What Is the Difference Between an Owner-Occupied and Commercial Investment Mortgage?

An owner-occupied commercial mortgage is generally used where the borrower’s own business will operate from the property. A commercial investment mortgage is generally used where the property will be let to another business. The lender’s assessment will differ because an owner-occupied application is usually supported by the trading business, while an investment application may rely more heavily on the property’s rental income, tenant and lease.

Can I Use Commercial Finance to Buy My Business Premises?

Potentially. A commercial mortgage may be used to purchase premises from which an established business will operate. The lender will usually assess the property, business accounts, trading history, existing commitments and ability to meet the proposed repayments.

Can I Obtain Finance for a Commercial Investment Property?

Potentially. Commercial investment finance may be available for property that is or will be let to a commercial tenant. The lender is likely to consider the rent, tenant, lease terms, property type, location and borrower’s wider financial position.

Can Commercial Finance Be Used for Mixed-Use Property?

Yes, mixed-use and semi-commercial properties may be considered by lenders offering finance for buildings with both commercial and residential elements. The proportion, use and value of each part of the property can affect the lenders and regulatory treatment of the application.

Can I Refinance a Commercial Property and Release Equity?

Potentially. Commercial property may be refinanced to replace existing borrowing or release part of the equity held within it. The amount available will depend on the property value, existing debt, income supporting the loan, reason for raising the funds and borrower circumstances.

How Much Can I Borrow on a Commercial Property?

The amount available will depend on factors including: The purchase price or current property value The property type and condition The business or rental income The strength of the tenant and lease The borrower’s contribution Existing borrowing The proposed repayment structure The lender’s criteria We will need to understand the property and transaction before giving an indication of the borrowing that may be available.

How Long Does a Commercial Mortgage Take to Arrange?

There is no single completion timeframe for commercial property finance. The process can depend on the lender, property valuation, legal work, business information, lease arrangements and complexity of the ownership structure. We will establish any intended deadline at the beginning and explain what information and third-party work will be required to keep it realistic.

Will I Need to Provide a Personal Guarantee?

A lender may request personal guarantees from company directors or other relevant parties, particularly where a limited company is borrowing. Whether a guarantee is required and the extent of the commitment will depend on the lender, transaction and borrower’s financial position. Independent legal advice may be required before a personal guarantee is entered into.

Can a New Business Obtain a Commercial Mortgage?

It may be possible, but lenders will need sufficient evidence that the proposed repayments are sustainable. Where the business has limited trading history, the lender may place greater emphasis on the experience of the directors, business plan, financial forecasts, available contribution and strength of the property. The range of available lenders and terms may be more limited than for an established business.

Is Commercial Property Finance Regulated by the FCA?

Finance secured entirely against commercial premises will not normally be a regulated mortgage contract. However, the position can be different where residential accommodation forms part of the security, particularly with mixed-use property, or where an individual or connected person occupies part of the property as a home. The regulatory position should therefore be established from the circumstances of the transaction rather than assumed from the product name alone.

What Information Should I Have Before Getting in Touch?

It is helpful to know: The property address and type The purchase price or current value The amount you would like to borrow Whether the property will be owner-occupied or let Details of the business or tenant Current or expected rental income The lease terms, where relevant Your available cash or equity contribution Details of existing borrowing The purpose of the finance Any target completion date The intended longer-term plan for the property You do not need to have every supporting document ready for the first conversation.

Commercial Finance

Commercial Property Finance for Business Premises and Investments

Commercial property finance can support the purchase, refinance or wider funding of premises used by a business or held as an investment.

Jayhawk Capital advises business owners, property investors, landlords and private clients on finance for offices, retail units, industrial premises, mixed-use buildings and other commercial property.

We consider the property, the borrower, the business or tenant, the income supporting the loan and the wider purpose of the transaction. This allows us to provide an early, honest view of what appears achievable and how the borrowing may need to be structured.

For business owners, commercial property investors, landlords, developers and private clients.

