High LTV Commercial Mortgages: 85%, 90% & 100% Options Explained

One of the most common questions we receive is: "Can I get a commercial mortgage with a small deposit?" The honest answer is that commercial mortgage LTV limits are significantly lower than residential, but there are legitimate ways to reduce the equity you need to inject -- if you know where to look.

Having spent years on the lending side at Lloyds Bank and Bank of Scotland, I saw firsthand how LTV decisions were made. The standard commercial mortgage tops out at 70-75% LTV, but there are lenders, structures, and strategies that can take you higher. Let me walk you through the full picture.

Standard Commercial Mortgage LTV: The Baseline

Before exploring high LTV options, it is important to understand the standard landscape. Most commercial mortgage lenders operate within these LTV bands:

Lender Type	Typical Maximum LTV	Common Range
High street banks	65-70%	50-65%
Challenger banks	70-75%	60-75%
Specialist lenders	70-80%	65-75%
Private banks	60-70%	50-65%

These limits exist because commercial property is inherently riskier than residential. Commercial values can fluctuate more sharply, void periods are longer, and the tenant market is less liquid. Lenders protect themselves by requiring a meaningful equity cushion.

For a 1,000,000 commercial property at 70% LTV, you need a 300,000 deposit plus costs. That is a significant barrier for many businesses and investors, which is why high LTV lending is so sought after.

Which Lenders Offer Higher LTV?

75% LTV Lenders

Several challenger banks and specialist lenders routinely offer 75% LTV on commercial mortgages:

• Aldermore: Up to 75% on standard commercial property with strong tenant covenants
• Allica Bank: Up to 75% for established businesses and investment properties
• Shawbrook: Up to 75% for certain property types with strong DSCR
• Paragon: Up to 75% on selected commercial investment properties
• Hampshire Trust Bank: Up to 75% for established borrowers

80% LTV Lenders

A smaller number of lenders will consider 80% LTV, but typically with additional requirements:

• Specialist lenders: Some offer up to 80% LTV where the property has exceptional tenant strength, long unexpired lease terms, and the borrower provides additional security
• Challenger banks: Occasionally stretch to 80% for owner-occupied properties where the business has strong financials and a long trading history
• Private lenders: Some private and bridging lenders offer 80% LTV on a short-term basis, with plans to refinance to a lower LTV term mortgage

At 80% LTV, expect to pay a premium of 0.5-1.5% above the rate you would achieve at 65-70% LTV.

85% LTV: Rare but Possible

85% LTV commercial mortgages are uncommon but not impossible. They typically require:

• Exceptional property: Strong location, high-quality tenant, long lease
• Additional security: A charge over another property or significant personal assets
• Owner-occupied with strong trading: A profitable business with several years of accounts
• Government-backed schemes: Some government-guaranteed lending programmes have facilitated higher LTV commercial lending (discussed below)

The Reality of 90% and 100% Commercial Mortgages

Let me be straightforward: genuine 90% or 100% LTV commercial mortgages from mainstream lenders do not exist. If you see advertisements promising 100% commercial mortgages with no catches, proceed with extreme caution.

However, there are legitimate ways to achieve the economic equivalent of high LTV lending:

Why Lenders Will Not Offer 100% LTV

• Risk profile: Commercial property values can fall 20-40% in a downturn. At 100% LTV, the lender is immediately in negative equity if values drop even slightly
• Regulatory capital: Banks must hold more capital against higher LTV loans, making them uneconomical
• Loss given default: If a borrower defaults at 100% LTV, the lender faces significant losses after accounting for selling costs, legal fees, and void periods
• Market precedent: The 2008 financial crisis demonstrated the catastrophic consequences of high LTV commercial lending

What "100% Finance" Actually Means

When you see claims of 100% commercial finance, they typically involve one of these structures:

• Senior debt + mezzanine finance: 70% from a senior lender topped up with mezzanine lending (see below)
• Vendor finance: The seller provides part of the purchase price as a loan
• Cross-collateralisation: Additional properties used as security to achieve a higher effective LTV on the target property
• Unsecured business lending: A commercial mortgage at standard LTV supplemented by an unsecured business loan

Each of these has costs and complexities that genuine 100% LTV lending would not. But they can reduce or eliminate the cash deposit required.

