Deposit is the single biggest barrier to buying commercial property, so it is no surprise that low deposit commercial mortgages are one of the most searched topics we deal with. The honest starting point is this: for a standard commercial purchase, lenders expect 25-40% of the price as deposit, with 25% (75% loan-to-value) being the best case for mainstream property. A 10% or 5% deposit is the exception, not the norm, and it almost always depends on something beyond cash.
That does not mean a low deposit is impossible. It means the routes to 20%, 15%, 10% or even 5% work differently from residential lending, and understanding how each one is priced and secured is the difference between a realistic plan and a wasted month. In this guide we set out the honest baseline, then walk through when each lower deposit level genuinely works and what it costs.
We are a commercial finance broker, not a residential adviser, so everything below relates to commercial and semi-commercial lending. For the full picture on deposits, read alongside our [commercial mortgage deposit guide](/knowledge-hub/commercial-mortgage-deposit-guide).
The honest baseline: 25-40% is standard
Commercial lenders manage risk through equity. Because commercial property is slower to sell, more volatile in value, and often specialist in use, lenders want a larger buffer than they do on a home. For mainstream assets, offices, industrial units, standard retail and mixed-use, the maximum is usually 75% loan-to-value, so a 25% deposit. Specialist or trading assets such as pubs, care homes and hotels often need 30-45%.
So when someone asks for a 5% or 10% deposit commercial mortgage, the realistic answer is that the gap between that and the standard 25% has to be filled by something else: additional security, a particularly strong covenant, a residential weighting on a semi-commercial building, or vendor support. The deposit does not disappear; the lender's risk is simply covered another way.
When a 20% deposit works
A 20% deposit (80% loan-to-value) is the most achievable step below standard, and it is realistic for a strong owner-occupier. When a profitable, established business buys its own trading premises, the lender is lending against a property it occupies and a business whose accounts it can see. That combination reduces risk, and a handful of lenders will stretch to 80% for the right owner-occupier at rates in the 6.0-7.5% band.
The case for 80% is strongest when the business has several years of clean, profitable accounts, strong affordability against the new mortgage, and a property in good condition and easy to re-let or resell. Investors, by contrast, rarely reach 80% on commercial property, because the lender is relying on tenant income rather than an occupying business it can assess directly.
Owner-occupiers versus investors
The gap between owner-occupier and investment lending is the single biggest reason low deposits are more available to some borrowers than others. When you occupy the premises, the lender can see your trading accounts, understand the business behind the payments, and take comfort that you have every incentive to keep the property and the loan in good order. That visibility supports a higher loan-to-value. An investor, by contrast, is one step removed: the lender depends on a tenant it did not choose, paying rent under a lease that will one day end. That extra layer of risk is why investment lending is usually capped lower and why investors more often need additional security or a strong covenant to push the deposit down. Knowing which category you fall into tells you, before you start, how realistic a low deposit really is.
When 10-15% deposits work
Getting to a 10% or 15% deposit (85-90% loan-to-value) on commercial property almost always requires one of three things, and often a combination.
Additional security
The most common route to a low cash deposit is offering another property as extra security. If you own a residential or commercial property with meaningful equity, a lender can take a charge over it alongside the property you are buying. This gives the lender the equity buffer it needs without you finding it in cash. In effect, the deposit is covered by equity you already hold elsewhere, which is how borrowers reach 90% and occasionally 100% of the purchase price. It does mean putting an additional asset at risk, so it needs careful thought.
Strong covenants
On an investment purchase, the quality of the tenant, the covenant, drives the lender's confidence. A property let on a long lease to a financially strong tenant with years left to run is far less risky than the same building with a weak or short-term tenant. A genuinely strong covenant can persuade some lenders to lend at a higher loan-to-value than they would otherwise, edging you toward a 15% deposit. Pricing typically sits in the 6.5-8.5% investment band.
Semi-commercial with residential weighting
Semi-commercial property, such as a shop with flats above, is often assessed with the residential element weighted more favourably. Because part of the value and income is residential, some lenders will lend at a higher loan-to-value than on pure commercial, which can bring the deposit down toward 15%. Rates for semi-commercial generally sit in the 6.5-8.5% band. Our [semi-commercial mortgage guide](/knowledge-hub/semi-commercial-mortgage-guide) covers this in more depth.
When 5% works: additional security or vendor support
A genuine 5% cash deposit on a commercial mortgage is rare and effectively never comes from a lender simply accepting 95% loan-to-value on the property alone. It works in one of two ways.
The first is substantial additional security. If you pledge enough equity in other property, the lender's overall position across all the security can be comfortable even though your cash contribution is only 5% of the purchase. This is really a high-security deal, not a high-loan-to-value deal.
