Commercial property mortgages may carry higher interest rates than residential loans because you are considered a higher risk – particularly if your deposit is lower than 25 per cent. The term of the loan will be at the discretion of the lender and is typically between ten and 25 years.

Interest rates

There are two interest rate options – variable or a fixed rate commercial mortgage. Commercial mortgage rates are usually set between 2.5 and 6 per cent above the Bank of England base rate or libor, but you should be prepared to shop around and negotiate for the best deal. This is where it is advisable to consult with a Commercial mortgage broker. With many lenders all under one roof, a commercial mortgage broker can find the best deal for you and offer invaluable commercial mortgage advice.

Most commercial mortgage schemes have variable fixed rate commercial mortgage rates and will fluctuate in line with the Bank of England base rate. Your repayments may rise or fall and you should budget accordingly.

A fixed rate commercial mortgage means your repayments are fixed for a certain period of time, usually two to twenty five years. At the time when the rate is fixed, it will usually be higher than the variable rate, but it will allow you to plan your budget more reliably. At the end of the fixed rate period the rate may change to a market variable rate or you may have the right to renegotiate the loan.

Repayment methods

Different kinds of commercial mortgages are repaid in different ways. With a repayment mortgage – sometimes called a capital and interest mortgage – you repay a portion of the loan and the accrued interest each month.

An interest-only mortgage means only the interest on the debt is paid off with each monthly payment.

Why not have a look at our Commercial mortgage calculator for a quick online quote?

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