Owner Occupier Commercial Mortgages
An owner-occupier commercial mortgage lets your business buy its own trading premises. You occupy and operate from the property. From £250,000, up to 80% LTV. Professional practices can access up to 100% LTV with the right lender. No broker fees on most cases.
£250,000
Up to 80% (100% professional practices)
5-25 years
Capital & interest or interest only
All sectors considered
No fees on most cases
What is an owner-occupier commercial mortgage
An owner-occupier commercial mortgage is a loan for your business to purchase the property you trade from. Instead of renting, you own the building and build equity as you pay the mortgage.
You might be a dental practice buying its surgery, a manufacturer purchasing a warehouse, a professional service firm acquiring an office, or a care home buying its operating property. The common thread: the business occupies the premises and trades from there.
Owner-occupier mortgages are available from £250,000 upwards. Lenders assess your business trading income, not rental yield. They want confidence that your business can service the debt from its operating profit.
How owner-occupier mortgages differ from investment
Investment mortgages (buy-to-let) are based on rental income. The lender looks at what tenants will pay you, then lends a multiple of that rent.
Owner-occupier mortgages work differently. Lenders assess whether your business generates enough trading profit to cover the mortgage payment. They review your accounts for the past 2-3 years and may consider forward projections if you're expanding.
A key metric is DSCR, or debt service coverage ratio. This compares your annual profit to the annual cost of the mortgage. Most lenders want a minimum DSCR of 1.25x. If your business makes £100,000 profit and the mortgage costs £80,000 per year, your DSCR is 1.25x, which just meets the requirement. Stronger ratios, such as 1.5x or above, improve your rates and terms.
You must occupy at least 40% of the property for it to be classified as owner-occupier. If you occupy less, it may be treated as mixed-use or investment, triggering different lending criteria.
Who uses owner-occupier commercial mortgages
Owner-occupier mortgages suit any business that wants to own its operating property. Common sectors include:
- Professional practices: dental surgeries, medical practices, accountants, solicitors, consultancies
- Manufacturing and light industrial: factories, workshops, distribution centres
- Retail: shops, salons, boutiques, supermarkets
- Care homes and healthcare: residential care, nursing homes, healthcare centres
- Hospitality: pubs, restaurants, hotels, cafes
- Service and maintenance: garages, plumbing depots, trade workshops
- Office-based: call centres, creative agencies, tech companies
If you're in any sector where you operate a business and want to own the property you trade from, an owner-occupier mortgage is worth exploring.
How affordability is assessed
Lenders assess your affordability using your trading income, not your personal salary or assets alone.
Key documents we'll need: 2-3 years of business accounts (profit and loss, balance sheet), projected year accounts if you're expanding, recent management accounts, and bank statements. If you're self-employed, we'll look at your tax returns. If you're a limited company, we'll review corporation tax returns and directors' credit files.
Lenders calculate DSCR by dividing your annual profit by the annual mortgage payment. Most want minimum 1.25x. Some stronger lenders will go to 1.1x or 1.15x if you have security or a good payment history. Specialist lenders may consider projected growth if your business is expanding. Use our DSCR calculator to estimate your maximum borrowing before you apply.
Risk varies by sector. Growing sectors like healthcare are viewed more favourably. Declining retail faces tighter scrutiny. Lenders will stress-test your business: if interest rates rise or revenue drops, can you still pay?
LTV, rates and terms
Owner-occupier mortgages are typically available up to 80% LTV. This means if your property costs £500,000, you can borrow up to £400,000. Professional practices (dental surgeries, medical practices, solicitors, accountants) can access up to 100% LTV with specialist lenders, using the strength of the practice income and goodwill as additional comfort. These are among the most competitive products in commercial lending.
Rates are currently indicative from 5.5% to 8% depending on LTV, term, sector, and DSCR. Stronger businesses with higher DSCR and lower LTV will get better rates. Rates vary month to month and between lenders, so we'll shop your deal to find the best option.
Terms run 5 to 25 years. Shorter terms (5-10 years) suit businesses with high profit and fast equity build. Longer terms (20-25 years) spread payments lower, useful if DSCR is tighter or the business is still establishing.
Capital and interest is the standard option. Interest-only is available from some lenders, but requires a stronger DSCR and is less common. Interest-only suits businesses with seasonal cash flow or expansion plans, but expect tighter lending criteria.
