Whether you're looking to purchase your first commercial property or growing an established portfolio, understanding your finance options is key. Unlike residential mortgages, commercial property finance can be complex - but with the right insight, you can navigate the landscape with confidence and secure funding aligned with your strategic goals.
In this guide, we’ll walk you through everything you need to know, from straightforward buy-to-let arrangements to sophisticated development finance, so you're equipped to make informed, profitable choices.
Purchasing commercial property with finance rather than paying outright can offer several strategic advantages:
* You should always seek independent professional Tax advice.
Buy-to-let mortgages are generally the most straightforward form of commercial property finance for smaller investment properties.
How they work: Similar to residential mortgages but assessed based on rental income potential rather than personal income.
Ideal for: Individual investors or small businesses purchasing rental properties
Key features:
Pros:
✅ Predictable monthly payments
✅ Straightforward application process
✅ As the property value increases, your equity grows
Cons:
Commercial mortgages are designed for businesses purchasing property for their own use or investors purchasing larger assets.
How they work: Secured against the property with repayments based on business income and property value.
Ideal for: Established businesses buying premises, offices, or investment properties.
Key features:
Pros:
✅ Competitive commercial mortgage rates for creditworthy businesses
Cons:
Development finance is specialist short-term funding for property development or major refurbishments.
How they work: Drawn in stages based on project milestones, typically over 12–24 months.
Ideal for: Experienced developers and investors with refurbishment or ground-up projects.
Key features:
Pros:
✅ Unlock significant capital for large-scale projects
Cons:
Bridging loans provide fast, short-term finance to cover time-sensitive property purchases.
How they work: Secured loans for up to 24 months, typically used to bridge the gap before securing long-term finance.
Ideal for: Auctions, chain breaks, or refinancing under pressure.
Pros:
✅ Very quick turnaround (as little as a few days)
Cons:
❎ Expensive if held long-term
❎ Clear exit plan is essential
❎ High setup and legal fees
Commercial property finance covers a broad range of property types:
Define your investment goals, assess financials, and determine budget.
2. Property Search & Evaluation
Identify suitable properties, conduct due diligence, and obtain valuations.
3. Finance Application
Compile required documents, business plans, and financial projections.
4. Underwriting Process
Lenders assess the business, property, and applicant’s creditworthiness.
5. Offer & Completion
Negotiate terms, appoint solicitors, and finalise the transaction.
Typical Timelines:
Rates Are Influenced By:
General Rate Trends:
Remember: The cheapest rate isn't always the best deal. Consider arrangement fees, legal costs, and overall terms when comparing options.
Challenge: Many lenders require 2-3 years of accounts
Solutions:
Challenge: Unusual properties can be difficult to finance
Solutions:
Challenge: Economic uncertainty affects lending appetite
Solutions:
Q: How much deposit do I need?
A: Typically 20–40%, depending on property type, lender, and risk profile.
Q: Can I avoid a personal guarantee?
A: Rare, but possible for larger, well-established businesses.
Q: How much can I borrow?
A: Subject to property value, projected income, and financial strength.
Q: How fast is approval?
A: Bridging finance can complete in days. Mortgages and development finance take longer.
Q: Are rates fixed or variable?
A: Both options exist - fixed offers certainty, variable may offer flexibility.
Q: Can I refinance later?
A: Yes - refinancing can release equity, lower rates, or restructure your strategy (subject to status and approval).
Choosing the right commercial property finance depends on your specific circumstances*:
* This information is provided for reference only and you should always seek independent professional advice tailored to your individual circumstances
If you’re ready to explore commercial property finance options:
At Charles & Dean, we help investors and businesses access tailored commercial finance solutions. Whether you’re purchasing a shop, an office, or a development site, we’ll guide you through the process from start to finish.
Book a consultation today and discover how we can help you secure the right funding for your next commercial property venture.