Commercial Mortgage: Documents, Timeline and Fees

What is a commercial mortgage?

A commercial mortgage is a secured loan against a commercial property, repaid over a fixed term, typically five to twenty-five years, with interest calculated on a fixed, variable or tracker basis. Borrowers are usually limited companies, LLPs or partnerships, and some lenders also lend to sole traders; residential mortgages regulated by the FCA under MCOB rules do not apply to purely commercial transactions, though semi-commercial properties containing a residential element may attract partial FCA oversight.

Loan-to-value ratios on commercial mortgages typically range from 60% to 75% of the property's surveyed value. Owner-occupied premises, investment properties let to third parties, and mixed-use buildings all qualify, but lenders distinguish between the three categories and apply different stress tests to each. Pricing is usually set as a margin above the Bank of England base rate (3.75%, last changed 18 December 2025) or SONIA, and the margin depends on property type, covenant strength and loan size. The commercial mortgage product overview sets out LTV bands, typical rates and the lenders active in this market.

Eligibility and entity requirements

Most commercial mortgage lenders in the UK will only advance funds to a trading limited company, LLP or partnership that can demonstrate a stable financial history of at least two to three years. Sole traders and newly incorporated entities are generally excluded or face significantly higher deposit requirements and shorter terms.

FundBiz enquiries are for UK limited companies, LLPs and partnerships of four or more partners. Lenders also assess the personal credit history of directors, designated members and significant shareholders, so all key stakeholders should obtain a copy of their credit report before applying. The property must be located in England, Wales, Scotland or Northern Ireland, and must have a valid Energy Performance Certificate, and lenders check it. For let property in England and Wales, landlords of non-domestic property generally need at least an EPC E rating to keep letting it (GOV.UK guidance).

Documents you will need to prepare

Preparing the correct documents before you approach a lender materially reduces delays; incomplete applications are a common reason commercial mortgage timelines run long.

The core document pack typically includes: the last three years of full, accountant-prepared financial accounts for the borrowing entity; six months of business bank statements; a current rent schedule or tenancy agreements if the property is an investment let; a copy of the property's title register from HM Land Registry; and proof of identity and address for all directors or partners.

Lenders will also request a business plan or brief investment rationale, particularly for acquisitions. If the company is refinancing an existing commercial mortgage, a recent mortgage statement and a copy of the current lender's title charge will also be needed.

VAT registration certificates and HMRC tax compliance confirmations may also be requested, particularly for larger loans.

The application and underwriting timeline

A commercial mortgage timeline usually runs to several weeks or more, split across four broad phases: initial credit assessment, formal application, valuation and legal completion.

Phase one, the credit assessment, starts once the full document pack is received. The lender's credit committee reviews the trading accounts, the directors' personal credit histories and the proposed security. If a decision in principle is issued, the borrower moves to phase two, submitting a formal application with all supporting documents.

The lender then instructs a RICS-qualified surveyor to value the property; how long the valuation takes depends on property complexity and the surveyor's diary. Legal work runs concurrently once the valuation is received. The lender's solicitor raises enquiries, the borrower's solicitor responds, and completion is booked once the legal replies are satisfactory.

Delays most frequently arise from missing title documents, unresolved planning consents or slow responses to solicitor enquiries.

Fee structure: what to budget for

Commercial mortgage transactions carry several layers of fees that borrowers should budget for before committing to a purchase or refinance; together they can add materially to the initial outlay.

Arrangement fees charged by the lender are usually a percentage of the loan amount and are either added to the loan or paid on completion. Valuation fees vary by property size and complexity, with larger industrial or mixed-use sites costing more than a small retail unit. Legal fees are charged by both the borrower's and the lender's solicitors; the borrower pays both sets. Broker fees, where applicable, vary by broker, so ask how and when they're payable before you instruct one. Some lenders also charge an exit fee or early repayment charge if the mortgage is redeemed within an initial penalty period set out in the facility letter. In England and Northern Ireland, Stamp Duty Land Tax on a freehold non-residential purchase is tiered: 0% up to £150,000, 2% on the portion from £150,001 to £250,000, and 5% above £250,000 (GOV.UK). Scotland (LBTT) and Wales (LTT) have their own taxes and rates.

Fixed versus variable rate: key considerations

Choosing between a fixed and a variable rate commercial mortgage depends on the borrower's appetite for payment certainty and their view on the direction of the BoE base rate, currently 3.75% following the last movement on 18 December 2025.

A fixed rate locks the interest cost for an agreed term, commonly two, three or five years, providing budget certainty but usually coming with early repayment charges if the loan is redeemed before the fixed period ends. A variable or tracker rate moves in line with the BoE base rate or SONIA; payments fall when the base rate is cut and rise when it increases.

For businesses with strong cashflow and tolerance for short-term payment variation, a tracker can reduce the overall cost of borrowing over the mortgage term. Some lenders offer a split product, fixing part of the loan and leaving the remainder on a variable rate, which provides partial certainty without fully forfeiting the benefit of potential rate reductions.

Post-application: what happens at completion

At completion, the lender releases funds to the borrower's solicitor, who uses them to pay the vendor or discharge the existing mortgage, with any surplus returned to the borrower. The process concludes with registration of the lender's charge at HM Land Registry, which can take several weeks to appear on the title register but doesn't delay the borrower taking ownership.

Once the mortgage is live, the borrower should retain copies of the facility letter, the mortgage deed and the valuation report. Annual reviews are common on larger investment mortgages, where lenders may require updated rent schedules and management accounts. Borrowers should also note the date their fixed rate or initial discounted period ends and begin reviewing re-mortgage options at least four to six months before that date to avoid reverting to the lender's standard variable rate, which is typically higher than competitive market rates.

Step-by-step

1. Gather three years of accountant-prepared accounts, six months of bank statements and all property title documents before making any enquiry.
2. Obtain personal credit reports for all directors or partners and significant shareholders, and resolve any errors with the relevant credit reference agency.
3. Approach a lender or broker with the property address, estimated value, required loan amount and intended use of the property. If you send an enquiry through FundBiz, we pass your details to a business finance broker, who will contact you about your options.
4. If a lender issues a decision in principle, review the indicative rate, LTV and fee schedule, and confirm you wish to proceed.
5. Instruct your solicitor and allow the lender to instruct a RICS valuer; respond promptly to any additional information requests to avoid timeline delays.
6. Exchange and complete: your solicitor transfers funds, the charge is registered at HM Land Registry and the mortgage account is opened.

Example

Frequently asked questions

By Adam Parker, Founder & Managing Director, Muswell Rose. FundBiz is owned and operated by Best Business Loans Ltd, directed by Oliver Mackman. Last updated: 17 September 2026.