Alternative Ways to Reduce Your Deposit

Mezzanine Finance

Mezzanine finance is the most established route to higher effective LTV in commercial property. A mezzanine lender provides a second-charge loan that sits behind the senior mortgage, effectively bridging the gap between the senior lender's maximum LTV and the purchase price.

**How it works:**

• Senior lender provides 65-70% LTV at standard commercial rates
• Mezzanine lender provides an additional 10-20% of the property value
• Combined lending can reach 80-90% of the property value
• You provide the remaining 10-20% as equity

**Example:**

• Property value: 1,000,000
• Senior mortgage at 65% LTV: 650,000 at 5.5%
• Mezzanine at 20% of value: 200,000 at 12%
• Your equity: 150,000 (15% of value)

**Costs**: Mezzanine finance is expensive -- typically 10-15% interest with arrangement fees of 2-3%. The combined cost of senior debt plus mezzanine is significantly higher than a single mortgage, but it allows you to proceed with less equity.

**Key considerations:**

• The property must generate sufficient income to service both the senior and mezzanine debt
• Mezzanine lenders typically require a second charge, which the senior lender must consent to (an intercreditor agreement)
• Terms are usually shorter (2-5 years) with an expectation that the mezzanine is repaid through refinancing or capital events

Vendor Deposits and Deferred Consideration

Some sellers agree to defer part of the purchase price, effectively providing finance to the buyer. This can work as follows:

• Purchase price: 800,000
• Commercial mortgage at 70% LTV: 560,000
• Vendor loan (deferred payment): 160,000 (paid over 2-3 years)
• Your cash deposit: 80,000 (10% of the purchase price)

**Important**: Most commercial mortgage lenders require disclosure of vendor finance arrangements. Some will not accept them, while others may be comfortable provided the deferred element is genuinely subordinated to the mortgage. Transparency with your lender is essential.

Cross-Collateralisation

If you own other properties with significant equity, you can offer them as additional security to support a higher LTV on your new purchase.

**Example:**

• New purchase: 500,000 property, you want 90% LTV (450,000 loan)
• Existing property: Worth 400,000 with 150,000 mortgage (250,000 equity)
• Combined security: 900,000 of property supporting 600,000 of total debt (67% aggregate LTV)

The lender sees a comfortable overall LTV position even though the LTV on the new property alone would be unacceptably high.

**Considerations:**

• Both properties are at risk if you default
• The lender takes a charge over both assets
• Your existing lender must consent if there is a prior charge on the additional property
• You lose flexibility to sell or refinance the additional property independently

Equity Release from Existing Portfolio

If you already own commercial properties that have increased in value, you may be able to remortgage them to release equity for your new purchase deposit.

**Example:**

• Property bought 5 years ago for 600,000 with 400,000 mortgage (now worth 800,000)
• Remortgage to 70% LTV: new mortgage of 560,000
• Equity released: 160,000 (560,000 - 400,000)
• This 160,000 becomes your deposit for the new acquisition

This is one of the most common portfolio-building strategies and is entirely standard in commercial property investment.

Unsecured Business Finance Top-Up

For owner-occupied purchases, some borrowers use unsecured business loans or overdraft facilities to supplement their commercial mortgage. This should be approached carefully:

• The business must be able to service both the mortgage and the unsecured debt
• Some commercial mortgage lenders will ask about other borrowing at application stage
• Unsecured business finance rates are higher (8-15%) and terms shorter

Government-Backed Schemes

Recovery Loan Scheme (and Successors)

The UK government has periodically offered guarantee schemes that enable lenders to offer higher LTV commercial lending. These schemes provide a government guarantee on a portion of the loan, reducing the lender's risk and allowing them to lend at higher LTVs.

Availability changes over time, so it is worth checking with a broker whether any current schemes apply to your situation. These schemes have historically supported:

• Higher LTV lending for SMEs
• Longer terms with lower deposits
• Access to finance for businesses that would otherwise not qualify

British Business Bank Programmes

The British Business Bank facilitates access to finance for smaller businesses, sometimes through programmes that support higher LTV lending. These are accessed through accredited lenders rather than directly.

The Relationship Between LTV and Interest Rates

Higher LTV means higher risk for the lender, which translates directly into higher costs for the borrower.

