How Commercial Investment Mortgages Work
You’re borrowing as an investor here, not an occupier, so the rent does the heavy lifting. The lender secures the loan on the property and underwrites affordability against the passing rent, or the estimated rental value if the unit isn’t yet let.
Your key test is the debt service coverage ratio: the rent divided by the annual debt service. Most lenders want at least 1.25x, rising to 1.35x on higher-risk property. The LTV runs lower than owner-occupier lending, because your rent is a more variable cash flow than trading profit.
You can’t win terms on a shaky tenant. On the Monday your broker sizes the deal, a long lease reads very differently from a three-year lease. That gap sets your LTV and your margin.
- DSCR. Rental income divided by annual debt service. Usually 1.25x minimum, 1.35x or more on higher-risk property types.
- LTV. Typically 65% to 70%, lower than owner-occupier lending because rental income is seen as more variable.
- Tenant quality. A long lease to a listed company or government body attracts better terms than a short lease to a small private business.
- Lease length. The lender wants the income stable over the loan term. A 15-year lease with 10 years left is strong; a three-year lease is thin cover.
What Types of Property Qualify
You’ll find standard commercial property straightforward and specialist property much harder. High-street banks are comfortable with offices, industrial units, warehousing and retail, so those price keenest and clear underwriting fastest.
Your specialist assets change the conversation entirely. A pub, care home, hotel or petrol station is harder to value and harder to sell, so it needs a lender with sector experience, and that thinner competition costs you on both rate and LTV.
You can’t assume every building is bankable to everyone. At quarter-end your accountant lines up lenders by property type, and the specialist list is far shorter than the standard one, which is exactly where a good broker earns their fee.
| Standard (high-street appetite) | Specialist (specialist lender) |
|---|---|
| Offices, single-tenant or multi-let | Pubs and licensed premises |
| Industrial and warehouse units | Care homes and healthcare |
| Retail, high-street and out-of-town | Hotels and serviced accommodation |
| Mixed-use with residential above | Student accommodation, petrol stations |
| Verified 21 July 2026. | |
Semi-Commercial Property
You occupy a middle ground with mixed-use property, and it’s treated as commercial for mortgage purposes. A retail or office unit on the ground floor with flats above is valued on both the commercial and the residential element separately, then combined into one figure.
Your realistic lenders here are the specialists. Shawbrook, InterBay and Together are more comfortable with semi-commercial than high-street banks, so this is specialist territory that leans on your cash flow. We cover the detail in our dedicated semi-commercial guide.
Interest-Only vs Repayment Mortgages
You’ll often run a commercial investment mortgage interest-only, and the logic is simple. Your return comes from rental income after debt service and from capital growth, not from paying down the loan, so interest-only keeps your monthly outgoing lower and the running cash yield higher.
Your catch is that the whole capital falls due at maturity, repaid by sale or refinance. The lender wants to understand that exit at origination, so a repayment structure suits an investor who would rather build equity steadily. That’s the real trade-off here.
You can’t leave the exit vague. On the Friday your accountant models the refinance, an interest-only deal with no credible way out is exactly what makes a lender nervous and your next application harder.
Who Can Get a Commercial Investment Mortgage
You’ll most often borrow through a limited company or a special purpose vehicle set up for property investment, though individuals, partnerships and LLPs all qualify. Pension structures such as a SIPP or SSAS can hold the property too, with specialist advice.
Your property usually needs to be tenanted or immediately lettable, with the rent passing the DSCR test at the loan you want. Some lenders will look at a vacant building where there’s a credible tenancy pipeline, but that’s specialist territory that leans on your cash flow forecast.
Commercial Investment Mortgage Rates and Costs
You’ll pay more than an owner-occupier for the same LTV, because rental income is treated as a more variable cash flow than trading profit. The margin depends on your LTV, property type and tenant quality; we set out the full picture in our rates guide.
Your fees stack on top of the rate. An arrangement fee of 1% to 2%, plus legal and valuation costs, adds materially to the real cost, and those charges bite proportionally harder on a shorter term or a smaller loan.
Commercial Investment Mortgage FAQs
What is a commercial investment mortgage?
It’s a loan secured against commercial property that’s let to tenants, where the borrower is an investor rather than the occupier. The lender underwrites it on the rental income the property generates, not on the borrower’s own business trading. It’s the commercial equivalent of a buy-to-let mortgage, and the core question is the same: can the rent service the debt with enough margin to spare? Standard property is straightforward; specialist property needs a specialist lender.
What DSCR and LTV do lenders want?
Most lenders want a debt service coverage ratio of at least 1.25x, so the rent covers the mortgage payment by 25% or more, rising to around 1.35x on higher-risk property types. LTV typically runs at 65% to 70%, a little lower than owner-occupier lending because rental income is seen as a more variable cash flow than business trading income. Both figures flex with the strength of the lease and the tenant covenant: a long lease to a solid tenant supports keener terms.
Should you take interest-only or repayment?
Many investors choose interest-only, because the return comes from rental income after debt service and from capital appreciation, not from building equity through capital repayment. Interest-only keeps monthly outgoings lower and maximises the running cash yield during the term. The trade-off is that the full capital must be repaid at maturity, usually through sale or refinance, and the lender will want a credible exit at origination. Repayment suits an investor who prefers to build equity in the asset steadily over the term.
Can a pension or SPV hold the property?
Yes. Commercial investment mortgages are commonly held through a limited company or a special purpose vehicle set up specifically for property investment, and many investors use a corporate structure for tax and portfolio-building reasons. Individuals, partnerships and LLPs can borrow too. Pension structures such as a SIPP or SSAS can hold commercial property as well, which is a well-established route for business owners, but it’s specialist territory that needs professional advice before you commit.
How we researched commercial investment mortgages
What we covered. We explain how commercial investment mortgages work in 2026: rental-income underwriting, the DSCR and LTV lenders use, which property qualifies, the semi-commercial middle ground, interest-only versus repayment, ownership structures, and the rate premium over owner-occupier lending.
Data sources. DSCR, LTV, property-type and cost detail are drawn from lender criteria and the lenders we assess in our commercial mortgage reviews.
How we handle gaps. Lender criteria are not always published, so we give indicative DSCR, LTV and margin ranges as a framework and say plainly that the lease, tenant and property type decide your own terms.
Update cadence. We re-verify this page at least monthly, and whenever the MPC moves base rate. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Commercial investment lending is generally unregulated, so compare facilities and read the terms before you sign.