Commercial Mortgages for Owner-Occupiers
Buying the premises your business trades from can replace rent with an asset you own. An owner-occupier commercial mortgage is built for this. This page covers how these mortgages work, what lenders assess and what to prepare.
How owner-occupier mortgages differ from investment mortgages
With an investment property, the lender looks at the rent it earns. With an owner-occupied property, your business is the tenant, so the lender looks at your business profits and whether they comfortably cover the mortgage payments. The property is the security, but affordability comes from your trading.
What lenders usually assess
- Your business accounts, usually two or three years, and recent management figures.
- Whether profits cover the repayments with a margin to spare.
- The deposit you can put in, typically a meaningful share of the price.
- The type of property and how easily it could be re-sold.
- Your personal and business credit position.
- The directors' experience and the stability of the business.
Costs to budget for
Beyond the deposit, expect valuation fees, legal fees, arrangement fees and Stamp Duty Land Tax. A building survey is also wise. Compare the total cost of each offer, not only the interest rate. Any figure you see quoted is indicative until a lender confirms it.
Fixed or variable, and term
Some mortgages are fixed for an initial period, others track a base rate. Terms are commonly longer than for a business loan. An early repayment charge may apply if you repay or switch within the fixed period, so check this before you commit.
Typical examples
- A clinic, workshop or office moving from renting to owning.
- A restaurant or retailer buying the unit it already trades from. See our page on commercial mortgages for retailers.
- A business buying a larger site to expand.
How we help
Sadi's Commercial Finance, an NACFB and FIBA member based in Chingford, East London, compares lenders who suit your sector and the property, and presents your accounts in the strongest way. See our commercial mortgages page, read how to get a commercial mortgage in the UK, or speak to a specialist.
Frequently asked questions
Can I get a commercial mortgage to buy my own business premises?
Yes. This is an owner-occupier mortgage, and the lender assesses your business's profits.
How much deposit will I need?
It varies by lender, property and your business profile. A meaningful deposit is normal, and any percentage quoted should be treated as indicative until confirmed.
Do I need two years of accounts?
Many lenders prefer it, though some will consider newer businesses with a stronger deposit or other support.
How long does it take?
Longer than a business loan, because valuation and legal work are involved. Allow several weeks and treat any timeline as indicative.
Is owning cheaper than renting?
It depends on the price, the rate, your deposit and how long you stay. We can help you compare, but speak to your accountant about the tax effects.
Your property may be repossessed if you do not keep up repayments on a mortgage secured against it.