Commercial buy-to-let and investment mortgages

A commercial buy to let mortgage, also called a commercial investment mortgage, is a loan to buy or refinance business property that is let to a tenant. It covers shops, offices, industrial units and other commercial buildings. The rent from the tenant repays the loan, so lenders focus on the lease and the tenant.

It differs from a residential buy-to-let mortgage, which is for homes let to private tenants. Commercial leases are usually longer, the tenant is often a business, and the landlord's and tenant's obligations are set out in the lease rather than by residential tenancy rules. Lending is generally unregulated (FCA Handbook PERG 4.4, accessed 20 Oct 2026).

Lenders read the lease closely. The unexpired term, break clauses, rent review dates and who pays for repairs and insurance all affect the loan. A long lease to a financially strong tenant usually supports the most borrowing, while a short lease or a tenant with weak accounts reduces it or narrows the choice of lenders.

Lenders may check the tenant's accounts and credit history, and they look at how easily the property could be relet if the tenant left. A full repairing and insuring lease, where the tenant covers repairs and insurance, makes the income more secure than a lease that leaves those costs with the landlord.

Where a property has several tenants, the lender looks at the whole rent roll, including vacancies, lease expiries that fall close together and the mix of tenant types.

Lenders test that the rent covers the interest by a margin they set, known as the interest cover ratio. Some also look at debt service cover, which compares the rent with the full repayment including capital. The loan offered is the lower of the amount these tests support and the lender's maximum loan-to-value.

Because the tests use the lender's own view of the rent and an assumed rate, the loan can be lower than expected. Running the numbers with a higher rate and a period without a tenant shows how much headroom a purchase has. How lenders build up pricing on investment property is explained on the commercial mortgage rates page.

Lenders look at the investor's experience with commercial property, the size of any existing portfolio and the other borrowing in place. First-time commercial investors can borrow, but may find fewer lenders and more conservative terms. Many investors buy through a limited company, and lenders usually ask the directors for personal guarantees.

Mixed-use buildings, such as a shop with a flat above, sit between commercial and residential lending. Lenders value them on the mix of uses and the income from each part. Some owners also hold business premises in a pension scheme and lease it back to their own company, which lenders treat as investment lending.

Commercial investment mortgages differ on loan-to-value, rent cover tests, term, fixed or variable pricing, fees and how lenders treat short leases or vacant units. Comparing on the total cost over the expected holding period, and on any conditions written into the offer, gives the fairest view of which lender suits a property.

Conditions can include a minimum rent cover throughout the term, a requirement to tell the lender about lease changes or a cap on the loan-to-value at revaluation. Understanding them before the offer is accepted avoids surprises if a tenant leaves or a lease changes.

A broker who arranges investment lending regularly can say which lenders suit a given lease and tenant. The commercial mortgage brokers page lists firms that arrange this kind of finance.