Key takeaways
- Commercial mortgage rates in 2026 typically range from 6.0% to 9.5% fixed, or base rate + 2.0% to 5.5% variable
- Owner-occupied mortgages usually secure lower rates than investment or semi-commercial assets.
- Rates are highly bespoke, driven by LTV, business financials, property type, and market conditions.
- Established businesses with larger deposits and strong cashflow are likely to be offered the most competitive pricing.
What is a commercial mortgage?
A commercial mortgage is a type of loan a business can take out to fund a property purchase. Provided by a bank, building society or credit union, the loan is secured against the property and repaid over anything from a few years to 25 years or more.
You can choose to fix the interest rate on your loan for a number of years or pay a variable rate, tied to the Bank of England base rate.
The amount of money a finance provider will loan to you is partly assessed against the value of the property. Loan-to-value (LTV) is the ratio of how much you need to borrow vs. how much you have as a deposit. For example, if you are buying a £500,000 property and you have a deposit of £100,000, you need an 80% LTV commercial mortgage.
It’s expensive to buy a commercial property outright. Even if you have the cash to do so, it often makes more financial sense to borrow the money with a commercial mortgage and use your remaining cash in other ways.
Typical commercial mortgage rates
In 2026, commercial mortgage rates in the UK typically range from around 6.0% to 9.5% for fixed rates, or 2.0% to 5.5% over the base rate for variable rates. The actual rate you'll be offered depends on the type of property you're buying and the overall risk profile of the deal.
Unlike residential mortgages, pricing is highly bespoke, as lenders assess each deal individually based on factors such as:
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Loan-to-value
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The financial strength of the business
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Property type
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Tenant quality (for investment assets)
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Wider economic conditions
Very broadly speaking, an established business with strong cashflow and a larger deposit will usually be best-placed for competitive rates. The reality is a bit messier, though!
Due to the unique nature of commercial mortgage deals, we can only give you a guide to our own prices. You'll need to enquire with other lenders if you want to know their specific rates.
All rates listed below are inclusive of our 0.50% current account discount – explained in more detail in the 'discounts and incentives' section below.
Commercial investment mortgage rates
An investment mortgage is for a property you intend to lease out to another business, with you as the landlord and not the occupant.
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|
Up to 65% LTV |
Over 65% LTV |
|
5-year fixed rate |
7.90% |
8.10% |
|
Variable (margin over base rate) |
3.70% |
3.90% |
Semi-commercial investment mortgage rates
Semi-commercial properties are a mixture of both commercial and residential space. For example, a building with a shop on the ground floor and a flat on the first floor.
We determine whether a property qualifies as semi-commercial by assessing the percentage of floor space given to residential occupancy. To be eligible, the residential floor space must not exceed 80% or be less than 50%. You must also be able to let the residential space on a separate assured shorthold tenancy. We confirm this percentage at valuation.
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|
Up to 65% LTV |
Over 65% LTV |
|
5-year fixed rate |
6.30% |
7.15% |
|
Variable (margin over base rate) |
2.35% |
3.20% |
Specialist buy-to-let
A buy-to-let mortgage is designed for residential property you intend to lease out. Allica's specialist buy-to-let mortgages are for landlords with residential portfolios or buyers for houses in multiple occupation (HMOs) and multi-unit freehold blocks (MUFBs).
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|
Up to 65% LTV |
Over 65% LTV |
|
5-year fixed rate |
6.20% |
6.75% |
Owner-occupied commercial mortgage rates
Owner-occupied mortgages are used for buying a property from which you will operate your business.
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Up to 65% LTV |
Over 65% LTV |
|
5-year fixed rate |
6.50% |
6.85% |
|
Variable rate (margin over base rate) |
2.30% |
2.65% |
Owner-occupied semi-commercial mortgage rates
To be eligible for an owner-occupied semi-commercial mortgage, the same residential floor space requirements apply as with investors.
As a reminder, the residential element must occupy between 50% and 80% of the total floor space.
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|
Up to 65% LTV |
Over 65% LTV |
|
5-year fixed rate |
6.00% |
6.75% |
|
Variable rate (margin over base rate) |
1.80% |
2.55% |
Hotel mortgage rates
We offer specialist lending for hoteliers
To be eligible for an owner-occupied semi-commercial mortgage, the same residential floor space requirements apply as with investors.
As a reminder, the residential element must occupy between 50% and 80% of the total floor space.
|
|
Up to 65% LTV |
Over 65% LTV |
|
5-year fixed rate |
6.00% |
6.75% |
|
Variable rate (margin over base rate) |
1.80% |
2.55% |
Discounts and incentives
We offer discounts on the rates listed above, based on a few different criteria.
