Commercial Mortgages for Expats: Financing UK Commercial Property From Abroad

What Is a Commercial Mortgage?

A commercial mortgage is a loan secured on property used for business or investment, rather than as a home. It can fund the purchase of a shop, office, warehouse, pub, hotel or mixed-use building, or release money from a commercial property you already own. Repayment may be over a term of up to 25 years, sometimes longer, with the property as security.

For a UK expat, a commercial mortgage can be a way to invest in UK property without living in the UK, to buy premises for a business you run from abroad, or to refinance property you already hold. Lenders lend differently to non-residents, so the process needs more planning than for a UK-based borrower.

This guide explains how commercial mortgages work for expats, what lenders look for, the deposit and rates to expect, the paperwork and people you will need in the UK, and the mistakes that cost time and money. It is part of our guide to expat financing. It is general information, not advice. Last reviewed.

What Counts as Commercial Property?

• Offices of any size, from a single suite to a whole building.
• Retail units, including shops, showrooms and units in a parade.
• Industrial and warehouse space, including light industrial units and distribution sites.
• Pubs, restaurants and hotels, which lenders treat as trading businesses.
• Healthcare and leisure property, such as surgeries, care homes, gyms and nurseries.
• Semi-commercial or mixed-use property, such as a shop with a flat above.
• Land held for commercial use or development.

Multi-unit residential blocks and houses in multiple occupation can sit between commercial and residential lending. How a lender classes them affects the rate and the rules, so ask early. For buying a property to rent to individual tenants, see our guide to expat mortgages.

Owner-Occupied or Investment?

Lenders divide commercial property into two broad groups, and they assess each differently.

These ranges are indicative only and differ by lender and property.

Why Commercial Mortgages Work Differently for Expats

On a commercial deal the property itself carries a lot of weight, which can help a non-resident whose personal income is hard to evidence. But lenders still ask more of you if you live abroad.

• Residence. Many lenders only lend to people living in a stated list of countries, and the list can change.
• Experience. Some want to see a track record as a commercial landlord, for instance two years or two previous investments. First-time commercial buyers may get a lower loan-to-value.
• UK ties. A UK bank account for repayments is common, and a UK registered company is often easier to lend to than an overseas one.
• Enforcement. If a loan fails, a lender cannot easily pursue a borrower overseas, so it may ask for more security or a personal guarantee.
• Verification. Identity and source-of-funds checks take longer with overseas documents.
• Management. A lender may insist on a UK property manager, because you are not on the spot.

None of this rules you out. It means preparation matters, and so does choosing a lender that has dealt with borrowers in your situation.

Types of Lender

We do not name lenders on this page, because criteria change often and the right one depends on your country, structure and property.

How to Compare Lenders

Two lenders can quote the same rate and still offer very different deals. Before you choose, ask each one the same questions and write down the answers. Which countries and currencies do you accept? Do you lend to overseas-owned companies, or only UK ones? What loan-to-value do you offer on this type of property and tenant? Do you ask for personal guarantees, and are they limited? What is the minimum loan, and what happens if the valuation comes in lower? How do you treat a property that is partly empty? What fees are payable if I do not complete? A lender that answers clearly, in writing, is usually a safer partner than one that quotes a low rate and stays vague. Speed matters too: ask for the typical time from application to offer, and what could slow it down for an overseas borrower.

Deposit and Loan-to-Value

Loan-to-value (LTV) is the loan as a percentage of the property’s value. The rest is your deposit, and you also need funds for tax and fees. For commercial property, deposits of 20% to 40% are common, and lenders sometimes ask for up to 50% for new businesses or unusual property. For expats, a typical range is about 15% to 25% where the lender is comfortable, and 25% to 40% for foreign nationals.

A worked example

The figures below are invented to show the principle. They are not a quote.

Many buyers focus on the deposit and forget the costs on top. Allow for tax, fees and a cash buffer for empty periods or repairs.

Rates, Terms and Interest Cover

Commercial rates are usually higher than residential rates and are often set as the Bank of England base rate plus a margin. On mainstream deals the margin is often cited at about 1.5% to 4%, and expat or specialist deals can cost more. Rates can be fixed for a period or variable.

Terms commonly run from one year up to 25 years, and sometimes 30. Shorter terms mean higher monthly repayments but less interest overall. Some commercial loans are interest-only with a balloon payment at the end, which means you must refinance or sell then.

Interest cover, with an example

For an investment property, lenders test whether the rent covers the interest with a margin to spare. This is called the interest cover ratio, and it is often set at 125% to 150% of the interest, sometimes at a stressed rate. For illustration, if the annual interest is £20,000 and the lender wants 150% cover, the property must produce at least £30,000 of rent a year. If it only produces £27,000, the loan will be cut or refused.

For an owner-occupied property, the equivalent test is whether your trading profit comfortably covers the repayments, using your business accounts.

Who Can Borrow: You, a Company or an SPV?