When It May Be Right

When Commercial Property Finance May Be Appropriate

Commercial property finance is commonly used to purchase or refinance property that is occupied by a business or let to a commercial tenant.

It may be appropriate where:

01A business wants to purchase the premises it currently occupies
02A company is acquiring new premises as part of an expansion
03An investor is purchasing a commercial property to let
04Existing commercial property borrowing needs to be refinanced
05Equity is being raised from a property for another business or investment purpose
06A mixed-use building includes both commercial and residential accommodation
07Several commercial properties need to be considered as part of a wider portfolio
08A short-term facility needs to be replaced with longer-term commercial borrowing

Commercial finance is rarely assessed through the property value alone. The intended use of the building, strength of the business or tenant, lease arrangements, ownership structure and proposed repayment profile can all influence the available options.

Finance Objectives

Commercial Finance for Different Property Objectives

Purchasing Premises for Your Own Business

A commercial mortgage may allow an established business to purchase the property from which it operates.

This can provide greater control over the premises and reduce reliance on a commercial landlord. It may also allow the business to invest in a property suited to its longer-term plans.

The lender will usually want to understand the trading history, financial position and future prospects of the business, alongside the property being purchased and the contribution available.

Moving or Expanding into New Premises

A business may require larger premises, a second location or a property better suited to its operations.

The proposed borrowing should be considered alongside the costs of moving, fitting out the property and maintaining sufficient working capital while the business transitions to the new location.

Where the property is larger or more expensive than the business’s current premises, the lender may also assess how the expansion is expected to affect future income and costs.

Commercial Property Investment

Commercial investment mortgages are used to purchase property that will be let to another business.

The strength of the investment may depend on the property type, location, lease, tenant, rental income and prospects for continued occupation.

A lender may consider the tenant’s financial position, the remaining term of the lease, any break clauses and whether the rent provides sufficient support for the proposed borrowing.

Refinancing an Existing Commercial Mortgage

Commercial property finance may be reviewed when an existing facility is approaching the end of its term or no longer suits the borrower’s plans.

Refinancing could be considered to replace the existing debt, review the repayment structure, release equity or bring several facilities into a more suitable arrangement.

The new lender will need to understand the current property value, outstanding borrowing, payment history and reason for refinancing.

Raising Capital from Commercial Property

A business or investor may wish to release equity held within a commercial property.

The funds could be used for business expansion, another property acquisition, refurbishment, restructuring existing borrowing or another clearly defined purpose.

The proposed use of the capital, resulting level of borrowing and ability to meet the repayments will all form part of the assessment.

Mixed-Use and Semi-Commercial Property

Mixed-use property combines commercial and residential accommodation within the same building.

Examples may include a shop with flats above, an office with residential accommodation or another property containing both business and residential space.

The proportion and use of each part of the building can affect the lenders available, the valuation approach and whether any part of the transaction falls within a regulated framework.

Commercial Property Portfolios

An investor may own several commercial or mixed-use properties with different tenants, leases and existing finance arrangements.

Rather than considering each asset in isolation, it may be useful to review the portfolio as a whole. This can help establish how the rental income, property values and existing borrowing interact and whether the finance could be structured more effectively.

Modern commercial office building facade

Commercial finance covers a spectrum of property objectives — from acquiring premises to restructuring an investment portfolio.

Commercial Mortgages

Owner-Occupied and Commercial Investment Mortgages

Commercial mortgages can broadly be divided between owner-occupied and investment requirements.

Owner-Occupied

Owner-Occupied Commercial Mortgages

An owner-occupied commercial mortgage is generally used where the borrower’s business will operate from the property. The lender’s assessment is likely to focus on the financial strength of the trading business and its ability to meet the proposed repayments.

This may involve reviewing:

Recent business accounts
Management information
Bank statements
Existing borrowing and commitments
Trading history
Directors’ experience
The reason for the purchase or refinance
The business’s future plans

Investment

Commercial Investment Mortgages

A commercial investment mortgage is generally used where the property will be let to one or more commercial tenants.

