What Deposit Do I Need for a Commercial Mortgage UK?

Ask most people how much deposit they need for a mortgage, and they'll tell you about 5%, maybe 10% if they're being cautious. That's residential thinking. Bring that expectation to a commercial mortgage application and the lender will need a moment to compose themselves.

Commercial mortgages play by different rules. The deposit isn't a nice-to-have that gets you a slightly better rate. It's the foundation the entire application is built on.

Bank of England held base rate at 4.25% in June 2026 - waiting for inflation to cool.

73% of UK SMEs expect to grow in the next 12 months - confidence remains strong.

So, how much deposit do you actually need?

For most commercial mortgages in the UK, expect to put down somewhere between 25% and 30% of the property's value. That's the range that covers the majority of straightforward cases, whether you're buying an office, a warehouse, a shop, or premises for your own business to trade from.

Some lenders will stretch to 80% loan-to-value (meaning a 20% deposit) for the strongest applications. Others will want more like 40% down if the property, the business, or the borrower's circumstances carry extra risk. There isn't a single number that applies to everyone, but 25-30% is the sensible planning figure.

Why do commercial lenders want so much more than residential ones?

Because they're taking on more risk, and they know it. Commercial property values can be more volatile than residential ones. A specialist unit that's perfect for one business might be considerably harder to sell to the next occupier if things go wrong. Business income can also be less predictable than a salary.

The bigger deposit is the lender's way of building in a buffer. If the worst happens and the property needs to be sold, they want enough headroom that a drop in value doesn't leave them out of pocket.

What affects where you land in that range?

Several things push your required deposit up or down:

- The type of property. Standard commercial property (offices, shops, industrial units) tends to sit at the lower end. Specialist property (care homes, hotels, petrol stations) often needs more.

- Owner-occupier vs investment. Buying premises to trade from yourself is often viewed more favourably than buying to let, because the lender can assess your actual business performance.

- Trading history and accounts. A business with several years of solid accounts is a more known quantity than a start-up with none.

- The tenant, if there is one. A strong covenant on a long lease reduces risk considerably.

- Your experience. First-time commercial buyers are sometimes asked for a larger deposit than someone who's done this before.

Does a bigger deposit get you a better rate?

Generally, yes. Lower loan-to-value deals are lower risk for the lender, and that usually translates into more competitive pricing. If you can comfortably put down 35-40% instead of the minimum 25%, it's worth asking what difference that makes to the rate on offer. Sometimes it's significant.

Where does the deposit money come from?

Lenders aren't just interested in the amount, they want to understand the source. Acceptable deposits typically include:

• Personal or business savings

• Proceeds from selling another property

• Retained profits within the business

• Equity released from an existing property

What lenders are less keen on is a deposit that's itself been borrowed, since that changes the real risk profile of the deal. Be upfront about where the money is coming from early on, it saves time later.

The mistake people often make

Borrowers sometimes assume the deposit is the whole conversation. It isn't. A lender will still want to see that the numbers work once the deposit is in place, usually through the DSCR (Debt Service Coverage Ratio), which checks whether the rental income or trading profit comfortably covers the repayments.

A large deposit helps, but it doesn't replace the need for a deal that makes financial sense on its own terms.

The bottom line

Budget for a deposit of 25-30% on a UK commercial mortgage, and treat anything lower as a pleasant surprise rather than the starting assumption. The exact figure will move depending on the property, the business, and the borrower, but that range is where most realistic conversations begin.

Because in commercial lending, the deposit isn't just about topping up what you can't borrow. It's the first piece of evidence the lender uses to decide how much confidence they have in the rest of the deal

Disclosure: Money Pilot Ltd (FRN: 968705) is an Appointed Representative of Yellow Stone Finance Group Ltd which is authorised and regulated by the Financial Conduct Authority (FRN: 814533). Yellow Stone Finance Group Ltd is a credit broker not a lender. Money Pilot Ltd is Registered in England and Wales No: 13621432. You should always make sure you are able to afford any repayments as late or missed payments can affect your credit rating and access to future finance.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.