Best Commercial Mortgage Rates

Looking for a cheap commercial mortgage can be frustrating. It’s difficult to compare commercial mortgage rates online because this type of lenders in this sector don’t usually display them. That might seem secretive but it’s just because the rates can vary so much between applicants who all have different borrowing needs.

Nevertheless, we can give you some insight into the range of rates available, and how a lender will assess your case to determine the rate you’re offered. This will help you decide how to proceed.

What is the current interest rate for commercial mortgages?

Residential and commercial mortgage rates are the same in one respect though, which is that they tend to rise when the Bank of England base rate rises. That’s happened eleven times since December 2021 (at the time of writing, April 2023), which means that mortgage rates, in general, are high. So, typical commercial mortgage rates are in the range of 4%-10%.

While residential mortgage lenders offer set rates that they’ll often advertise, commercial mortgages don’t work in quite the same way. This is because commercial lenders decide their rates on a case-by-case basis.

They’ll decide your rate based on factors including your:

• Mortgage type (owner-occupier or buy-to-let)
• Rate type (fixed-rate or variable)
• Repayment style (capital repayment or interest-only)
• Property type (office space, warehousing, retail units, etc.)
• Mortgage term (how long you’re borrowing for)
• Loan size (how much you need to borrow)
• Business plan (how you’ll make money to repay them)
• Loan-to-value (LTV – the size of your loan relative to the property value)
• Business’ earnings before interest, tax, depreciation, and amortisation (EBITDA – a way of measuring your business’ success)

Commercial mortgage deals available currently

Below, we’ve listed some of the lenders offering attractive commercial mortgage deals at the moment. We can’t tell you exactly what rate they would give you, as that will be bespoke to your case, so if you’d like to compare them, you can either apply directly to each or speak to a commercial mortgage broker.

The terms outlined above are correct at the time of writing (April 2023) and are subject to change at any time at the lender’s discretion.  

How a commercial mortgage broker can help

Firstly, a broker can help you to find the cheapest commercial mortgage deal quickly, without having to apply directly to multiple lenders. Based on the details of your case (e.g. how much you want to borrow and for how long) they’ll know which lenders would offer you the cheapest commercial mortgage.

They’ll also help you to prepare your application. Commercial mortgage applications are far more complex than residential mortgages as they involve business plans and accounts. It’s easy to make mistakes that could cause delays or refusal. Your broker will help to avoid that.

They may also be able to provide access to lenders who don’t accept direct applications. Some commercial lenders prefer to work through brokers, so you could miss out on the best deal if you go direct. To speak to a broker today, get in touch.

What about remortgaging?

At the end of the mortgage term (or the fixed-rate period), many people choose to remortgage the property (rather than buy it outright or sell it). There aren’t any specific deals for businesses that are remortgaging so the rate you’re offered will be decided on the same criteria as a new mortgage.

However, note that rates may have changed a lot since you took out your mortgage. Your application details may have changed too (for example, the property may be worth more, or your business earnings may have increased or decreased). So, it’s important to shop around to find the best deal.

Commercial buy-to-let mortgage rates

One of the factors that lenders will consider as part of your rate is whether you will be using the commercial property to operate your own business from or to let to other businesses. Neither of these options will automatically result in a higher rate, but the best lender for you might be different if you plan to buy-to-let.

Agricultural mortgage rates

If you’re buying a farm or certain other rural businesses, you’ll need an agricultural mortgage. These work in essentially the same way as other commercial mortgages, and rates are very similar.

However, not all commercial lenders accept this type of application, or they may have much tougher requirements (for example, a lower maximum LTV of 50% rather than 70%). Luckily, there are also specialist lenders that cater specifically to this market. So, you might want to find a broker who’s a specialist in this area and knows the ins and outs.

Why Use Online Money Advisor

Due to the way commercial mortgage pricing is set, we can’t be specific about the best commercial buy-to-let mortgage rates. Luckily, it’s relatively easy to find out by speaking to a broker about your requirements.

If you’d like us to connect you with an independent broker with access to the whole market, get in touch and we’ll arrange a free, no-obligation conversation. Just give us a call on 0808 189 0463 or fill out this form.