Commercial Mortgage Rates 2026: How Lenders Build Your Margin

Why No Lender Publishes a Rate Card

You won’t find a commercial mortgage rate card anywhere, and that’s not lenders being cagey. Pricing is built deal by deal from the property, your accounts, the loan size and whatever appetite the lender has that month.

Your quote arrives as a margin over a benchmark rather than a headline percentage. Most lenders price over Bank of England base rate, currently 3.75%, or over SONIA, so the rate your cash flow actually pays moves when the benchmark moves.

You can’t compare two quotes on the headline alone. On a Monday your broker puts two term sheets side by side, and the finer margin turns out to be the one attached to the tighter covenant.

How the Margin Is Built

Your loan-to-value moves the margin more than anything else. A 50% LTV deal on a standard office prices meaningfully finer than the same borrower at 70%, because the lender’s downside is that much smaller.

Your property type and trading record set the rest. Offices, industrial units and retail price keenest, while care homes, pubs and petrol stations carry a premium because they’re harder to sell if your cash flow ever stops covering the loan.

You won’t get high-street pricing on a specialist building. On a Thursday your accountant runs debt service cover both ways, and the version with a clean trading year is the one that earns the finer margin.

• Loan-to-value. The single biggest lever. A 50% LTV deal prices materially finer than the same borrower at 70%.
• Property type. Offices, industrial units and retail price keenest. Care homes, pubs, petrol stations and student accommodation carry a premium because they are harder to resell.
• Trading record and debt service cover. Clean, profitable accounts with documented cover earn a finer margin than thin or volatile profits.
• Loan size. Fixed origination costs weigh proportionally heavier below about £250,000, which pushes small-loan pricing up.
• Lender type. High-street banks price finer but apply tighter criteria; specialists cost more and accept more.
• Purpose. Owner-occupier deals usually price better than investment, because the trading business supports the debt rather than rental income alone.

What the Margins Actually Look Like

£1m at base plus 2% costs you roughly £57,500 a year in interest while base sits at 3.75%. A strong owner-occupier at low LTV is the borrower who reaches that end of the range.

Your margin widens as risk does. Specialist lenders on investment property at moderate LTV commonly quote 2.5% to 4% over base, and complex property or higher LTV pushes past 4%, which is where your cash flow really feels it.

You can’t read those bands as all-in rates. At month-end your finance director models the same loan at base plus 2% and base plus 4%, and that gap becomes the whole case for cutting LTV.

Fees Change the Real Cost

You pay a good deal more than the interest. A 2% arrangement fee on a five-year facility adds about 0.4% a year to the effective cost before a penny of interest is counted.

Your valuation and legal bills land on top of that. You cover your own solicitor and the lender’s, and on a smaller loan those fixed costs bite hardest, which is why sub-£250,000 commercial mortgages price higher and stretch your cash flow.

You can’t judge a facility on its rate alone. On a Friday your solicitor confirms the lender’s legal costs, and the cheaper headline stops looking like the cheaper loan.

• Arrangement fee. Commonly 1% to 2% of the loan, and often addable to the balance. At 2% over five years that is about 0.4% a year on the effective cost.
• Valuation fee. Paid by you, scaled to the property’s value and complexity. A single retail unit is a few hundred pounds; a multi-tenanted estate is considerably more.
• Legal fees. You pay your own solicitor and the lender’s. Budget several thousand pounds on a straightforward purchase.
• Break costs. On fixed rates, scaled to the remaining fixed term and prevailing swap rates. They can be substantial if you exit early.

How to Get a Better Rate

You win most of the margin before you apply, not during the negotiation. Cutting LTV, tidying the accounts and documenting debt service cover shift pricing further than haggling ever does.

Your broker is the other real lever. A good commercial broker knows which lender is genuinely lending this quarter and how to present the case, and that placement usually does more for your cash flow than arguing over basis points.

You won’t see a lender’s true appetite on its website. At quarter-end your accountant collects terms from two or three lenders, and the competitive tension moves the margin further than any single conversation.

• Cut the LTV. Even a five-point reduction can move pricing. If spare capital is sitting idle, reducing gearing usually beats most alternative uses of it.
• Document debt service cover. Present the cover clearly, with sensitivity analysis, so the lender does not have to price in uncertainty it cannot see through.
• Use a commercial broker. Placing the case with a lender whose appetite genuinely fits does more than negotiating basis points with the wrong one.
• Get two or three quotes. Commercial margins are negotiable, and competing terms give you a real market read rather than a guess.

Commercial Mortgage Rate FAQs