The lender may place greater emphasis on:

The current or proposed rental income
The identity and financial strength of the tenant
The remaining lease term
Break clauses and rent-review provisions
The condition and location of the property
Demand for the premises if the current tenant leaves
The borrower’s property experience
The wider investment and repayment strategy

Some transactions contain elements of both. Understanding who will occupy the property and how the loan is expected to be serviced is therefore an important starting point.

Property Types

Types of Commercial Property That May Be Considered

Commercial finance may be available across a wide range of property types. These can include:

Offices

From individual office units to larger premises occupied by professional or commercial businesses.

Retail Property

Shops, retail units and other premises used for the sale of goods or services.

Industrial and Warehouse Premises

Units used for manufacturing, storage, logistics, distribution or trade-based businesses.

Mixed-Use Buildings

Properties containing both commercial and residential accommodation.

Hospitality and Leisure Property

Hotels, guest accommodation, restaurants, pubs and leisure-related premises may require a more specialist assessment based on the property and trading business.

Healthcare and Specialist Premises

Properties used by healthcare providers, care businesses or other specialist operators may be considered where the lender understands the sector and property type.

Land and Development-Related Property

Commercial land, development sites and properties requiring substantial work may need bridging or development finance rather than a standard commercial mortgage.

The available options will depend on the property, its current use, condition, income and the borrower’s plans.

How We Assess

How We Assess a Commercial Finance Requirement

A commercial finance application needs to bring the property, borrower and purpose of the transaction together clearly.

The Purpose of the Finance

We begin with what you want to achieve.

This could involve purchasing premises, acquiring an investment, refinancing existing debt, releasing capital or restructuring borrowing across several properties.

Understanding the purpose helps establish whether a commercial mortgage, bridging facility or another form of property finance is likely to be the more appropriate route.

The Property

The type, location, condition and intended use of the property will influence which lenders may consider the transaction.

A lender may also look at how easily the property could be sold or let to another occupier if circumstances change.

The Business or Tenant

For an owner-occupied property, the lender will usually assess the financial strength of the business that will meet the repayments.

For an investment property, the focus may be on the tenant, lease and rental income.

Where there are several occupiers or income sources, each may need to be considered as part of the wider transaction.

The Financial Position

The lender may review business accounts, management information, tax documents, bank statements, rental schedules and details of existing commitments.

The information required will depend on whether the application is based primarily on business trading income, rental income or a combination of the two.

The Amount Required and Available Contribution

We consider the amount being borrowed, the purchase price or current value, existing finance and the cash or equity being contributed.

The amount available will depend on the property, income supporting the loan, borrower profile and lender criteria.

The Ownership Structure

Commercial property may be purchased or held personally, through a trading company, a special-purpose company, a partnership or another structure.

The proposed ownership needs to be understood at the beginning because it can affect the lender, application and legal work required.

Tax and legal advice should be obtained separately before deciding how a property will be owned.

The Lease and Rental Income

For an investment property, the terms of the lease can be central to the lender’s assessment.

The lender may consider the rent, lease length, break clauses, repairing obligations, tenant quality and whether the income provides sufficient support for the loan.

Where a property is vacant or will have a new tenant, the proposed letting strategy and time required to establish the income may also be relevant.

The Repayment Structure

Commercial borrowing may be arranged on a capital repayment, interest-only or partially amortising basis, depending on the lender and transaction.

The proposed structure should reflect the income available, intended holding period and longer-term plans for the property.

The Wider Exit or Long-Term Plan

Even where the finance is intended to remain in place for several years, it is important to consider what is expected to happen at the end of the term.

The borrowing may ultimately be repaid through continued business income, refinancing, sale of the property or another planned event.

Speed & Accuracy

Speed and Accuracy in Commercial Finance

A commercial property transaction may be linked to a purchase deadline, lease expiry, business relocation or an existing facility reaching the end of its term.

