Owner-occupier vs commercial investment mortgages
Lenders split commercial mortgages into two products before they look at anything else. Which one you are decides the lender, the loan-to-value, the rate and what they test. Here is the difference.
Owner-occupier: you trade from it
Your business buys (or refinances) the premises it operates from. The lender is really lending to the business; the property is the security. So the test is serviceability: can the business's profit cover the mortgage payments with a margin? Lenders want adjusted net profit of 1.25 to 1.5 times the annual payments, and they will add back the rent you currently pay because it goes away.
- Loan-to-value up to 70% to 75%; 80% for dentists, doctors, vets, pharmacists and solicitors with some lenders.
- Usually capital repayment over 15 to 25 years.
- Rates from about 6% (high street) to 8.5% (challenger).
- High street banks like these if the accounts are good; it is their core commercial product.
Investment: you let it to someone else
You buy a commercial property with a tenant (or to find one) and the rent pays the mortgage. The lender is lending against the income stream and the asset, so the test is interest cover: rent divided by the annual interest at a stress rate, typically needing 125% to 145%. The tenant's strength and the lease length matter more than your own income.
- Loan-to-value up to 65% to 70%.
- Interest-only is common, for five to ten years or the whole term.
- Rates from about 7% to 9%.
- Challenger banks and specialists dominate; high street banks are selective.
Where it gets blurred
- You buy the building through a pension or a separate company and let it to your own trading company. Structurally investment, but lenders treat the tenant (your business) as they would an owner-occupier and look at its accounts.
- Part occupied, part let. Common with larger buildings; lenders blend the two tests.
- Semi-commercial with residential above: its own product. Explained here.
- Buying a going concern (a pub, hotel, care home, nursery) with its trade: owner-occupier, but with a valuation that includes the business, and specialist lenders. Trading businesses.
Why it matters before you start
Approach a lender with the wrong framing and you get declined for the wrong reasons. An investor with a strong tenant does not need three years of personal accounts; an owner-occupier with thin profits will not be saved by a good property. Knowing which test applies tells you what evidence to lead with.
A note on the numbers. Rates, loan-to-value limits, fees and criteria are typical figures at the time of writing (2026). Commercial lending is priced case by case, so your own terms depend on the property, the business, the tenant and you. This is information, not advice, and not an offer of finance.
Quick answers
Can I switch from investment to owner-occupier later?
Yes; it is a refinance onto a different product when your business moves in, usually at better terms.
I'm buying a unit and will use half of it. Which am I?
Mixed. The lender will underwrite your business on its half and the tenant (or the vacant space, cautiously) on the other. Expect the lower of the two LTVs.
Ready to talk to someone who can actually arrange it?
Tell us about the property and the business, and a commercial finance adviser will come back with which lenders fit, what rate to expect and what they'll want to see. No fee for the conversation, no obligation.