How commercial mortgage interest rates are calculated

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Unlike a personal mortgage for your home, there is no “off the shelf” commercial mortgage solution at fixed interest rates. Interest rates vary according to the individual loan deal, but a commercial mortgage broker can help you find the best deals at the best interest rates.

Low or high risk?

A mortgage offer is tailored to the individual deal. An assessor looks at the property deal and gives it a risk rating. It’s no surprise that higher-risk loans have a higher interest rate, but even low-risk loans will often charge interest rates that are higher than personal mortgage rates.

The deposit

The interest rate will also be dependent on the deposit. A 30% or higher deposit will generally mean paying less interest than a lower deposit. Some lenders may offer a loan based on 100% of the property value, but interest rates will be very high.


Most commercial mortgages are based on variable interest rates that can go up or down depending on the bank rate. It is possible to get a fixed-rate mortgage for a few years. This could cost more over time, but fixed-rate mortgages make it easier to budget for mortgage repayments.

Type of mortgage

There are two basic types of commercial mortgage.

Firstly, a commercial mortgage can be for premises that are occupied by the borrower. These could be the main headquarters of the business or regional locations.

The other type of commercial mortgage is for property investors who either want to rent out the property or renovate it for resale at a profit. If the property is residential, a type of commercial mortgage known as buy-to-let is required.

The interest rate charged is affected by the type of mortgage.

High street banks

Some large high-street banks offer commercial mortgages at low interest rates, but often their best offers can be dependent on moving your business banking to them.

Your business

The type of business and the type of building you are purchasing are other factors that affect interest rates. If you have a track record of healthy business accounts, your application could be seen as low-risk and lower interest rates offered.

Use a mortgage broker

Thanks to the many factors used in calculating commercial mortgage interest rates, it is difficult to know what interest rate you will pay.

To find out more, consult a mortgage broker who will be able to make an initial assessment of your loan requirements and advise you on the likelihood of a loan application being accepted. The broker can then approach suitable lenders and act on your behalf to negotiate the best commercial mortgage deal and interest rates tailored to your circumstances.

To find a good commercial mortgage interest rate, talk to Ascot Mortgages. We have access to a wide range of lenders and can match your loan requirements to commercial mortgage lenders who will accept your loan application at the best possible interest rates.

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*Privacy Notice - Any information provided will be treated with confidentiality and will only be accessible within Ascot Mortgages