Commercial Investment Mortgages
Commercial Investment Mortgages
A commercial investment mortgage finances the purchase or refinance of a commercial property let to a third-party tenant. The loan is assessed on the rental income the property generates relative to the mortgage payment, rather than the borrower’s personal or business trading income. Platinum Global Bridging Finance arranges commercial investment mortgages from £250,000 to £150m+ across the UK, covering offices, retail, industrial, mixed-use, and specialist assets through a panel of over 100 lenders. No broker fee on facilities of £500,000 or above.
What Is a Commercial Investment Mortgage?
A commercial investment mortgage is a long-term loan secured against a commercial property that is let, or to be let, to one or more third-party tenants. The lender’s primary concern is not the borrower’s trading income but the strength of the rental income and the tenant covenant. This makes commercial investment mortgages fundamentally different from owner-occupied commercial mortgages, which are assessed on business performance rather than the property’s income stream.
The key underwriting metric is the debt service coverage ratio (DSCR), the ratio of rental income to the mortgage interest payment. Most lenders require the rental income to cover the interest by 125% to 150%, and this coverage is almost always tested against a stressed interest rate, typically 1% to 2% above the actual pay rate, rather than the headline rate itself, so the deal has to work even if rates move against the borrower during the term. A property generating £100,000 per annum in rent, with an interest payment of £72,000 per annum at the pay rate, produces a DSCR of 1.39x, within most lenders’ acceptable range, though the same rent would need to be re-tested at the stressed rate before an offer is confirmed. InterBay, Together Money, and Shawbrook are among the most consistently active specialist lenders in commercial investment mortgage lending in 2026, each with genuine appetite across office, retail, and industrial investment assets.
Is a Commercial Investment Mortgage Regulated?
No. Because the property is let to a third party and not occupied by the borrower, commercial investment mortgages fall outside FCA mortgage regulation regardless of whether the borrower is an individual, an SPV, an LLP, or an offshore entity. This is one of the reasons commercial investment lending can move faster and offer more flexible structuring than a residential buy-to-let mortgage, lenders and borrowers are able to negotiate bespoke terms without the constraints that regulated lending imposes.
Key Lending Criteria
| Parameter | Typical Range |
|---|---|
| Loan size | £250,000 to £150m+ |
| LTV | Up to 70% (up to 75% for strong covenants) |
| Term | 3 to 25 years |
| Rate (2026) | 6.0% to 8.5% pa |
| DSCR minimum | 125% to 150% of interest payment, stress-tested |
| Repayment basis | Interest-only or capital and interest |
| Borrower types | Ltd company, LLP, SPV, trust, offshore entity, individual |
Fixed rates for commercial investment mortgages currently range from approximately 6.0% to 8.5% per annum depending on property type, LTV, and tenant covenant quality. Prime assets, strong tenants, long unexpired leases, liquid property types in major UK cities, achieve the lower end of this range. Secondary assets, weaker tenant covenants, or specialist sectors sit towards the upper end. Investment properties are generally priced higher than equivalent owner-occupied assets because the lender’s risk is more directly tied to the property’s income stream and occupancy rather than a trading business’s broader financial resources, which can usually absorb a short void or rent shortfall more easily than a single-asset investment vehicle.
What Lenders Look At
Rental Income and DSCR
The rental income must comfortably service the mortgage interest. Where a property is multi-let, lenders may apply a vacancy allowance, typically 10% to 20%, to the headline rent when calculating DSCR. Single-let properties with a strong institutional tenant covenant are assessed more favourably than multi-let assets with multiple small tenants. The DSCR is calculated on the passing rent, not ERV (estimated rental value), unless the property is vacant, lenders do not give credit for anticipated future rent that has not yet been contracted.
Lease Terms
The length and security of the lease matters significantly. A 10-year FRI (full repairing and insuring) lease to a national retailer is a very different lending proposition from a rolling monthly licence to a small business. Lenders look at the unexpired lease term relative to the mortgage term, break clause positions, and the likelihood of renewal. Where the unexpired lease term is shorter than the proposed mortgage term, lenders assess the re-letting risk at lease expiry and may limit the LTV or require a rental top-up guarantee.
Tenant Covenant
The financial strength of the tenant, assessed by reference to filed accounts, credit searches, and sector position, is a central underwriting consideration. A property let to a plc or well-capitalised national company will attract better terms than one let to a newly incorporated SME with limited trading history. Lenders categorise tenant covenants as strong (listed or institutional), satisfactory (established profitable SME), or weak (limited history or financial difficulty). The covenant category directly affects maximum LTV and rate, and can move pricing by 1% or more between the strongest and weakest tenant profile on an otherwise identical property.
