Mortgage Advisor & Director
Head of Bridging and Commercial
Deposits for commercial mortgages can differ from most types of property finance, offering more flexibility and a wider range of options. Here we’ll explain all the essential details you should know about commercial mortgage deposits, including how much you’ll need, typical rates to expect, and more.
How much deposit do you need for a commercial mortgage?
Typically, the average deposit you’ll need is around 25%. However, the unregulated nature of commercial lending means that there can be more flexibility with the structure and eligibility requirements for a commercial mortgage.
So, there’s no defined minimum deposit amount. The key is to deal with the right specialist lender for your situation. Because, they can tailor a business mortgage to your needs, which can sometimes involve setting up a commercial mortgage with little or no deposit.
What rates to expect based on LTV
Using a higher deposit for your commercial mortgage means that you’ll have a lower loan-to-value (LTV) ratio, which can be more appealing to lenders as it reduces their risk.
A lower LTV can help reduce the interest rates you pay. Below are examples (as of December 2024) illustrating how your deposit and LTV can influence the rates for a commercial mortgage.
Commercial investment 5-year fixed
|
LTV ratio |
Property use |
Interest rate |
|
Up to 60% |
Commercial |
8.35% |
|
Up to 60% |
Semi-commercial |
6.20% |
|
Up to 65% |
Commercial |
8.45% |
|
Up to 70% |
Semi-commercial |
6.90% |
|
Up to 70% |
Commercial |
8.75% |
|
Over 70% |
Semi-commercial |
7.10% |
Owner-occupied 5-year fixed
|
LTV ratio |
Property use |
Interest rate |
|
Up to 60% |
Semi-commercial |
6.10% |
|
Up to 60% |
Commercial |
7.15% |
|
Up to 70% |
Semi-commercial |
6.45% |
|
Up to 70% |
Commercial |
7.50% |
|
Over 70% |
Semi-commercial |
6.80% |
|
Over 70% |
Commercial |
7.85% |
These rates were sourced from a specialist commercial mortgage lender’s website and are representative of current market conditions. For this illustration, a semi-commercial mortgage refers to 50-80% residential use.
Keep in mind, your commercial mortgage deposit and LTV ratio will play an important role, but it’s not the only thing taken into consideration when it comes to interest rates. The type of property, its intended use, and your personal circumstances will all be looked at. Also, some lenders offer lower rates for larger loans or even provide discounts for energy-efficient properties.
How to get a commercial mortgage with a low deposit
Commercial mortgages provide a unique borrowing solution because the loans are usually created on a bespoke basis, which means the structure and terms can be tailored to your needs. This flexibility allows the possibility of getting a commercial mortgage with a low deposit, or even no deposit.
However, if you’re looking to use a low deposit, or get a 100% LTV commercial mortgage, this will likely reduce the pool of lenders available to you. It also means you’ll have to use something else alongside (or instead of) a cash deposit, which could involve:
- Financial collateral - this might be another property or high-value asset.
- Vendor financing - in some situations the seller might finance part of the purchase.
- Temporary finance - products like commercial bridging loans are designed for this purpose.
- Government support - sometimes government support and schemes are available.
- Proving your business strength - some lenders may accept a lower deposit if you can prove your business’s track record in the industry in question.
We can help you make your deposit go further
The bespoke nature of commercial mortgages opens up so many possibilities, no matter the size of your deposit. However, the flip side is that it’s extremely difficult to navigate all the options without expert support.
Many factors will be unique to your situation, including your business operations, personal finances, and the type of property you’re looking to buy. All of this can play a role in the deposit you need for your commercial mortgage, and the rates and terms you’ll be offered.
Speaking with a broker who specialises in commercial mortgages is highly recommended. You can have a free, no obligation chat with one of our experienced advisers below:
Connect with a commercial mortgage specialist
How much deposit do you need for a semi-commercial mortgage?
This is going to vary based on a whole host of factors. Some lenders will let you get a semi-commercial mortgage with a smaller deposit (compared to a full commercial mortgage) and they might offer lower rates for the same LTV ratios.
However, your situation will be looked at on a case-by-case basis and everything from the property’s location to your credit score can impact the deposit you need and the rates you’re offered. This is why it’s always worth speaking to an expert adviser to make sure you deal with the right lender for your circumstances.
Why choose Teito for your commercial mortgage?
At Teito, our specialist advisers have proven experience securing commercial mortgages with deposits of all sizes. We offer a free, no-obligation consultation where you can discuss your situation and deposit options with an impartial commercial mortgage broker who can help you find the most affordable solution.
Here are just some of the reasons people choose us for their commercial mortgage needs:
- Our brokers specialise in commercial mortgages
- You can explore low and no deposit options
- Your first consultation is free with no obligation to proceed
- We are 5-star rated on leading review websites
- We won’t leave any marks on your credit reports
Ready to take advantage of a free, no-obligation chat with a commercial mortgage broker who can make your deposit go further? Get started here.
FAQs
This can come from a range of sources including bridging loans, business loans, operating cash flow, cash held on your balance sheet, external investment, and plenty more options. The unregulated nature of commercial mortgages means that there can be much more flexibility around the source of your deposit.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.