The second is vendor support. Where the seller agrees to defer part of the price, or to leave equity in the deal, your cash requirement falls. Not all lenders accept vendor finance, and those that do usually require it to sit behind the main mortgage and be unsecured against the property. Both routes are structuring exercises, which is exactly where broker input matters. See our guide on the [100% commercial mortgage](/knowledge-hub/100-percent-commercial-mortgage) for how the no-cash-deposit version works.
How low-deposit routes are priced
The key principle is that a higher loan-to-value, or a thinner cash contribution, generally means a higher rate, because the lender is taking more risk. A well-secured owner-occupier at 80% might still price in the 6.0-7.5% band, while a stretched investment case pushes toward the top of the 6.5-8.5% range. Where additional security or a specialist lender is involved, expect pricing to reflect the added complexity. There will also be a valuation on every property offered as security, which adds cost.
| Deposit | Typical LTV | Usual route | Indicative rate band |
|---|---|---|---|
| 25-40% | 60-75% | Standard commercial | 6.0-8.5% |
| 20% | 80% | Strong owner-occupier | 6.0-7.5% |
| 10-15% | 85-90% | Additional security, strong covenant, semi-commercial | 6.5-8.5% |
| 5% or less | 95-100% | Additional security or vendor support | Case by case |
Loan-to-value is the mirror image of deposit, so it pays to understand how lenders think about it. Our guide to [commercial mortgage LTV explained](/knowledge-hub/commercial-mortgage-ltv-explained) sets out how the ratio is calculated and why it drives both the rate and the maximum you can borrow.
Sources of deposit lenders accept
Where your deposit comes from matters as much as its size, particularly on a stretched loan-to-value. Cash savings with a clear paper trail are the simplest source. Accumulated business profits can work, provided withdrawing them does not leave the business short of working capital. Equity released by remortgaging another property is one of the most common routes, and it overlaps closely with using that property as additional security. Sale proceeds, a director's loan into the company, and in some cases a gift are also accepted, though not every lender allows gifts on commercial deals. Pension funds held through a SIPP or SSAS can provide the equity directly. Whatever the source, expect to evidence it fully for anti-money laundering checks, because an unexplained lump sum will stall the application while the lender asks questions.
What additional security actually involves
Because additional security is the key to most low-deposit commercial deals, it is worth understanding what it means in practice. The lender takes a legal charge over a second property you own, alongside its charge over the property you are buying. The combined equity across both properties gives the lender the buffer it needs, so it can advance a higher proportion of the purchase price in cash terms. This is sometimes called cross-charging.
The trade-off is real. You are putting a second asset at risk to reduce the cash you put in, so if the deal goes wrong both properties are exposed. There will also be a separate valuation on the additional security, which adds cost and time to the process, and the lender will want that property to have enough clear equity to be worth charging. For borrowers who hold equity in a home or another investment but have limited free cash, this route can be the difference between transacting now and waiting years to save a full deposit. It should never be entered into lightly, and independent legal advice is sensible before charging your home. The fullest version of this approach is covered in our guide to the [100% commercial mortgage](/knowledge-hub/100-percent-commercial-mortgage) and, for the higher-loan-to-value angle, our [high LTV commercial mortgage](/knowledge-hub/high-ltv-commercial-mortgage) guide.
Costs to budget beyond a low deposit
A smaller deposit does not reduce the other upfront costs, and in some cases it increases them. You still pay Stamp Duty Land Tax, an arrangement fee of typically 1-2% of the loan, legal fees for both sides, and search costs. Where you offer additional security, add a second valuation and extra legal work to charge that property. Budget for all of this in full: reducing your deposit only to be caught short on fees is a common and avoidable problem. A higher loan-to-value also means a larger loan, so your monthly payments and total interest over the term rise even if the rate stays the same. The point of a low deposit is to preserve cash or transact sooner, not to make the property cheaper overall.
Is low deposit ever the right choice?
Just because a low deposit is possible does not always make it wise. A thinner equity stake means higher borrowing, higher monthly payments, and less cushion if values or income dip. Putting a second property up as security spreads your risk across two assets. We always weigh the appeal of preserving cash against the cost and exposure of gearing up. For many borrowers, a middle path, a slightly larger deposit at a better rate, is the stronger long-term position. Model the numbers with our [calculators](/calculators) before you decide.
If you want to know which low-deposit route is realistic for your case, [contact us](/contact). We will look at your deposit, any additional security, and the property, and tell you honestly what loan-to-value is achievable and what it will cost. You can also read more on our [commercial mortgages](/services/commercial-mortgages) service page.
*Written by Matt Lenzie, Founder of Commercial Mortgages Broker. Ex-Lloyds Bank & Bank of Scotland.*