You can borrow in your own name or through a company. Many investors use a special purpose vehicle (SPV), which is a limited company set up to hold one property or a small group of them. Lenders often prefer this because it is easy to see what the security is.

• Personal name. Simple, but your personal assets are exposed and the tax treatment differs.
• UK limited company or SPV. Common for investors. Lenders usually ask the directors for personal guarantees.
• Overseas company. Possible with some lenders, but harder, and may need extra legal work and security.
• Existing trading company. Used for owner-occupied property. The accounts and the trading history carry the application.

The right structure depends on tax, liability, how many properties you plan to hold and where you live. Take tax and legal advice before you choose.

Experience and Track Record

A lender is lending to you as well as to the building. If you have never owned commercial property, you may be offered a lower loan-to-value, asked to employ a professional managing agent, or be steered to a different lender. If you have two or more years of experience as a landlord, or a successful business, say so and prove it.

The Lease and the Tenant

On an investment property the lease is as important as the building. Lenders look at how long is left on it, who pays for repairs and insurance, whether there are break clauses that let the tenant leave early, and how and when the rent is reviewed. A long lease to a strong tenant supports a higher loan. A short lease, a tenant with a weak record or a rent well above the local market can cut the loan or lead to a refusal. Ask your solicitor to review every lease before you commit, and ask the seller for tenant references and rent payment history. If the property is empty when you buy, lenders will want to see how you plan to let it, and may lend less until it is let.

• List the properties you own or have owned, with values, loans and rents.
• Include references from managing agents or tenants if you have them.
• Show the history of any business you run, with accounts.
• Be honest about gaps. Lenders find them anyway.

Which Countries Do Lenders Accept?

Lenders keep lists of countries they will lend to, based on their ability to verify identity and enforce a loan, and on sanctions and anti-money-laundering rules. Residence in a country with strong financial-crime controls is usually necessary. Lists differ between lenders, so a refusal from one is not a refusal from all. Purchases are usually easier in England, Scotland and Wales than elsewhere.

Where you live also affects the documents accepted, the timescale and your tax. We will publish guides for the countries our clients live in most.

Documents You Will Need

• Passport and proof of your overseas address
• Two to three years of business accounts, or personal tax returns
• Three to six months of bank statements, personal and business
• A statement of your assets and liabilities, including other properties
• Proof of the deposit and where it came from
• For an investment property, the lease, tenant details and rent roll
• For a company, the certificate of incorporation, structure chart and details of directors and owners
• A business plan if you are buying for a new or changing business
• Valid visa or residence documents if you are a foreign national

Some lenders require original, wet-ink signatures witnessed by a qualified lawyer, which can take time if you are in another country. Documents in other languages may need a certified translation. Ask for the lender’s requirements at the start.

Your UK Team

• A UK solicitor. Lenders usually insist on one for the legal work and the charge over the property.
• A surveyor. The lender will instruct a valuation, often by a RICS surveyor, which costs you roughly £500 to £2,000 or more depending on the property.
• A managing agent. Many lenders require a professional property manager for investment property when you live abroad.
• An accountant. For self-employed or company applications, lenders may want accounts prepared or reviewed by a recognised accountant.
• A broker. A specialist can match your deal to the right lender and package the application.

The Process, Step by Step

1. Decide whether the property is for your own use or for investment, and how you will hold it.
2. Gather your documents while you search for the property.
3. Speak to a broker to find lenders that accept your country and structure.
4. Get indicative terms, which are not a guarantee.
5. Agree the purchase and instruct a UK solicitor.
6. Apply formally and pay for the valuation.
7. The lender reviews your documents, the property and the lease.
8. You receive a formal offer, which your solicitor checks.
9. Exchange contracts, then complete.

A straightforward deal can take four to eight weeks, and complex ones take longer. Expats should allow extra time for overseas document checks and signing.

Costs to Compare

Look at the total cost over the time you will hold the loan, not just the rate.

Semi-Commercial and Mixed-Use Property

A semi-commercial property combines business and residential use, such as a shop with a flat above or a pub with living accommodation. Lenders look at how much of the building is commercial and which use brings in the income. Some lenders treat it as commercial, others as residential investment, and the rate and loan-to-value follow from that. If at least a quarter of the property is residential, some lenders cap the loan-to-value for first-time commercial landlords.

Refinancing and Releasing Equity

You can also use a commercial mortgage to refinance property you already own. Reasons include a better rate when a fixed period ends, replacing a short-term loan with a long-term one, or raising money against built-up equity to buy another property. Lenders will ask what the money is for and may lend less if you are raising capital. If your current lender will not deal with a non-resident, you may need a new one.

If you want to borrow quickly against a property, a secured loan may be an alternative.

