Commercial Mortgages Explained: Owner-Occupier and Investment

This guide provides general information and is not a substitute for personalised mortgage, tax or legal advice.

Written and reviewed by the Highhouse Money mortgage team · Last reviewed: 25 August 2026

Commercial mortgages cover a broad range of scenarios, from a business buying its own trading premises to an investor purchasing a retail unit let to a tenant. The common thread is that the lending sits outside standard residential mortgage regulation and is assessed on business or investment fundamentals rather than personal income alone.

This guide explains the two main routes — owner-occupier and investment — how lenders typically assess each, and the practical costs and considerations worth planning for before you commit to a commercial purchase.

Commercial mortgage checklist

Clarify whether the purchase is owner-occupier, investment, or semi-commercial
Gather recent business accounts and trading history if buying for your own business
Get a realistic rental assessment if buying an investment property
Work out your likely deposit requirement — often 25% or more
Budget for valuation, legal and potentially higher Stamp Duty costs
Check whether the property or arrangement is FCA-regulated or not
Consider the lease terms and tenant strength for any investment purchase
Speak to an accountant about how the purchase fits your business or tax position

Owner-occupier commercial mortgages

If your business intends to occupy the property itself — a shop, office, workshop or warehouse, for example — the mortgage is generally assessed around the business's trading performance: turnover, profitability, sector, and how comfortably the repayments fit within the business's cash flow. Lenders will typically want several years of accounts where available, along with information about the sector and any seasonality in trading.

For newer businesses without a long trading history, lenders may look at director experience, a business plan, projections and the wider security offered, though this segment of the market tends to be more selective and case-by-case.

Commercial investment mortgages

If you're buying a commercial property to let to a tenant business, the assessment looks more like buy-to-let: the lender examines the rental income the property produces or could produce, the strength and length of any existing lease, the tenant's covenant (their ability to keep paying rent), and how comfortably the rent covers the mortgage interest.

	Owner-occupier	Investment
Main assessment focus	Business trading performance and accounts	Rental income and tenant covenant
Key document	Business accounts and projections	Lease terms and rental valuation
Risk to lender	Business viability	Tenant default or vacancy
Typical borrower	Trading business buying its premises	Investor or landlord

Semi-commercial and mixed-use property

Semi-commercial property — commonly a retail or office unit with a residential flat above, under one freehold title — sits between the residential and commercial markets. Lenders active in this space typically assess both the commercial and residential income elements and apply blended criteria, and the pool of lenders is narrower than for either pure residential or pure commercial lending.

Deposits, terms and pricing

Commercial mortgages generally require larger deposits than residential lending, reflecting the higher risk profile of business and investment property, and terms and pricing structures vary significantly by lender, sector and property type. There is no standard rate or term across the market — each case tends to be priced individually based on the specifics of the deal.

Costs beyond the mortgage itself

Valuation fees, which can be higher for specialist or complex commercial property
Legal fees, often greater than residential conveyancing due to lease and title complexity
Stamp Duty Land Tax, charged at non-residential rates for most commercial purchases
Buildings insurance appropriate to commercial use
For investment property, letting or managing agent costs and potential void periods

Some buy-to-let and commercial mortgages are not regulated by the Financial Conduct Authority. Because much commercial lending sits outside FCA mortgage regulation, it is particularly important to use a broker or lender you trust and to read all documentation carefully before committing.

Planning the transaction timeline

Commercial transactions often take longer than residential ones because of lease reviews, more detailed valuations, and business due diligence. Building extra time into your plans — particularly if you are also selling a property or business interest to fund the purchase — reduces the pressure on completion dates.

What lenders may assess

For owner-occupiers: business accounts, trading history, sector and affordability
For investors: rental income, lease strength and tenant covenant
Deposit and resulting loan-to-value for the specific property type
The nature and condition of the property, including any specialist use
Director or business owner experience, credit history and financial standing
Exit strategy and term length appropriate to the purpose of the loan

Every lender sets its own criteria, which change regularly. The points above are common themes, not a guarantee of how any individual lender will treat an application.

Frequently asked questions

What is a commercial mortgage?

A commercial mortgage is a loan secured against non-residential or mixed-use property, such as shops, offices, warehouses, industrial units, or semi-commercial buildings combining a flat above a shop. It can be used either to buy premises your own business will occupy, or to invest in property let to other businesses.

What's the difference between owner-occupier and investment commercial mortgages?

An owner-occupier commercial mortgage is assessed largely on your business's trading performance and ability to afford the repayments from its own income. An investment commercial mortgage is assessed more like buy-to-let, focusing on the rental income the property produces from tenants and how comfortably that covers the mortgage.

How much deposit is needed for a commercial mortgage?

Commercial mortgage deposits are generally higher than for residential lending, often starting somewhere in the region of 25% or more, and varying considerably depending on the property type, sector, tenant strength and the lender's own criteria.

Are commercial mortgages regulated by the FCA?

Most commercial mortgages, including semi-commercial and investment property lending, are not regulated by the Financial Conduct Authority in the way residential mortgages are, because they are treated as business lending. Some buy-to-let and commercial mortgages are not regulated by the Financial Conduct Authority — your advisor will confirm the status of any specific product recommended to you.

What is semi-commercial or 'mixed-use' property?

Semi-commercial property combines commercial and residential elements under one title, most commonly a shop or office with a flat above. Lenders in this space typically look at the income from both elements and apply criteria that blend commercial and residential approaches.

How is affordability assessed for an owner-occupier business mortgage?

Lenders will usually want to review business accounts, trading history, projections and the sector the business operates in, alongside the value and suitability of the property as security. A stronger trading history and clear business plan generally support a smoother assessment.

Can I get a commercial mortgage for a new business with no trading history?

It can be more difficult, though some lenders will consider start-ups with a strong business plan, relevant experience and sufficient deposit, sometimes alongside other forms of finance. Each case tends to be assessed individually given the higher risk profile.

What term lengths are typical for commercial mortgages?

Commercial mortgage terms vary by lender and purpose, and are often shorter than typical residential mortgage terms, though this depends heavily on the property, sector and the borrower's circumstances — there is no single standard term across the market.

What other costs should I budget for beyond the mortgage?

Commercial purchases commonly involve valuation fees, legal fees (often higher than for residential purchases due to lease and title complexity), potentially Stamp Duty Land Tax on non-residential rates, and ongoing costs like buildings insurance and, for investment property, void periods between tenants.

Sources and further reading

Where figures or rules can change, the position described is correct at the time of writing (25 August 2026) — always check the linked authoritative source for the latest position.

Commercial mortgages

Whole-of-market advice on commercial, semi-commercial and bridging finance.

Buy-to-let mortgages explained

The residential equivalent of investment property lending.

Limited company buy to let

How SPV structures compare with commercial ownership.

HMO and multi-unit mortgages

Specialist residential-adjacent investment lending.

Residential mortgages

If you also need advice on a home purchase alongside a commercial deal.

Discuss a commercial purchase

Tell us about the property and business, and we'll talk through the options.

Talk it through with an advisor

Every case is different. A short, no-obligation conversation with a whole-of-market advisor is often the fastest way to understand your options. Call 0345 512 0077 or send us a message.

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