Thinking about buying a shop, an office, a warehouse, or a unit to run your business from? The first number you’ll want to pin down is the deposit. And it’s usually bigger than people expect.
Here’s the short answer: most commercial mortgages in the UK need a deposit of 20% to 40% of the property’s value. A figure around 25–30% is common for straightforward cases. The exact amount depends on the property type, your business’s finances, the lender, and how the building will be used.
That’s the headline. The detail is where it gets interesting — because a few smart decisions can move your deposit by tens of thousands of pounds. This guide walks through how deposits actually work, what pushes yours up or down, and the legitimate ways to reduce the cash you put in.
Speak to a commercial mortgage broker — no obligation. A specialist can tell you the realistic deposit for your exact deal before you commit.
What Is a Commercial Mortgage Deposit?
Your deposit is the lump sum you pay upfront when you buy the property. The mortgage covers the rest. Think of it as your stake in the building — the money you’ve got on the line from day one.
Lenders care about it for one simple reason: risk. The more you put in, the less they stand to lose if the property’s value dips or your business hits a rough patch. A bigger deposit means a smaller loan against the property, and that makes lenders more comfortable.
It’s worth knowing that the deposit sits separate from your other costs. Stamp Duty Land Tax, valuation fees, legal fees, and arrangement fees all come on top. As a rough guide, budget for 20–30% above the deposit to cover everything else.
Why Commercial Deposits Are Bigger Than Residential Ones
If you’ve bought a home, you’ll remember deposits as low as 5–10%. Commercial property doesn’t work that way, and there’s a good reason.
With a home loan, the lender leans on your steady personal income and a regulated repayment structure. With commercial property, repayment usually hinges on trading performance or rental income — and that can swing with tenant quality, lease length, market demand, and the state of the building.
So lenders treat a commercial mortgage more like an investment. They want to see that the property earns enough to cover the loan, and that its value would hold up if they ever had to recover their money. That extra caution shows up as a larger deposit.
One more point worth flagging: standard commercial mortgages generally fall outside FCA regulation. That gives lenders room to negotiate terms case by case — which can work in your favour with the right broker, but it also makes specialist guidance more valuable.
How Loan-to-Value (LTV) Decides Your Deposit
Lenders talk in loan-to-value (LTV) — the size of the loan as a percentage of the property’s value. Your deposit is simply whatever LTV doesn’t cover.
Most UK lenders cap commercial LTV at:
- 70–80% for owner-occupied premises (you trade from the building) → a 20–30% deposit
- Up to 75% for commercial investment property (you let it out) → a 25%+ deposit
A quick example. Say you’re buying a unit valued at £400,000 and the lender offers 75% LTV:
- Loan: £300,000
- Deposit: £100,000 (25%)
Here’s a catch that trips people up: lenders base LTV on the lower of the purchase price or the valuer’s figure. If the surveyor values the property below what you agreed to pay, your deposit rises to fill the gap. Always leave yourself a buffer for a down-valuation.
What Affects How Much Deposit You’ll Need
Two businesses buying near-identical units can face very different deposits. These are the levers that move it:
- Property type. Standard offices and retail units sit at the lower end (25–30%). Higher-risk or specialist properties — pubs, restaurants, petrol stations, care homes, nightclubs — often need 35–40%, because they’re harder to resell.
- Owner-occupied vs investment. Running your own business from the property can attract slightly better terms than buying purely to let.
- Your trading history and finances. Strong, consistent accounts and a solid business plan build lender confidence — and can shave your deposit down.
- Credit profile. Both your business and personal credit history feed into the decision.
- Experience. A track record in your sector (or as a property investor) helps your case.
- The lender. High street banks tend to be cautious. Specialist and challenger lenders often take a more flexible view — which is exactly where a broker earns their keep.
Can You Get a Commercial Mortgage With a Smaller Deposit — or None?
Yes, in the right circumstances. A handful of routes can reduce the cash you need upfront, though each comes with conditions.
Use equity in another property. If you own a home, a buy-to-let, or another commercial property with spare equity, a lender may take additional security against it instead of a full cash deposit. In some cases this can stretch borrowing toward 100% of the purchase price — for example, borrowing 70% against the new property and securing the remaining 30% against a property you already own.
