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Commercial Mortgage Rates

Independent guides and comparisons across business loans, invoice finance, asset finance, commercial mortgages, and more.

Mike Smith
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Mike Smith
Updated on 5 May 2026
Independently assessed Rates verified 5 May 2026
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Commercial mortgage rates are not published on a rate card. Unlike residential mortgages, where product rates appear on comparison sites, commercial mortgage pricing is deal-specific — determined by the property type, borrower profile, loan size, LTV, and the lender’s current appetite. Understanding the factors that drive pricing is more useful than any headline rate figure.

How Commercial Mortgage Rates Are Structured

Commercial mortgage rates are typically quoted as a margin over a base rate — either Bank of England Base Rate (BEBR) or SONIA (Sterling Overnight Index Average), which has largely replaced LIBOR as the standard floating rate benchmark.

A typical quote might be: Base Rate + 2.5%. With Base Rate at a given level, that produces the total pay rate. The margin reflects the risk premium the lender charges for the specific deal.

Fixed rates are also available from some lenders, typically funded via swap rates. Fixed commercial mortgage rates provide payment certainty but may carry break costs if the loan is repaid early.

What Determines the Rate

LTV: the most significant factor. Lower LTV means lower lender risk, which means a lower margin. A 50% LTV deal will attract meaningfully better pricing than a 70% LTV deal with the same borrower.

Property type: standard commercial property (offices, industrial, retail) attracts lower risk premiums than specialist property (care homes, pubs, petrol stations, student accommodation). Unusual properties carry higher rates because they are harder to sell if the loan defaults.

Borrower profile: trading history, profitability, and debt service coverage all feed into the lender’s risk assessment. A well-established, profitable business with strong DSCR will price better than a newer business or one with thin margins.

Loan size: larger loans often attract finer pricing because the economics work better for the lender. Very small commercial mortgages (below £150,000–£250,000) may attract higher rates to cover fixed origination costs.

Lender type: high street banks generally offer lower rates than specialist lenders, but with stricter criteria. A borrower who qualifies for a high street bank rate will usually save on cost versus a specialist lender — the trade-off is appetite, speed, and flexibility.

Purpose — owner-occupier vs investment: owner-occupier commercial mortgages typically attract better rates than investment because the business’s cash flow (not just rental income) supports the debt. Investment commercial mortgages are underwritten on DSCR against rental income, which lenders treat as a more volatile cashflow.

Indicative Rate Ranges

Rate ranges for commercial mortgages move with the interest rate environment and lender appetite. As a general framework rather than a specific quotation: [EDITORIAL JUDGEMENT — illustrative; verify current margins against direct lender criteria and BoE Bankstats]

  • High street banks, owner-occupier, low LTV, strong borrower: typically Base Rate + 1.5–2.5%
  • Specialist lenders, investment property, moderate LTV: typically Base Rate + 2.5–4%
  • Specialist lenders, complex property or borrower, higher LTV: typically Base Rate + 4%+

These are margins, not all-in rates. The total pay rate moves with Base Rate. Borrowers considering fixed rates should compare the swap-based fixed rate against the floating margin to determine which provides better value over the expected loan term.

Fees Add to the Total Cost

The interest rate is not the total cost. Commercial mortgages carry arrangement fees, valuation fees, and legal fees that increase the effective cost, particularly on shorter-term facilities. A 2% arrangement fee on a 5-year mortgage adds 0.4% per annum to the effective cost before interest is considered.

See Commercial Mortgage Fees Explained for a full breakdown.

How to Get the Best Rate

Use a broker: commercial mortgage brokers have access to rates and lender appetite that are not available on the open market. On a complex deal, a broker’s ability to present the case correctly and match it to the right lender’s appetite can make more difference than the rate negotiation itself.

Reduce LTV where possible: even a 5% reduction in LTV can move pricing meaningfully. If additional capital is available, deploying it to reduce LTV is usually a better use than other uses at commercial mortgage rates.

Strong DSCR documentation: lenders price risk. A clearly documented DSCR that demonstrates comfortable debt service capacity — with sensitivity analysis — reduces the lender’s perceived risk and supports a lower margin request.

Comparison before commitment: commercial mortgage rates are negotiable. Getting terms from two or three lenders (via a broker) gives a real market read and creates competitive tension that improves pricing.

  • Commercial Mortgage LTV Explained
  • DSCR Explained
  • Commercial Mortgage Fees Explained
  • Owner-Occupier Commercial Mortgages
  • Commercial Investment Mortgages
  • Best Commercial Mortgage Lenders UK