Understand the deposit, equity and evidence lenders may expect
Commercial mortgage deposits are not set by one simple rule. The right amount depends on the property, loan-to-value, business income or rent, borrower strength, credit profile and how the deal is structured. This guide explains what to prepare before you apply.
How much deposit do you need for a commercial mortgage?
Many commercial mortgage enquiries need a larger deposit than a typical residential mortgage, but there is no fixed percentage that applies to every borrower. Some cases may be considered with a lower contribution when the property, accounts, rent and borrower profile are strong. Other cases need more equity because the property is specialist, the income is harder to prove, the lease is weak, the sector is higher risk or there is adverse credit.
If by business mortgage you mean borrowing secured on premises used by your own trading business, lenders usually treat this as an owner-occupied commercial mortgage rather than a separate standard product. There is no fixed business mortgage deposit: the contribution depends on the property, accounts, affordability, business experience, credit profile and the lender’s maximum loan-to-value.
- For owner-occupied premises, lenders usually focus on the trading business, accounts, affordability and management experience.
- For commercial investment property, lenders usually focus on rental income, lease quality, tenant strength and resale risk.
- For refinancing, the question is often whether existing equity is enough after valuation, fees, repayment costs and any capital being raised.
What lenders count as deposit or equity
A deposit is the money or equity you contribute so the lender is not funding the full property value. In a purchase, it is usually cash paid towards the price. In a remortgage or refinance, it may be the equity already held in the property. In some cases, equity in another property can form part of the wider structure, but the lender will still want to understand the commercial mortgage valuation, security, repayment route and source of funds.
If you hope to proceed without a cash deposit, read how a 100% commercial mortgage normally depends on acceptable additional security rather than the purchase property alone.
Money from the borrower, company, directors, retained profits, sale proceeds or other acceptable sources, supported by clear evidence.
Value already built up in an existing property, subject to valuation, current borrowing, lender appetite and security position.
Funds introduced by directors or shareholders may be possible, but lenders will normally ask where the money came from and whether it is repayable.
Some borrowers use a refinance to raise capital, but the final amount depends on valuation, affordability and the lender’s maximum loan-to-value.
What can increase or reduce the deposit needed?
Lenders do not look at the deposit in isolation. They look at whether the whole case makes sense. A strong deposit can help, but it does not fix every issue if the property is difficult to value, income is unclear or the repayment route is weak.
Standard trading premises can be easier to assess than highly specialist, short-lease or unusual properties.
Accounts, rent, lease terms, tenant quality and bank statements help lenders judge whether repayments are sustainable.
Lenders may take more comfort from experienced operators, established landlords and businesses with clear management records.
Adverse credit does not always stop a case, but it can reduce lender choice and may increase the equity expected.
Buying premises, refinancing, raising capital or funding refurbishment can each be assessed differently.
Clean documents, a realistic valuation and a clear explanation can make the enquiry easier to place with suitable lenders.
Typical deposit scenarios to discuss with a broker
These examples are not promises of approval. They show why two borrowers asking for a commercial mortgage can receive very different lender feedback, even when the purchase price looks similar.
The lender will usually want to understand trading history, accounts, current rent or occupancy costs, deposit source and whether the new premises support the business.
Rental income, lease length, tenant strength, location and property saleability are central because the rent often supports the borrowing.
Lenders may consider company borrowing, but they will review the company structure, directors, accounts, deposit source and sometimes personal guarantees.
The available equity depends on current value, existing borrowing, repayment record, purpose of funds and whether the lender is comfortable with the final loan-to-value.
Useful rule of thumb: before spending money on valuations or legal work, ask for an initial lender-fit review. It is better to find out early if the deposit is likely to be strong enough or if the case needs more preparation.
Acceptable deposit sources need clear evidence
Commercial mortgage lenders and solicitors will usually want to understand where the deposit came from. The cleaner the evidence, the easier it is to assess the case. If the deposit is coming from more than one place, explain that early rather than waiting until underwriting.
Often evidenced through accounts, management figures and bank statements.
Lenders may ask for statements and an explanation of whether funds are being gifted, loaned or invested.
Usually easier to evidence when supported by completion statements and bank records.
Can be viable, but the order of transactions, valuation and security position matter.
When a smaller deposit may not be the best answer
A lower deposit can look attractive because it keeps more cash in the business. It can also create risk if repayments become stretched, refurbishment costs are underestimated or the lender prices the loan higher because the case is more leveraged.
