The longest term for a commercial mortgage is typically around 25 years, although some lenders may offer terms of up to 30 years depending on the property, borrower and loan structure.
Commercial mortgage terms are often shorter than residential mortgages because lenders assess commercial property lending as higher risk and more complex.
The length of the mortgage will usually depend on factors such as the borrower’s financial position, the type of property and the lender’s criteria.
Typical Commercial Mortgage Terms
Most commercial mortgages are arranged over terms of between 10 and 25 years.
Shorter terms may be common for certain types of commercial lending, particularly where the borrower plans to refinance or sell the property in the future.
For example:
- 10 to 15 years may be common for some investment properties
- 15 to 25 years is typical for many commercial mortgages
- Up to 30 years may sometimes be available in certain circumstances
The exact term offered will vary depending on the lender and the details of the transaction.
Why Commercial Mortgage Terms Are Often Shorter
Commercial mortgage terms are usually shorter than residential mortgages because commercial lending is assessed differently.
Lenders typically review:
- The financial strength of the borrower
- The income generated by the property
- The type and location of the building
- The loan-to-value ratio
- The borrower’s experience
Because commercial properties can involve greater risk, lenders often prefer shorter loan terms compared with standard residential mortgages.
Interest-Only and Repayment Structures
Commercial mortgages can be structured in different ways depending on the borrower’s needs and the lender’s criteria.
Some borrowers choose repayment mortgages, where the loan balance is gradually reduced over the term.
Others may arrange interest-only mortgages, where the borrower pays interest during the loan term and repays the capital later, often through refinancing or selling the property.
The most appropriate structure will depend on the borrower’s strategy and financial circumstances.
Can Commercial Mortgages Be Extended?
In some situations, borrowers may be able to refinance or restructure their commercial mortgage when the loan term ends.
Refinancing may allow the borrower to:
- Extend the loan term
- Access better interest rates
- Release equity from the property
- Adjust the structure of the borrowing
This can be particularly useful for property investors who plan to hold commercial assets over the long term.
Why Many Borrowers Use Commercial Mortgage Brokers
Commercial lending criteria can vary significantly between lenders, particularly when it comes to loan terms and repayment structures.
Commercial mortgage brokers can help borrowers identify lenders that offer suitable mortgage terms and structure the application appropriately.
They can also compare options across different lenders to help borrowers find a mortgage that suits their circumstances.
Related Guides
- How long does it take to get a commercial mortgage approved
- How do I prepare for a commercial mortgage
- What are current commercial mortgage rates in the UK
Need Help Arranging Commercial Property Finance?
Commercial mortgage terms and lending criteria can vary widely depending on the property, borrower profile and lender.
Explore our Best Commercial Mortgage Brokers in the UK guide to compare experienced advisers who specialise in arranging commercial property finance.