Typical Rate Premium by LTV Band

LTV Band	Indicative Rate Premium Over 50% LTV
50-60%	Baseline (best rates)
60-65%	+0.15% to +0.30%
65-70%	+0.30% to +0.60%
70-75%	+0.50% to +1.00%
75-80%	+1.00% to +1.75%

On a 1,000,000 loan, a 1% rate premium costs 10,000 per year in additional interest. Over a five-year term, that is 50,000 extra. This is the price of higher leverage, and it needs to be factored into your investment appraisal.

Cost of Capital Stack at High LTV

When using mezzanine or other supplementary finance, the blended cost of the full capital stack rises sharply:

Structure	Amount	Rate	Annual Cost
Senior debt (65% LTV)	650,000	5.50%	35,750
Mezzanine (20%)	200,000	12.00%	24,000
Equity (15%)	150,000	-	-
Total finance cost			59,750
Blended rate on debt	850,000	7.03%

Compared to a single mortgage at 65% LTV costing 35,750 per year, the high-leverage approach costs an additional 24,000 annually. The property must generate sufficient returns to justify this premium.

Security Requirements for High LTV Lending

As LTV increases, lenders require more comprehensive security packages:

Personal Guarantees

Virtually all high LTV commercial mortgages require personal guarantees (PGs) from the borrower's directors or principals. These may be:

• Full PG: The guarantor is personally liable for the entire loan balance
• Limited PG: Capped at a specific amount or percentage of the loan
• Reducing PG: Decreases as the loan balance reduces

At higher LTVs, lenders are more likely to insist on full rather than limited guarantees.

Debentures and Floating Charges

For corporate borrowers, lenders may require a debenture over the company's assets, including:

• Fixed charge over the property
• Floating charge over all other company assets
• Assignment of rental income
• Assignment of insurance policies

Additional Property Security

As discussed under cross-collateralisation, lenders may request charges over additional properties to support higher LTV lending.

Cash Reserves

Some lenders require borrowers to maintain minimum cash reserves (often 6-12 months of mortgage payments) in a charged account as a condition of higher LTV lending.

How to Improve Your LTV Position

If you cannot achieve the LTV you need, consider these strategies:

Negotiate the Purchase Price

A lower purchase price directly improves your LTV. If you can negotiate a 5% reduction, you effectively need 5% less deposit (as a proportion of the price).

Add Value Pre-Purchase

If you can negotiate a price that reflects the property's current condition and the lender values it at a higher figure (reflecting its potential), you achieve a better effective LTV. This is common with properties requiring light refurbishment.

Strengthen the Income Profile

A property with stronger rental income achieves a higher valuation on the investment method. If you can demonstrate improved rental potential (through lease renewals, rent reviews, or pre-let agreements), the valuation may support a higher loan amount.

Improve Personal Financial Position

• Reduce existing debts to demonstrate stronger serviceability
• Build cash reserves to show financial resilience
• Demonstrate a track record of commercial property ownership
• Provide additional assets that evidence overall net worth

Use a Broker

Different lenders have different appetites and criteria. A broker with full market access can identify lenders offering the highest LTV for your specific property type, location, and circumstances. We regularly find 5-10% more LTV than borrowers have been offered by going directly to banks.

Common Mistakes When Seeking High LTV

**Over-leveraging**: Just because you can borrow more does not mean you should. High LTV means smaller margins for error. If rental income drops, costs increase, or values fall, highly leveraged properties are the first to face difficulties.

**Ignoring total cost**: Focus on the total cost of the capital stack, not just the headline rate. Mezzanine, arrangement fees, and higher rates on senior debt all compound. Run the numbers carefully.

**Insufficient reserves**: High LTV leaves less room for unexpected costs. Ensure you retain adequate cash reserves after completing the purchase.

**Unrealistic valuations**: Do not assume the property will value at a particular level. If the valuation comes in lower than expected, your LTV increases and you may need to find additional equity at short notice.

**Rushing into complex structures**: Mezzanine and vendor finance arrangements take time to structure. Allow sufficient time in your purchase timeline for these elements to be arranged.

How We Help Clients Maximise LTV

At Commercial Mortgages Broker, we specialise in structuring finance to minimise the equity our clients need to inject. With access to the full market -- high street banks, challengers, specialist lenders, mezzanine providers, and private capital -- we identify the most competitive high LTV options available for your specific circumstances.

Our ex-banking background means we understand exactly how lenders assess high LTV applications and how to present your case to achieve the maximum borrowing available.

[Contact us](/contact) to discuss your commercial mortgage deposit requirements and explore how we can help you achieve higher leverage.

*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*