Most residential advisers get the call sooner or later. A client who runs a dental practice wants to buy the building it trades from. A landlord wants to add a shop with flats above to the portfolio. The enquiry sits outside the usual lender panel, and the easy reply is that it is not something you handle.
A good referral keeps the client, can earn a fee and protects your reputation. A poor one wastes everyone’s time. The difference usually comes down to knowing what the lender will ask for, and collecting it before the case moves.
Owner-occupied or investment
Commercial mortgages split two ways. An owner-occupied mortgage funds a building the business will trade from, such as a workshop, a shop or a clinic. A commercial investment mortgage funds a property let to a third-party tenant, such as an office or an industrial unit.
The assessment follows that split. On owner-occupied cases, lenders look at the business itself. ABC Finance, a whole-of-market broker that places commercial mortgages for introducers, works to a simple rule on owner-occupied cases: the lender will want two to three years of accounts showing the business can cover 120% to 150% of the monthly payment. Introducers can check the firm on the FCA register under reference 304671.
That rule tells you a lot at first contact. A client with one year of trading, or accounts showing a recent loss, faces fewer lenders, higher pricing or a request for extra security. A few lenders will look at newer businesses, on less favourable terms.
On investment cases the focus moves to the tenant and the lease. Lenders favour a strong covenant, a long lease and upward-only rent reviews, and they stress test the rent at a rate above the product rate.
Regulated or unregulated
Most commercial mortgages sit outside FCA mortgage regulation, but mixed-use cases need a closer look. The FCA’s guidance at PERG 4.4 defines a regulated mortgage contract as one where credit goes to an individual or trustees, secured on land in the UK, where at least 40% of that land is used, or intended to be used, as a dwelling.
That test can catch a mixed-use purchase. An individual buying a shop with a large flat above in their own name, and living in it, may be entering a regulated contract. The same building bought by a limited company to let would sit outside it. Getting that right at referral stage shapes the advice process and the lenders available.
What to collect before you refer
A clean referral pack speeds up the first lender conversation:
- Two to three years of full accounts, plus current management figures.
- Bank statements and SA302s for the directors or partners.
- For limited companies, the balance sheet, existing debts and director loan accounts.
- For investment property, the rent schedule, the leases and evidence of rent paid.
- A clear description of the property, including any residential part.
Borrowers can be sole traders, partnerships, limited companies or LLPs. Special purpose vehicles are common for investment property because they keep the property’s income and debts apart from any trading business. Lenders usually ask for personal guarantees from the directors whatever the structure, so raise that with the client early.
Credit history needs an early conversation as well. Defaults, missed payments, county court judgments or past insolvency narrow the options sharply, and the client will take that news better from you at the start than from a lender at the end.
What the client can expect
Setting expectations keeps the client on side. Typical loan to value runs from 60% to 75%, with the keenest pricing at 60% or lower. ABC Finance’s April 2026 figures put owner-occupied fixed rates at about 5.5% to 7.5%, with variable rates from about 5.2% to 7.0%.
Timescales are longer than on a residential case. Credit-backed terms can arrive within 24 to 48 hours, while full completion usually takes 4 to 8 weeks. Arrangement fees commonly run at 1% to 2% of the loan.
Terms usually run from 3 to 25 years. Many lenders offer interest-only, which keeps the monthly payment down but leaves the full balance to repay at the end, so the client needs a plan for that from day one.
Specialist property takes longer again. Pubs, petrol stations, care homes and places of worship each have a small pool of lenders and more detailed underwriting, so allow extra time and prepare the client for tighter terms.
Building the referral relationship
Advisers who get the most from commercial referrals tend to agree the basics up front. That means how any fee is shared, who speaks to the client and when, and how progress updates come back to you. A written arrangement avoids awkward conversations later and keeps the client relationship where it started.
These enquiries will keep coming. With mortgage pricing moving again this autumn, more business owners are asking whether buying their premises beats renting, and the adviser who can answer that question, or knows who can, stays at the centre of the client relationship.
