What is a commercial mortgage?
A simple explanation of what a commercial mortgage is, how it differs from a home mortgage, and who they are for.
Written by Matt Vincent DipFA, CeMAP, CeRER, BSc · Published 25 June 2026 · Version 1.0 · 4 min readA commercial mortgage is a loan used to buy or refinance property that is used for business, rather than to live in. That could be a shop, an office, a warehouse, an industrial unit, a surgery, a pub, a care home, or a building you rent out to business tenants.
It works much like the mortgage on a home: you borrow a chunk of the property's value, secure the loan against the property, and pay it back over a number of years. If you don't keep up the repayments, the lender can ultimately take the property to recover its money.
Two main reasons people get one
Most commercial mortgages fall into one of two camps: buying premises to run your own business from, or buying property to rent out to others as an investment. They're assessed quite differently, which is worth understanding before you start.
How is it different from a residential mortgage?
- It's usually not regulated in the same way. Most commercial and buy-to-let mortgages fall outside the consumer protections that apply to ordinary home loans. That makes good advice more important, not less.
- Lenders look at the business, not just you. They want to understand how the loan will be paid, from your trading profits, or from rent paid by tenants.
- Rates and fees are priced case by case. There's no single "best buy" table. Pricing depends on the property, the loan size, how much you're borrowing against the value, and the strength of the income.
- Deposits tend to be larger. Many commercial lenders lend up to around 65–75% of the value, so you typically need 25–35% as a deposit.
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This guide was published on 25 June 2026 (version 1.0) and reflects our understanding at that time. It is general information about commercial mortgages, not financial advice or a recommendation. Lending criteria, interest rates and tax rules change over time, so please confirm current details with a qualified advisor before acting. Reference: PL-CM-WHATISCOMM-v10.