Buy through a pension (SIPP or SSAS). A Self-Invested Personal Pension or Small Self-Administered Scheme can buy commercial property directly. The pension provides the equity and can borrow up to 50% of its net value. For business owners, it’s one of the more tax-efficient routes to ownership — worth exploring with proper advice.
Combine cash with assets. Commercial lending is flexible. It’s common to make up a deposit from a mix of cash, business assets, or equipment value rather than cash alone.
Bridging finance. Short-term bridging can cover a gap until longer-term funding lands. It moves fast, but it costs more and needs a clear exit plan, so it suits specific situations rather than every buyer.
A reality check on “no deposit” deals: true 100% commercial mortgages are rare, and they almost always rely on you pledging other security. Most lenders still want you to have real skin in the game.
Find out how much you could borrow. Get matched with a broker who has access to specialist commercial lenders across the market. Get Free Advice
Other Upfront Costs to Budget For
The deposit is the big one, but it isn’t the only cash you’ll need at completion. Plan for:
- Stamp Duty Land Tax on commercial property
- Arrangement fees — often 1–2% of the loan
- Valuation and survey fees
- Legal fees for both sides
- Broker fees, where they apply (some waive these on larger loans)
On a £500,000 purchase, these extras commonly add £25,000–£40,000 beyond the deposit. Build that into your plan early so nothing catches you out near completion.
How UKMortgageFinder Can Help
Commercial deals rarely fit a template, and the difference between a 25% and a 40% deposit often comes down to finding the right lender — not just any lender.
UKMortgageFinder is a free, no-obligation service that matches you with experienced commercial mortgage brokers who work across a wide panel of lenders, including specialists you won’t find on the high street. They’ll look at your business, your goals, and the property, then point you toward deals suited to your circumstances.
There’s no cost to get matched, and no pressure to proceed. It simply gives you a clearer picture before you commit serious money.
Frequently Asked Questions
How much deposit do I need for a commercial mortgage in the UK?
Typically 20–40% of the property’s value, with around 25–30% common for standard cases. Higher-risk property types can require 35–40%.
Can I get a 100% commercial mortgage with no deposit?
It’s possible but uncommon. You’d usually need to secure the loan against other assets or property where you hold sufficient equity.
Why is the deposit higher than for a residential mortgage?
Commercial lending carries more risk — repayment depends on trading or rental income, which is less predictable than personal salary. Lenders offset that with larger deposits.
Does the property type change the deposit?
Yes. Standard offices and shops sit at the lower end, while pubs, restaurants, and specialist premises often need more because they’re harder to resell.
Can I use equity in my home as a deposit?
In many cases, yes. A lender may take a charge over a property you own as additional security in place of some or all of a cash deposit.
What is LTV on a commercial mortgage?
Loan-to-value is the loan as a percentage of the property’s value. Most commercial lenders cap LTV at 70–80%, so your deposit is the remaining 20–30%.
Can my pension buy commercial property?
Yes. A SIPP or SSAS can purchase commercial property and borrow up to 50% of the pension’s net value — a tax-efficient route for many business owners.
Will a down-valuation increase my deposit?
It can. Lenders base LTV on the lower of the purchase price or valuation, so a low valuation means you’d need more cash to bridge the gap.
Are commercial mortgages regulated by the FCA?
Standard commercial mortgages generally aren’t FCA-regulated, which gives lenders more room to negotiate terms case by case.
How long does a commercial mortgage take to complete?
It varies with complexity, but many commercial cases take several weeks to a few months from application to completion.
The Bottom Line
For most UK commercial mortgages, plan for a deposit of 20–40%, with 25% a sensible starting assumption. The figure that actually applies to you depends on the property, your finances, and the lender — and the right deal can save you a serious amount of cash upfront.
If a 30%+ deposit feels steep, you have options: equity in other property, pension purchase, asset-backed security, or bridging finance can all change the maths. The trick is matching your situation to a lender who’ll say yes on sensible terms.
Ready to find out where you stand? Get matched with a specialist commercial mortgage broker — it’s free, with no obligation. Get Free Advice
Important: The information in this article is for guidance purposes only and does not constitute financial advice. Commercial mortgages are typically not regulated by the Financial Conduct Authority. You should seek independent advice from a qualified, suitably authorised adviser before making any financial decisions. UKMortgageFinder introduces customers to commercial mortgage brokers and advisers.