Business mortgages for the premises you trade from

A business mortgage is a loan secured against a commercial property that your business will occupy and trade from. You put down a deposit, borrow the balance, and repay over a term of years, with the property itself standing as the lender's security. It sits apart from a residential mortgage because the borrower is usually a limited company or a trading partnership, and the purpose is commercial rather than a home.

The key distinction is owner-occupier versus investment. An owner-occupier deal is where the business buying the property is the business using it. That is the whole focus of this site. It is a different animal from a buy-to-let or investment loan, where the borrower is a landlord letting the property to a separate tenant. Because you occupy and trade from the building, lenders look hard at the health of your business, not just the bricks.

Owning your premises tends to make sense once a business is established, trading profitably, and paying meaningful rent for space it expects to stay in. Instead of rent leaving the business every month, the mortgage payment builds equity in an asset the company owns. It also gives you control: no landlord, no lease renewals, and freedom to fit out the space the way the business needs.

• Professional practices such as dental, medical, veterinary and accountancy firms buying their own consulting or office space.
• Trade and manufacturing businesses buying a workshop, warehouse or industrial unit.
• Retail and hospitality operators buying the shop, restaurant, cafe or gym they run.
• Service businesses that have outgrown rented space and want a permanent base.

It is not right for everyone. If you may move or scale quickly, or cash is tight, renting can be the better call. Our guide on renting versus buying works through that decision.

This is what separates a business mortgage from a home loan. Because the debt is repaid out of trading, the funders we work with underwrite the business first and the building second. They want to see that the company earns enough, reliably enough, to cover the mortgage payment with room to spare.

In practice, expect a lender to review your last two to three years of accounts, recent management figures, and business bank statements. They look at profitability, how steady your income is, and your track record in the sector. The core test is debt service cover: whether trading profit comfortably covers the mortgage payment. We do not quote a fixed ratio here because it varies by lender and sector, but the principle is simple. The stronger and steadier your profits, the more a lender will advance and the better the terms. Our guide on how lenders read your accounts goes deeper.

Every case is priced individually, but it helps to know the bands the market tends to work within. Treat these as indicative and subject to status and valuation.

• Rates: from around 6%, depending on the strength of the business, the property and the loan to value.
• Loan to value: typically 70% to 80% for strong trading businesses.
• Deposit: commonly 20% to 30% of the purchase price.
• Term: usually 5 to 25 years, most often on a capital and interest basis so the balance reduces over time.
• Arrangement fees: typically 1% to 2% of the loan, often added to the facility.

On top of these there are valuation, legal and professional costs to budget for. Our guide on deposits and costs sets out the full picture so nothing catches you out.

It is worth being clear about the difference, because the two are underwritten in very different ways. An owner-occupier mortgage is judged mainly on your trading business: its profits, its cash flow and its ability to service the debt. The building matters as security, but the covenant that reassures the lender is your own business trading from it.

Investment or buy-to-let lending is judged mainly on rental income from a tenant, and on the value and quality of the property as an asset that produces rent. If you occupy and trade from the premises, you are firmly in owner-occupier territory, and you should be talking to lenders who understand and price that story well. Getting matched to the right lender from the start avoids wasted time and a mispriced offer.

Applying to a single bank means one view of your business and one set of criteria. As a whole-of-market broker we take your case to the lenders on our panel, position your accounts properly, and press for terms that fit how your business actually trades. We handle the back and forth, keep the valuation and legal work moving, and aim the case at funders who like your sector.

Starting is straightforward. Have your last two to three years of accounts, recent management figures and business bank statements to hand, along with details of the property and roughly what deposit you can put in. Send us those and we will come back with a realistic view of what the market is likely to offer and the sensible next step. Nothing here is financial, tax or legal advice.