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Offer |
Discount |
Product |
Eligibility |
|
Energy efficiency discount |
0.25% |
Owner-occupied and investment mortgages
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If the property has an EPC rating between A and C. |
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Large loan discount |
0.25% |
If your loan is greater than £750,000. |
|
|
Current account discount |
0.50% |
Owner-occupied mortgages
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If the borrower opens a current account with Allica and uses it for 50% of their annual turnover. Discount applies to the first 5 years of the mortgage. Additional terms and conditions apply. |
|
Debt service cover of >200% |
0.25% |
If you can evidence Debt Service Cover* of 200% at application. (*This is a comparison of the loan amount against your net earnings – essentially proving that you can earn enough to repay the debt in full.) |
Not every discount will apply to every deal, but where the criteria is met, discounts can be combined and applied to both fixed and variable rates.
We also offer specialised mortgages for hotels, care homes and children’s day nurseries.
You can find much more information about all of these loans and their associated fees on our dedicated commercial mortgages page.
The differences between fixed and variable interest rates
You’ll be charged interest on your commercial mortgage, just the same as with any other loan.
The amount you owe on the loan will depend on the amount borrowed plus the amount of interest charged for the loan. Every mortgage comes with one of two options for the interest rate applied: a fixed rate or a variable rate.
Fixed rate
A fixed rate commercial mortgage charges you the same interest rate for a period of time (usually two, three, or five years).
This gives you a level of predictability, which can be useful if you’re in a tight cashflow position or like to have a reliable medium-term forecast. On the other hand, if rates drop during your fixed term, you’ll pay more than the average business taking out a loan at that time.
You cannot change your rate (without penalty) until your fixed term is complete. If you reach the end of the fixed term, you can either renegotiate a new fixed rate mortgage or your mortgage will automatically move to a variable rate.
Variable rate
The interest rate on a variable commercial mortgage can change from month-to-month. The rate you pay will be based on the lender’s underlying benchmark (often the Bank of England base rate).
This can work in your favour if rates are falling, but not if they rise. If your lender’s benchmark goes up, so will your repayments.
If you decide you want to remortgage, pay off the debt or move to a fixed rate, you’ll be in a more flexible position than with a fixed rate.
Commercial loan rates vs commercial mortgage rates
Commercial loan rates and commercial mortgage rates are often discussed interchangeably, but they differ in both structure and pricing.
A commercial mortgage is a type of secured loan specifically used to purchase property, which typically results in lower interest rates due to the asset-backed security and longer repayment terms.
In contrast, general commercial loans, such as unsecured business loans or short-term finance, usually come with higher rates to reflect increased lender risk and shorter durations.
In 2026, commercial loan rates can vary widely depending on the product, but they are often higher than commercial mortgage rates, particularly where no property security is involved.
For established businesses, choosing between the two depends on the purpose of funding. Mortgages generally offer more cost-effective, long-term financing for property acquisition, whereas commercial loans provide faster, more flexible access to capital for broader business needs.
Allica Bank’s commercial mortgage rates in 2026
Given the higher variance and complexity associated with commercial properties, lenders set their rates on more of a case-by-case basis.
There’s no comparison site for commercial mortgages, so nobody can tell you what the whole market is doing. We can, however, share some insight from Allica Bank. All of the rates and fees listed in this article come from our own product guide.
Across our entire product range, we're able to lend between £150,000 and £10 million to UK registered limited companies, LLPs, partnerships and sole traders on terms between five and 30 years. Minimum debt service cover is usually around 130%.
Our variable rates represent our margin above the Bank of England’s base rate. So, a variable rate of 4.60% should be read as 4.00% + 3.75% (the base rate at the time of writing) = 7.75% in total.
Why should I use Allica for my commercial mortgage?
Having used Allica’s rates and products plenty of times in this article as examples, we think it’s only right to add a bit more colour to what we offer borrowers.
Business owners choose Allica Bank for lots of reasons, but the most common reasons we hear are:
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The fact that every customer has a dedicated relationship manager.
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We offer mortgages up to 80% LTV.
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We lend to a wide scale of valuations, from £150,000 to £10 million.
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You get a fast response to your application for a commercial mortgage – days, not weeks or months.
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Every application is individually reviewed by an underwriter, meaning you’ll never be turned down because a computer decided it.
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The range of products available, across both owner-occupied and investment mortgages – including specialist lending for hotels, care homes and day nurseries.
If you want a real-world example of the difference we can make to your waiting time, we highly recommend reading or watching the story of Fuel Accountancy’s owner-occupied mortgage experience.
If you’re interested in the finer details of Allica Bank mortgages, take a look at our commercial mortgage product guide.
Or, if you’re ready to apply, you can submit an enquiry about a commercial mortgage now.
Please see our:
Mandatory information checklist
Disclaimer: This is information – not financial advice or recommendation
The content and materials featured in this article are for your information and education only, and are not intended to take into consideration any particular recipients’ financial situation. The product details and interest rates referred to are correct at the time of writing.
The information does not constitute financial advice or recommendation and should not be considered as such. Allica Bank will not accept any liability for any loss, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
