Owner-occupied commercial and business mortgages

A business mortgage, often called an owner-occupied commercial mortgage, is a loan secured on property that the borrowing business uses for its own trade. It funds the purchase or refinance of premises such as an office, shop, surgery, workshop, garage, restaurant, gym or veterinary practice, and is repaid over an agreed term.

Because the business itself repays the loan, lenders focus on how the business performs rather than on rent from a tenant. The property is the security, but affordability comes from trading profit and cash flow. Lending of this kind is generally unregulated business lending (FCA Handbook PERG 4.4, accessed 20 Oct 2026).

Lenders review recent trading accounts, management accounts, existing borrowing and cash flow to see whether the business can meet the repayments with room to spare. Most want a trading record of a year or more, and some ask for longer. The directors' experience in the sector and their personal credit history also count.

Newer businesses can still borrow, but may face a lower loan-to-value, a shorter term or a request for extra security. Sectors with specialist premises, such as pubs, care homes or petrol stations, are often assessed on trading performance in more detail because the building's value depends on the business.

Forecasts, a business plan and an explanation of why the move to owning the premises makes sense help a lender understand the case, particularly where profits have changed recently.

Owner-occupied business mortgages usually need a larger deposit than residential mortgages. The amount depends on the lender, the type of premises, the strength of the business and the borrower's track record. Lenders work out the loan-to-value on their own valuation, so a low valuation can increase the deposit needed.

Some businesses offer additional security, such as another property, to reduce the cash deposit needed. Lenders weigh this alongside the main security and may still set a limit on the total lent. How the deposit and loan size change the monthly cost is shown by the commercial mortgage calculator, once it is live.

Lenders also want to know where the deposit comes from. Business reserves, directors' savings and the sale of another property are common sources, and each needs clear evidence.

Directors sometimes buy business premises through a small self-administered scheme (SSAS) or a self-invested personal pension (SIPP). The pension owns the property and leases it to the trading business at a market rent. Lenders then treat the loan as investment lending, with the business as tenant, and the pension's own borrowing limits apply.

Pension purchases have their own tax and legal rules, set by HMRC, and the scheme's trustees or provider must agree the purchase. A pension adviser and a solicitor who handle these structures can explain how the rules apply. Not every lender offers SSAS or SIPP lending, so the choice is narrower.

Business mortgages differ on loan-to-value, term, fixed or variable pricing, arrangement and valuation fees, early repayment charges and how lenders treat newer or specialist businesses. Comparing on the total cost over the expected holding period, together with any conditions written into the offer, gives the clearest picture of each option.

Owning the premises fixes occupation costs and builds equity, but ties capital into the building and can make a future move slower. Many owner-occupiers weigh these points against taking a long lease before deciding to buy, and some keep the property after moving and let it to another business.

Lenders who offer owner-occupied lending, and how their criteria differ, are compared on the commercial mortgage lenders page, which covers banks and specialist lenders.