Commercial mortgage rates: how they’re priced and what moves yours

Vortex Finance is a whole-of-market commercial mortgage broker. We are not a lender and we are not tied to one. We compare a panel of 100+ lenders on your side of the table, match your case to the ones whose appetite fits, and return indicative terms with no fee to find out where you stand. Because commercial pricing is bespoke, the value of a broker here is sharper than almost anywhere else: the difference between your bank’s one quote and the right lender’s keenest quote is real money over a 20-year term.

How commercial mortgage rates are set

There are no published commercial mortgage rate tables, because no two cases carry the same risk. The lender prices each deal from the ground up. The starting point is a reference rate — usually the Bank of England base rate or SONIA — and the lender adds a margin on top for the risk it is taking. Your pay rate is that reference rate plus the margin. A keener case earns a thinner margin; a riskier one earns a wider one.

That is why two borrowers buying near-identical units can be quoted very different rates. One has clean accounts, a low loan-to-value and a blue-chip tenant on a long lease; the other is highly geared with thin trading figures. Same building, different risk, different margin. Understanding what the lender is pricing is the first step to getting it down.

Indicative rate ranges by case type

Figures here are indicative for June 2026 and confirmed only on application, but they give you a realistic frame. All-in pay rates typically run from around 6.5% to 9.5% a year, and where you sit on that span is driven mostly by who is borrowing and why.

Owner-occupier cases — where your trading business buys the premises it operates from — are usually priced more keenly, because the lender can see the business behind the building. Investment cases, where you let the property to a third party, generally sit higher, since the lender is relying on a tenant it does not control. Within both, a strong covenant (a financially solid borrower or tenant) earns keener pricing than a weak one. The strength of the income, not just the bricks, sets the number.

Fixed versus variable rates

A variable rate tracks the reference rate, so your payments move as the Bank of England base rate or SONIA moves. It often starts lower, but you carry the risk of rate rises. A fixed rate locks your pay rate for a set period — commonly two to five years — which makes budgeting easy but usually starts a little higher to pay for that certainty. Neither is automatically better. If you plan to hold the property for years and value predictable cashflow, fixing has real appeal; if you expect to sell or refinance soon, a variable rate may cost less overall. We map both against your plans before you choose.

The fees that sit alongside the rate

The headline rate is not the whole cost, and budgeting only for the rate is the most common mistake we see. Expect an arrangement fee, commonly around 1.5% to 2% of the loan, which is often added to the facility rather than paid in cash on day one. On top of that you will meet a valuation fee, your own legal costs and the lender’s legal costs, and on some deals a broker fee. Every fee that applies to your deal is set out in writing before you commit to anything, and there is no charge to get indicative terms or a lender shortlist.

Term lengths and repayment

Commercial mortgage terms are typically 5 to 25 years. Owner-occupier deals usually run on a capital-and-interest basis, so the balance reduces over the term. Investment deals are more often arranged interest-only, which keeps monthly payments lower and the focus on rental yield, with the capital repaid on sale or refinance. The term and repayment basis both feed into your monthly cost, so they are part of the rate conversation, not separate from it.

A worked example

Take an owner-occupier buying premises for £500,000 at 70% loan-to-value — a loan of £350,000. Assume an indicative pay rate of 7% on a 20-year capital-and-interest basis. The monthly repayment works out at roughly £2,710. An arrangement fee at 1.5% adds about £5,250, commonly rolled into the facility rather than paid upfront. The same £350,000 taken interest-only on an investment basis at 7% would cost around £2,040 a month in interest, with the capital repaid later. These are illustrations, not quotes — your sector, covenant and loan-to-value will move the rate, and with it the monthly figure.

What moves your rate, and how a broker gets it down

Pull the levers together and the picture is clear: loan-to-value, the strength of the borrower or tenant, the unexpired lease term, the sector, the property type and the quality of your accounts all feed the margin the lender adds. The same case can be priced very differently across the market, because each lender has its own appetite — one loves industrial units, another avoids them; one is comfortable at 75% loan-to-value, another caps at 65%.

That spread is exactly where a whole-of-market broker earns its place. We do not accept the first quote your bank produces. We read your file the way an underwriter will, match it to the lenders whose appetite fits, and package it so the keenest of them says yes. You can model the numbers yourself first with our finance calculators, then bring us the deal. If you need to move faster than a term mortgage allows — an auction purchase or a chain-break — we can also compare short-term bridging finance, and for ground-up commercial schemes we arrange development finance alongside the exit.

Common questions

All rates, ranges and figures above are indicative for June 2026 and for guidance only. Commercial mortgages are priced individually — the lender confirms your actual rate, fees and terms on application, once it has assessed the property, the borrower and the file. Vortex Finance is a broker, not a lender.