Property types accepted
Most property types qualify for owner-occupier lending, provided you occupy and trade from them:
- Offices: single or multi-let, provided you occupy your own suite
- Retail units: shops, shopping centres, arcades
- Industrial: warehouses, factories, workshops, trade counters
- Mixed-use: provided you occupy at least 40% of the property
- Medical and dental: practices, surgeries, healthcare centres
- Care homes: residential care, nursing homes, specialist facilities
- Hospitality: pubs, bars, restaurants, hotels, cafes
- Listed buildings and period properties: accepted, though specialist valuation required
New build, recently completed, and converted properties are all acceptable. Unusual uses, such as betting shops or adult entertainment venues, are trickier but not impossible. We have access to specialists for niche property types.
How the mortgage process works
Discuss your situation
We take a brief on your business, property, and financial position. We'll assess whether you have a viable case and discuss realistic terms before you incur costs.
Match you with a lender
Based on your DSCR, sector, property type, and LTV, we identify lenders we work with who are actively lending in your space. We submit an outline and get a conditional in-principle offer.
Full application and valuation
Once you've found a property, we submit full application documents: accounts, tax returns, bank statements, and property details. The lender will instruct a valuation of the building.
Underwriting and offer
The lender's underwriter reviews your papers, the valuation, and DSCR. If everything stacks up, they issue a mortgage offer with detailed terms.
Completion
Solicitors exchange contracts, conduct searches and due diligence, then complete the transaction. Funds are released to the seller, you receive the keys, and the mortgage begins. Typical timescale: 8-12 weeks from full application to completion.
Worked example: dental practice mortgage
Scenario
A dental practice with three dentists operates from rented premises in Bristol. The practice EBITDA is £180,000 per year. They've found a freehold surgery for £600,000 and want to buy it with an owner-occupier mortgage.
Lending structure
They approach us with a 65% LTV request. That's £390,000 borrowed against the £600,000 property. They need £210,000 equity from the practice or personal resources.
Affordability
At 65% LTV and a 20-year term, interest at 6.5%, the annual interest cost is approximately £25,350. Using capital repayment, annual principal payment is approximately £19,500. Total annual mortgage cost: approximately £44,850.
DSCR = £180,000 / £44,850 = 4.0x. This is a very strong ratio. Most lenders require 1.25x; a 4.0x DSCR signals a business in good health with headroom for rate rises or revenue dips.
Outcome
Approval for £390,000 at 6.5% (indicative), 20-year term, capital and interest. The practice owns its premises, builds equity, and removes rent risk. Completion in 10 weeks.
Frequently asked questions
Can a limited company get an owner-occupier commercial mortgage?
Yes. Limited companies can borrow on owner-occupier terms provided the company occupies the property for trading purposes. Lenders assess the company's trading income and directors' personal credit. Most of our lenders will consider sole traders, partnerships, and limited companies.
What if I only occupy part of the building?
You must occupy at least 40% of the property for it to qualify as owner-occupier. If you occupy less, it may be classified as mixed-use or investment, which have different affordability criteria and rates. Let us know your occupancy split and we'll match you with a suitable lender.
How is affordability assessed on an owner-occupier mortgage?
Lenders look at your business trading income, typically using DSCR (debt service coverage ratio). Most lenders require a minimum DSCR of 1.25x, meaning your annual profit must cover the mortgage payments 1.25 times over. We review 2-3 years of business accounts, and some lenders will consider forward projections. Personal credit is also checked.
Can I get interest-only on an owner-occupier mortgage?
Interest-only terms are available from selected lenders, though less common than on investment properties. You will typically need a stronger trading history and DSCR to support interest-only borrowing. Most owner-occupier mortgages are capital and interest over 5-25 years.
What sectors won't lenders touch?
Most mainstream sectors are accepted: professional practices, retail, hospitality, manufacturing, care. Lenders are typically cautious about betting shops, adult entertainment venues, high-risk food and drink, and businesses with declining sectors. We have access to specialists for niche sectors, so do ask even if you think you'll be rejected.
How long does an owner-occupier commercial mortgage take to complete?
Typically 8-12 weeks from application to completion, depending on the lender and whether the property transaction is straightforward. Fast-track lenders can complete in 6-8 weeks. Chain-dependent sales may take longer. We'll give you realistic timescales once we match you with a lender.
FD Commercial arranges owner-occupier commercial mortgages from £250,000. Call us to discuss your business, confirm lender suitability, and get indicative terms. No fees on most cases.
Call 03300 100315Rates and terms shown are indicative only and subject to lender assessment, individual circumstances, and change without notice. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured against it.