occupies the property.
This matters for pricing. Owner-occupier deals are generally seen as lower risk, because a business buying its own home has a strong incentive to keep paying, and the property is core to how it earns money. That is why owner-occupier rates sit at the lower end of the commercial spectrum. For a deeper comparison, see our guide to [owner-occupied commercial mortgages](/knowledge-hub/owner-occupied-commercial-mortgage).
Business mortgage rates in 2026
Owner-occupier commercial mortgage rates in 2026 typically sit between 6.0% and 7.5% per annum. That band assumes a trading business with reasonable accounts, a mainstream property type, and a loan-to-value of 70% or below. Weaker covenant, a specialist property, or a higher loan-to-value pushes the rate up.
Rates come in two broad shapes:
- Variable, priced over Bank of England base rate: the margin is fixed for the term, but the rate moves as base rate moves. Common with clearing banks such as Lloyds, NatWest, Barclays and Santander.
- Fixed for a period: typically two, three or five years, giving certainty on the monthly payment. Common with specialist lenders such as Shawbrook, InterBay Commercial and Cynergy Bank, and challenger banks like Allica and Aldermore.
The rate you are quoted depends on more than the headline. Loan-to-value is the single biggest driver: drop from 75% to 65% and you will usually see a better margin. The strength of your accounts, the property type, the lease or freehold position, and your sector all feed in. A rate advertised as a starting point is achieved only by the strongest cases. Most owner-occupiers should budget for the middle of the band. Our guide to [commercial mortgage rates in the UK](/knowledge-hub/commercial-mortgage-rates-uk) breaks the drivers down in detail.
How much deposit you need
Most business mortgages require a deposit of 20% to 30% of the purchase price, so lenders advance 70% to 80% of the value. Owner-occupiers often achieve the higher end of lending, because the business occupying the property strengthens the case.
A trading business with strong accounts buying a mainstream property (an office, an industrial unit, a standard retail shop) can often borrow 75% to 80%, meaning a 20% to 25% deposit. Specialist or harder-to-sell property, or a business with a shorter or patchier trading history, tends to sit nearer 65% to 70%, so a 30% to 35% deposit.
Deposit can come from cash savings, accumulated business reserves, equity released from another property, a director's loan, sale proceeds, or a pension scheme buying the premises. The source has to be evidenced for anti-money laundering purposes. Our [commercial mortgage deposit guide](/knowledge-hub/commercial-mortgage-deposit-guide) covers acceptable sources and strategies to reduce the cash you need in full.
How lenders assess affordability: EBITDA, not salary multiples
This is where business mortgages diverge most sharply from residential lending. There is no income multiple. A lender does not take your salary and multiply it by four or five. Instead, it looks at whether the business generates enough profit to comfortably cover the mortgage payments.
The core measure is usually EBITDA: earnings before interest, tax, depreciation and amortisation. It is a proxy for the cash a business produces before financing costs. The lender compares EBITDA to the annual cost of the loan and wants to see a cushion. A common test is that EBITDA should cover the mortgage payments by around 1.3 to 1.5 times, though this varies by lender and sector.
Lenders typically want:
- Two to three years of accounts showing stable or growing profitability
- Up-to-date management figures if the last filed accounts are more than a few months old
- An explanation of any dip, such as a Covid-affected year or a one-off cost
- Evidence the payment is affordable once you strip out any rent the business currently pays
There is an important upside here. If you currently rent your premises, the money you pay in rent disappears from your costs once you own the building. Many owner-occupier deals stack up precisely because the mortgage payment is similar to, or lower than, the rent the business was already paying. Our guide on [how much you can borrow on a commercial mortgage](/knowledge-hub/how-much-borrow-commercial-mortgage) works through the affordability maths.
Rent versus buy: the real comparison
The instinct to own your premises is strong, but it is worth doing the comparison properly rather than emotionally.
The case for buying:
- You build equity in an asset instead of paying a landlord
- You control the property: no lease renewals, no landlord refusing alterations, no being asked to leave
- Payments can be stable and, on a repayment mortgage, steadily reducing your debt over time
- The property can be an asset for retirement, particularly if held in a pension
The case for renting:
- Lower upfront cost: no deposit, no purchase fees, capital stays in the business
- Flexibility to move as the business grows or shrinks
- No exposure to property value falls or maintenance liability
- Capital is not tied up in bricks and mortar when it could fund growth
The deciding factors are usually how settled the business is in its location, how the mortgage payment compares to the rent, and whether the deposit is capital the business can spare. A fast-growing business that may double in size in three years is often better renting. A settled, profitable business in premises it intends to occupy for a decade frequently finds buying compelling. We are happy to model both sides with you: [get in touch](/contact).
Buying through a limited company or personally
Most trading businesses buy their premises through a company, but the structure deserves thought.
**Through your trading company**: the simplest route when the company that occupies the property also owns it. The mortgage sits on the company balance sheet and payments come from trading income. The downside is that the property is exposed to the trading risks of the business. If the business fails, the property is part of the estate.
**Through a separate property company**: many owners set up a separate company to hold the premises, then let it to the trading company at a market rent. This ring-fences the property from trading risk and can be tidier for succession and eventual sale. Lenders are comfortable with this structure, though the loan is then assessed partly on the rent between the two companies.
**Personally, then let to the business**: some owners hold the property in their own names and charge the business rent. This can suit smaller operations but exposes the individual directly and has different tax consequences.
**Through a pension (SIPP or SSAS)**: a self-invested pension can buy commercial premises and let them to your business. Rent is paid into the pension, and the property grows outside your estate. This is one of the most tax-efficient routes to owning your premises, though it suits some situations better than others.
Each structure has tax, liability and succession consequences that sit outside our remit. Take advice from your accountant on structure, and speak to us about which lenders suit each option. Our guide to [business loans to buy property](/knowledge-hub/business-loan-to-buy-property) covers the borrowing side in more depth.
Is it hard to get a business mortgage?
Business owners often assume a business mortgage is out of reach, or that a single wobble in the accounts will sink the application. In practice it is more accessible than the reputation suggests, provided the fundamentals are there.
The lender is really asking three questions. Can the business afford the payments, tested on profitability rather than a salary multiple? Is the property acceptable security, meaning a reasonable value, condition and marketability? And is the borrower credible, with a clean enough background and an explainable financial history? Answer those three well and approval follows.
Where cases get harder is at the edges: a business with only one year of accounts, a recent loss, a very specialist property, a poor personal credit history, or a deposit whose source cannot be evidenced. None of these is automatically fatal. They simply narrow the field of lenders and may nudge the rate or deposit. The clearing banks, **Lloyds**, **NatWest**, **Barclays** and **Santander**, tend to want the cleanest cases; specialist and challenger lenders exist precisely to handle the ones that do not fit a tidy box. Matching the case to the right lender is most of the job.
The application process, step by step
A business mortgage application runs through a predictable set of stages. Knowing them helps you prepare.
- Agreement in principle: we present your case to suitable lenders and secure indicative terms, usually within a few days.
- Full application and documents: accounts, management figures, bank statements, ID, and details of the property and your deposit source.
- Valuation: the lender instructs a RICS valuation of the property, which confirms the value and the loan-to-value.
- Underwriting: the lender assesses affordability, the business, the property and your background, then issues a formal offer.
- Legals: solicitors act for you and the lender, handle searches, and prepare the security.
- Completion: funds are released and the property is yours.
Start to finish, expect six to twelve weeks for a straightforward purchase, and longer for complex cases. The single biggest cause of delay is incomplete or late paperwork, so preparing your accounts, statements and deposit evidence early pays off.
*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*