Property Type and Location
Prime commercial investment assets in major UK cities attract the most competitive terms and the widest lender appetite. Secondary locations, tertiary assets, or specialist property types carry higher rates and lower maximum LTVs. We place specialist assets with lenders who actively target those sectors, see our dedicated pages for office finance, retail property finance, and industrial and warehouse finance.
EPC Rating
Lenders are increasingly factoring Energy Performance Certificate ratings into commercial investment mortgage underwriting. Properties rated EPC A to C attract the widest lender appetite. EPC D and below can result in restricted LTV or higher pricing from some lenders, reflecting the regulatory trajectory toward mandatory minimum energy standards for let commercial property. We advise on lenders who will finance sub-investment-grade EPC assets alongside a costed improvement plan, and can structure the mortgage to include an allowance for retrofit works where required.
Single-Let vs Multi-Let Investment Properties
Single-let properties, one building, one tenant, offer simplicity and, where the tenant is strong, very competitive mortgage terms. The risk is concentration: if the tenant vacates, the entire rental income is lost. Lenders manage this by ensuring the DSCR is robust enough to absorb a void period and by requiring a strong covenant on long unexpired lease terms.
Multi-let properties spread income across several tenants, reducing void risk but adding management complexity. Lenders assess the aggregate rent roll, apply vacancy assumptions, and examine the lease expiry profile to ensure the income is sustainable across the mortgage term. A well-spread multi-let estate with no single tenant representing more than 30% of income is viewed positively by most commercial investment lenders. Portfolio bridging loans are available for investors acquiring multiple assets simultaneously ahead of arranging term investment finance.
Rental Yields and Market Context
Commercial investment yields vary considerably by sector and location, but well-let secondary industrial and logistics assets have consistently outperformed many other commercial classes in recent cycles on a total return basis, driven by structural e-commerce demand. Prime office and retail in strong regional cities continues to attract institutional and private investor demand where the lease profile is secure. Understanding the yield and rental growth prospects of a sector before committing to a purchase is as important as the mortgage terms themselves, since the mortgage is ultimately serviced by that income stream for the life of the loan.
Commercial Investment Mortgage Remortgages
Remortgaging a commercial investment property to a better rate, to release equity, or to restructure debt is one of the most effective tools available to property investors. Where rental income has grown since the original mortgage was taken out, the improved DSCR may unlock higher LTV or lower pricing than was available at the time of purchase. We regularly remortgage commercial investment portfolios and individual assets, and there is no broker fee on remortgages of £500,000 or above.
Buying at Auction
Commercial investment properties regularly appear at auction, often at a discount to market value. The 28-day completion requirement for auction purchases makes a standard commercial mortgage impractical, the underwriting timeline is simply too long. A commercial auction bridging loan can complete in 3 to 10 working days, allowing the purchase to proceed. Once the property is in ownership and any letting or refurbishment requirements are met, we arrange the commercial investment mortgage to refinance the bridge, typically within 6 to 12 months of the original auction purchase.
Refurbishment and Value-Add Investments
Where a commercial property requires refurbishment before it can be let, a standard commercial investment mortgage is not available, lenders require a tenanted or lettable asset. Refurbishment development finance or a commercial bridging loan is used to fund the acquisition and works. Once the refurbishment is complete and a tenant is in place, we arrange the long-term investment mortgage to refinance, capturing the uplift in value created by the works into a lower blended cost of finance.
Ownership Structures
Commercial investment mortgages are arranged for a wide range of ownership vehicles: individuals, limited companies, LLPs, SPVs set up specifically to hold the asset, family trusts, and offshore entities. Each structure carries different tax and lending implications. A limited company or SPV structure is the most common for portfolio investors, as it ring-fences liability to the entity and can simplify future refinancing or disposal of individual assets within a wider portfolio. Offshore and trust structures require lenders experienced in that space; not every commercial lender will underwrite non-standard ownership vehicles, which is where a whole-of-market broker adds the most value.
Fixed vs Variable Rates on Investment Mortgages
Investment mortgages are available on both fixed and variable terms, and the right choice depends on the investor’s appetite for payment certainty against the possibility of lower long-run cost. Fixed rates, typically available for 2, 3, or 5-year periods, give certainty over the mortgage payment regardless of what happens to the base rate, which is particularly valuable when the DSCR is tight and the investor wants to protect the margin against future rate rises. Variable rates track the Bank of England base rate plus a lender margin and can work out cheaper over the life of the loan if rates fall or remain stable, but they expose the investor to payment increases that could compress or eliminate the DSCR headroom if rates move sharply. Most portfolio investors run a mix, fixing the core debt on their most highly-levered assets while leaving lower-LTV, well-covered properties on variable terms to capture any rate reductions.
