Industrial Mortgages

Demand for industrial space has increased since 2020, when use class regulation was amended, allowing for mixed-use facilities to house several businesses more easily. It also became simpler to change the building class of industrial property.

So if you’re looking for industrial space, either for your own business, or to add a flexible commercial plant to your existing investment portfolio, read on. We look at how to get a mortgage for industrial property.

Can you get a mortgage to buy industrial property?

Yes, you can get an industrial property mortgage. In fact, demand for this type of commercial investment has increased in recent years to accommodate the growth in online retail sales businesses. A number of elements of the retail supply chain can be served by industrial units, such as manufacturing and production, distribution hubs and warehouses. 

If you intend to keep the industrial property for your own business use you’ll need a commercial owner occupier mortgage, whereas if you plan to let it out as a commercial landlord, you’ll need a commercial investment mortgage.

Who can get a commercial mortgage?

To get any type of commercial mortgage you’ll need to demonstrate some industry experience in the field you’re looking to buy into. 

If you plan to become a landlord of industrial property it’s likely you’ll also need to show some history of commercial letting, preferably in the same or an adjacent industry. 

Individuals or businesses trading as a limited company, LLP can get a mortgage for industrial property, as well as offshore businesses or SPV (Special purpose vehicle) specifically intended as a property management entity.

How industrial mortgages work

Industrial mortgages work in the same way as any other commercial mortgage, so you put down a deposit and make monthly repayments (either capital plus interest or interest-only). 

An industrial property mortgage for your own commercial use would generally be considered lower risk than one for an investment property, so this usually means lower interest rates are offered on owner-occupier industrial property. 

However, lenders will assess the following in all scenarios 

• How much you’re borrowing (The LTV or loan to value)
• The credit history of your business and directors’
• Level of industry experience, and experience as a landlord where applicable
• The financial history of your business
• Your business plan and future profit projections
• The criteria of the property you plan to buy, such as location, demand, state of repair

Types of property you can buy

There are a wide range of industrial use property you might wish to invest in, including but not limited to:

Class B2 - General Industrial

This would include factories for use in light through to heavy manufacturing and research and development property, such as those used for biotechnology and digital production. 

Class B8 - Storage & Distribution

This would include distribution and logistics centres, storage facilities (including self-storage units) and warehouses, both with and without customer facing space. 

You can find out more about warehouse mortgages in our guide. 

Entire industrial sites

This may include any mixture of the above buildings, all covered by the same mortgage.

How to get an industrial mortgage

Commercial mortgages can be complex to arrange, especially when you’re looking at property that may have mixed industrial uses, or need some form of use class change. It’s a good idea to speak to a knowledgeable mortgage broker that specialises in industrial mortgages, like ourselves, before you commit to this type of mortgage. 

Book a free, no-obligation chat with a broker who specialises in industrial mortgages below:

Find a better industrial mortgage deal on Teito

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How much could you borrow?

Lenders tend to calculate a commercial mortgage loan in a bespoke way that does not suit a generic mortgage calculator. Loan size is usually determined against industrial property based on its current value, potential future value, and the LTV of your borrowing.

This calculation will vary by lender, depending on their individual criteria. It’s therefore difficult to determine how much you might be able to borrow without talking to an expert who can look at the viability of your investment.

Industrial mortgage rates

Industrial mortgage rates vary depending on whether you’re buying as an investment or as an owner occupier. The LTV will also influence the rates available to you, as well as other factors, such as your trading history, industry experience and overall finances.

At the time of writing (July 2024) you can expect to pay between 5% and 9% for most commercial mortgages, however, this will depend on your individual circumstances.

Refinancing your mortgage

Industrial mortgage refinancing is similar to any other form of remortgage on a commercial property. Lenders will look at similar criteria to when you took out the original finance, but in addition, how the property has benefitted your business, whether that’s directly, or through rental income.

Why choose Teito for your mortgage needs?

At Teito we have commercial brokers who specialise in borrowers looking to diversify their portfolio, whether you’re looking at industrial property, a retail mortgage or even a mortgage to purchase a care home. 

People love our experts because:

• We look at 90+ mortgage lenders to find the most suitable finance product for your needs
• Our commercial brokers can access exclusive deals not available to the general public
• Our 5-star rated reviews give confidence 
• We always provide your first consultation free of charge and there’s no obligation

Ready to take advantage of a free, no-obligation chat with a broker who specialises in industrial mortgages to find out how much they could help you save? Get started here.