How much deposit do you need for a commercial mortgage?
Most UK commercial mortgages require a deposit of between 25 and 35 percent of the property value. That equates to a loan-to-value (LTV) ratio of 65 to 75 percent. So on a 500,000 pound property, you would typically need 125,000 to 175,000 pounds as a deposit, with the lender advancing the rest. The exact figure depends on the property type, the strength of the business or tenant, and the lender.
What is LTV on a commercial mortgage?
LTV, or loan-to-value, is the size of the loan expressed as a percentage of the property value. If a lender offers 70 percent LTV, they lend 70 percent of the value and you fund the remaining 30 percent. Commercial LTVs are generally lower than residential because commercial property is considered higher risk: values can be more volatile, tenants can leave, and reselling can take longer.
Typical LTV ranges by property type
As a general guide in the current UK market:
- Owner-occupied premises: up to around 70 to 75 percent LTV
- Investment commercial property: around 65 to 75 percent LTV depending on the tenant and lease
- Semi-commercial and mixed-use: up to around 70 to 75 percent, helped by the residential element
- Specialist assets (pubs, care, leisure, petrol stations): often lower, around 50 to 65 percent
Semi-commercial deals often achieve slightly higher LTVs than pure commercial. Our semi-commercial mortgages guide explains why.
What affects how much you can borrow?
Beyond the headline LTV, several factors determine your actual borrowing:
- Affordability: for owner-occupied deals, the business must show enough profit; for investment deals, rent must cover the loan under a debt service coverage ratio test
- Property type and condition: standard, lettable assets attract higher LTVs than niche or dilapidated ones
- Tenant and lease quality: a strong tenant on a long lease supports a bigger loan
- Borrower strength: trading history, experience, and credit profile all matter
- Location: prime, in-demand locations are viewed more favourably than remote ones
The affordability side is often the real constraint. Even if the LTV allows a large loan, the rent or profit must service it. See our guide to the debt service coverage ratio to understand how this works.
Can you reduce the deposit you need?
There are ways to lower the cash you put in:
- Additional security: some lenders accept a charge over another property you own, reducing the cash deposit
- Stronger covenant: improving the tenant or lease profile can lift the LTV offered
- Cross-collateralisation: using equity across a portfolio to support the deal
- Shopping the whole market: LTV appetite varies widely, so matching to the right lender matters
Why the right lender match changes the number
Two lenders can look at the same property and offer very different LTVs, because their risk appetites and criteria differ. Getting your deal in front of the lenders most comfortable with your asset type is the difference between 60 and 75 percent. Assesr builds a lender-ready credit paper in around 60 seconds and matches your commercial mortgage to lenders whose criteria fit your deposit and asset, at a quarter of the typical broker fee.
Frequently asked questions
What is the minimum deposit for a commercial mortgage?
Most commercial mortgages require a deposit of at least 25 percent, so an LTV of up to 75 percent. Some specialist or lower-risk deals can go higher, and additional security can reduce the cash deposit needed.
Can I use other property as security instead of cash?
Yes. Some lenders accept additional or cross-collateral security, such as another property you own, in place of part of the cash deposit. This can raise the effective LTV against the property being purchased.
Does a stronger business mean a lower deposit?
Often, yes. A strong trading business or a high-quality tenant on a long lease reduces the lender's risk, which can support a higher LTV and therefore a smaller deposit.