Portfolio Commercial Investment Mortgages
Investors holding multiple commercial properties can consolidate them under a single portfolio facility rather than running separate mortgages with different lenders, different renewal dates, and different reporting requirements. A portfolio facility simplifies administration, can improve overall pricing through the scale of the combined loan, and gives the lender a blended view of risk across the whole portfolio rather than assessing each asset in isolation, which can help weaker individual assets qualify where they might not on a standalone basis. Cross-collateralisation across the portfolio is common, meaning the security pool as a whole supports the lending rather than each property standing alone, which is worth understanding fully before committing, since it affects how individual assets can later be sold or refinanced out of the facility.
Worked Example: Office Investment
A property investor purchases a fully let Grade B office building in Leeds city centre for £1,500,000. The property is let on a 7-year FRI lease to a professional services firm at £105,000 per annum.
- Purchase price: £1,500,000
- LTV: 65% = Loan of £975,000
- Rate: 6.75% pa interest only
- Annual interest: £65,812
- DSCR: £105,000 / £65,812 = 1.60x (above the 1.25x minimum)
- Arrangement fee: 1.5% = £14,625
- Deposit required: £525,000
No broker fee on this facility. The strong DSCR, established tenant covenant, and prime regional location would support competitive pricing from lenders including InterBay and Shawbrook.
Worked Example: Industrial Investment
An investor acquires a multi-let industrial estate in the East Midlands for £3,200,000. The estate is fully let to 6 tenants on leases ranging from 3 to 8 years at a combined passing rent of £256,000 per annum.
- Purchase price: £3,200,000
- LTV: 60% = Loan of £1,920,000
- Rate: 7.0% pa interest only
- Annual interest: £134,400
- Lender vacancy allowance (10%): adjusted income £230,400
- DSCR: £230,400 / £134,400 = 1.71x (strong)
- Arrangement fee: 1.25% = £24,000
- Deposit required: £1,280,000
No broker fee applies. The diversified tenant base, strong industrial demand fundamentals, and high DSCR support a competitive rate from specialist industrial investment lenders.
Worked Example: Retail Parade Investment
An investor purchases a parade of 4 retail units for £2,100,000, let to a mix of national and independent retailers on leases of 4 to 10 years at a combined rent of £168,000 per annum.
- Purchase price: £2,100,000
- LTV: 60% = Loan of £1,260,000
- Rate: 7.25% pa interest only
- Annual interest: £91,350
- Lender vacancy allowance (15% for retail): adjusted income £142,800
- DSCR: £142,800 / £91,350 = 1.56x
- Deposit required: £840,000
No broker fee applies. Mixed covenant strength across the parade is offset by the diversification of income across four separate leases.
Frequently Asked Questions
What DSCR do I need for a commercial investment mortgage?
Most lenders require the rental income to cover the interest payment by 125% to 150%, tested against a stressed rate above the actual pay rate. The exact threshold depends on the lender, the property type, and the tenant covenant quality.
Can I buy a vacant commercial property on an investment mortgage?
No, the property needs to be tenanted or immediately lettable. A vacant building requires a bridging loan or development finance to fund acquisition and any works, with a commercial mortgage arranged once the property is income-producing.
What is the maximum LTV for a commercial investment mortgage?
Most lenders cap investment LTVs at 65% to 70%. Some specialist lenders will stretch to 75% for prime assets with strong institutional tenants on long leases.
Can an SPV or offshore entity borrow on a commercial investment mortgage?
Yes, we regularly arrange commercial investment mortgages for SPVs, holding companies, LLPs, trusts, and offshore entities. See our offshore bridging loans page for further context on non-UK borrowing structures.
Is a commercial investment mortgage regulated by the FCA?
No, letting to a third-party tenant takes the transaction outside FCA mortgage regulation, giving both parties more flexibility on structure and terms than a regulated residential product.
How is rent treated if the property is only partly let?
Lenders typically use the passing rent from let units and either exclude vacant space entirely or apply a heavy discount to the valuer’s estimated rental value for any unlet space, unless a pre-let is already agreed.
Does Platinum Global charge a broker fee?
No broker fee on facilities of £500,000 or above.