The right question is not only “what is the smallest deposit possible?” It is also “what structure gives me a realistic chance of approval and leaves enough working capital after completion?”
How to prepare a stronger deposit enquiry
You do not need a perfect application before asking for guidance, but a few details make the first review much more useful. Count Ready can then explain whether the deposit position looks realistic, what evidence is missing and which lender routes may be worth considering.
- Property address or type, purchase price or estimated value.
- How much cash deposit or equity is available.
- Whether the property will be used by your business, let to tenants or held as an investment.
- Recent accounts, rental details or a brief explanation of the income supporting the loan.
- Any credit issues, missed payments, arrears or previous lender declines.
- Your target timescale and any offer, auction or refinance deadline.
Check whether your deposit or equity is likely to work
Tell us the property type, value or purchase price, deposit or equity available, source of funds and timescale. We will explain the lender routes that may be realistic and what evidence could strengthen the enquiry.
- Useful before viewing unsuitable properties.
- Helps explain deposit source and equity position.
- Shows whether the case needs more preparation first.
Your information is used to respond to this enquiry. Submitting the form does not commit you to an application and does not guarantee that a lender will accept the case.
Related commercial mortgage guides
Verify the deposit, valuation, transaction costs and regulatory position
No official source sets one deposit percentage for every commercial mortgage. Use current lender material only as a product example, then test the actual property, borrower, valuation, affordability and source of funds with the lender considering the case.
NatWest currently says that, as a guideline for its commercial mortgage calculator, a deposit of 25% of the property’s total value is typically required. That is one lender’s indicative product guidance, not a market-wide minimum or an approval promise. Read the qualification and calculator notes on the NatWest commercial mortgage page.
The British Business Bank’s commercial property finance guide explains that a commercial mortgage involves a deposit and repayments, and highlights trading evidence and costs beyond the deposit. Keep money available for tax, professional fees and ownership costs instead of assuming every available pound can become equity.
RICS guidance on bank-lending valuations explains how valuation standards support assessment of property offered as security. A valuation can affect loan-to-value and the equity needed, but it is not a promise that a particular loan amount will be approved.
The relevant transaction tax depends on where the property is: use GOV.UK for non-residential and mixed-property SDLT in England and Northern Ireland, GOV.WALES for Land Transaction Tax in Wales, or Revenue Scotland for Land and Buildings Transaction Tax. Ask your solicitor or tax adviser to confirm the treatment before committing funds.
The FCA’s firm-checking guidance lists commercial mortgages and lending among products it does not regulate or supervise, while FCA PERG 4 explains why the exact perimeter depends on the borrower, property and arrangement. If a regulated service may be involved, use the FCA Firm Checker to check the relevant permissions.
Keep the questions separate: use the commercial mortgage loan-to-value guide to understand the value-and-equity ratio, and the commercial mortgage borrowing guide to understand the affordability ceiling. A workable deposit does not by itself prove that the repayments are affordable.
Last reviewed: . Tax rules, valuation standards, lender criteria and regulatory treatment can change, so confirm the current position for your property and borrowing structure before committing funds.
Questions people ask before applying
There is no single fixed deposit for every commercial mortgage. The amount depends on the property, borrower, income, credit profile, loan-to-value, lender appetite and whether the case is owner-occupied, investment or refinance.
There is no standard business mortgage deposit. If the borrowing is secured on premises used by your own trading business, it is usually assessed as an owner-occupied commercial mortgage. The lender will consider the property, accounts, affordability, management experience, credit profile and maximum loan-to-value before deciding the contribution required.
It may be possible in some strong cases, but it is not guaranteed. Lenders will look at the quality of the property, income evidence, borrower strength and overall risk. Some enquiries will need a larger contribution.
Sometimes equity can help structure a case, especially on refinance or additional security discussions. The lender will still need to assess valuation, existing borrowing, security, affordability and the purpose of funds.
Possible sources include business funds, retained profits, personal savings, director or shareholder funds, sale proceeds and refinance proceeds. The important point is that the source must be clear and properly evidenced.
Adverse credit can reduce lender choice and may mean the lender wants more equity, but the outcome depends on the type, age and seriousness of the issue as well as the strength of the property and income.
Prepare the property details, price or value, deposit or equity available, purpose of the loan, income evidence, credit background and timescale. This helps a broker give more useful lender-fit feedback.