Moving promptly starts with identifying the information the lender will need and whether the proposed structure appears realistic.

Jayhawk Capital was built around speed and accuracy of service. We aim to understand the property, borrower and financial position early, while being frank about any issue that could affect the borrowing or transaction timetable.

This could include:

Business income that does not support the proposed repayments
Limited trading history
A short or complex commercial lease
A specialist property with fewer potential lenders
A vacant investment property
An ownership structure that needs further explanation
A valuation that differs from the purchase price
Existing borrowing that affects the available equity
Legal or planning matters connected to the property

Where there is a viable route to explore, accurate preparation can reduce unnecessary questions and help keep the transaction moving.

Throughout the process, we keep you informed about where matters stand, what is currently being worked on and whether anything is required from you.

A Wider View

Commercial Finance with a Wider View

The commercial mortgage is one part of a wider property or business decision.

Purchasing premises may affect the capital available to the business. Releasing equity may support expansion but increase the ongoing financial commitments. Acquiring an investment property may form part of a broader portfolio rather than a single standalone transaction.

The aim is to structure the borrowing around the property, borrower and intended outcome rather than considering the commercial mortgage in isolation.

Jayhawk Capital seeks to become a reliable point of contact for future purchases, refinancing requirements and property projects, maintaining the same direct advice and clear communication beyond the first transaction.

Experience across commercial finance, bridging, development, buy-to-let and high-value property borrowing allows Jayhawk Capital to consider how the immediate requirement fits with the client’s wider plans.

This can be particularly important where:

A business is purchasing premises while continuing to fund its operations
Commercial property is held alongside residential investments
Equity is being raised for another acquisition or project
A short-term bridging facility will later move onto a commercial mortgage
A mixed-use property contains several income sources
Several properties or loans are being refinanced together
The borrower has a more complex company, income or asset structure
The transaction forms part of a longer-term investment or expansion strategy

Costs & Fees

Understanding the Cost of Commercial Finance

The cost of commercial property finance will depend on the property, borrower, business or tenant, amount required, repayment structure and perceived level of risk.

Potential costs may include:

Interest
A lender arrangement fee
Property valuation fees
Legal costs
Administration fees
Specialist reports, where required
Brokerage fees

The lender may also require specific legal advice, searches, surveys or reports depending on the property and transaction.

A lower headline interest rate will not necessarily result in the most appropriate overall facility. The fees, repayment profile, term, conditions and flexibility of the arrangement should all be considered together.

We will explain the anticipated costs, proposed structure and principal conditions before you decide whether to proceed.

Broker Fee

Jayhawk Capital may charge a tailored broker fee of up to 1% of the loan, subject to a minimum fee of £500. The amount and payment stage will depend on the nature and complexity of the commercial finance requirement and will be confirmed before you proceed.

Questions & Answers

Commercial Finance Frequently Asked Questions

A commercial mortgage is finance secured against property used for business or commercial investment purposes.

It may be used to purchase or refinance premises occupied by the borrower’s business or property let to a commercial tenant.

Client Reviews

Trusted by Property Investors & Developers

Great customer experience! John was brilliant start to finish and really supported us throughout the whole process. Bridging loans were all new to us so John really took the time to make sure the loan was right for us, along with explaining everything in detail. We had a short timescale and John again made sure this was pushed along at each point in the process

Adviser: John Symons

Discuss Your Commercial Finance Requirement

You may be purchasing premises for your business, acquiring an investment property, refinancing existing borrowing or raising capital from a commercial asset.

Tell us about the property, the amount required, how it will be occupied and what you want the finance to achieve.

We will review the initial details and contact you to discuss whether there appears to be a realistic route forward and what information is needed next.

Important Information

Security will be required. Your property may be repossessed if you do not keep up repayments on finance secured against it.
Not all forms of commercial finance are regulated by the Financial Conduct Authority.

Related Services

Commercial finance often sits alongside other property or mortgage requirements. Explore related services offered by Jayhawk Capital.