Bridging to a Commercial Mortgage

Commercial deals do not always fit a mortgage timetable. At auction you may need to complete within 28 days, or a property may be in poor condition and not yet mortgageable. A bridging loan can fund the purchase quickly, after which you refinance onto a commercial mortgage when the property is let or improved. The risk is that the refinance takes longer than planned or the valuation comes in lower, leaving you on bridging rates for longer. Plan the exit before you borrow. See our guide to bridging loans for expats.

Planning your exit

Every commercial loan ends one way: you repay it, refinance it or sell the property. Decide which before you borrow, and ask what happens if it does not go to plan. If you will refinance, check that the property would meet a lender’s criteria at the time, including interest cover and the length of the lease. If you will sell, allow for the time a commercial sale can take and the costs involved. If you will repay from other income or savings, be realistic about exchange rates and about what could change in the meantime. A loan with a clear exit is safer for you and easier for a lender to approve.

Tax When You Buy Commercial Property From Abroad

• Stamp Duty Land Tax. Commercial property has its own rates, which are different from residential. Non-resident surcharges may apply. Check the current rates and the rules for Scotland and Wales, which have their own taxes.
• VAT. Commercial property can be sold with or without VAT, and the position affects your costs. Ask your solicitor early.
• Income tax or corporation tax on rent. Rent is usually taxable in the UK even if you live abroad, and the rate depends on how you hold the property.
• Capital gains. Gains on UK property can be taxable for non-residents.
• Tax where you live. Your home country may tax the same income or gain. A double tax treaty may reduce the overlap.
• Inheritance Tax. UK property is within scope of UK Inheritance Tax whatever your residence. Ask about your estate.

We are not tax advisers. Speak to someone who understands both countries before you buy.

Regulated or Unregulated?

Most commercial mortgages to companies and investors are not regulated by the Financial Conduct Authority. That means fewer formal protections, such as the affordability and advice rules that apply to a mortgage on your own home. It does not mean unsafe, but it does mean you must read the terms carefully. Check whether the broker or adviser is authorised and what they are permitted to do. You can search the FCA Financial Services Register. Take independent legal advice before signing a charge over a property.

If Your Application Is Declined

A refusal is not the end. Ask the lender or broker for the reason and for it in writing. Common causes are the country you live in, too little experience, a weak lease, a low valuation or gaps in the paperwork. Some can be fixed: a bigger deposit, a different structure, a managing agent, extra security or a different property. Others mean trying a different lender whose criteria suit you better. Avoid sending the same application to several lenders at once, because each credit search is recorded. Take a week to fix the cause, then apply with a clearer case.

Protecting the Loan and Your Family

If you sign a personal guarantee, you are personally liable if the company cannot repay. Think about what would happen to the loan if you died or could not work. Our expat insurance guide explains the options, including life insurance and income protection. If you hold the property to fund retirement, see our guide to UK pensions for expats.

Common Mistakes to Avoid

• Choosing the property before checking finance. A great building does not help if no lender will lend on it.
• Forgetting costs on top of the deposit. Tax, legal and valuation fees add up.
• Ignoring the lease. A short lease or a weak tenant can sharply cut the value and the loan.
• Applying to several lenders at once. Multiple searches can hurt your credit file.
• Underestimating void periods. An empty unit still costs interest, rates and insurance.
• Skipping a managing agent. You cannot manage tenants from a distance on your own.
• Signing a personal guarantee without understanding it. It can put your own assets at risk.
• No exit plan. A balloon payment or a short bridging loan needs a clear plan to repay.
• Overlooking VAT and tax. They can change the real cost.
• Leaving documents late. Certifying and translating overseas paperwork takes time.

Frequently Asked Questions

1. Can an expat get a UK commercial mortgage?
Yes. Many specialist lenders lend to non-residents, though the choice is narrower and the requirements stricter than for UK residents.

2. How much deposit do I need?
Commonly 20% to 40% for commercial property. Some lenders ask for less from experienced expats and more from foreign nationals.

3. What is the typical loan-to-value?
About 65% to 75% for owner-occupied property and 60% to 70% for investment property.

4. What interest rate can I expect?
Usually higher than residential. Rates are often base rate plus a margin, and expat deals can cost more. Rates depend on your deal.

5. How long can the loan last?
Commonly up to 25 years, sometimes 30. Bridging loans are much shorter.

6. What is interest cover?
A test of whether the rent covers the loan interest with a margin to spare, often 125% to 150%.

7. Can I borrow through a limited company?
Yes, and many investors do. Lenders often ask the directors for personal guarantees.

8. Can an overseas company borrow?
Some lenders allow it, but it is harder and may need extra legal work or security.

9. Do I need experience as a commercial landlord?
Some lenders ask for it. If you are a first-time buyer, expect a lower loan-to-value or a managing agent requirement.

10. Do I need a UK bank account?
Often yes, for repayments by direct debit. Check with the lender.

11. Do I need a UK solicitor?
Almost always. The lender will want a UK solicitor for the legal charge.

12. Can I get a commercial mortgage without UK income?
Often yes for investment property, because the lender looks at the rent. Owner-occupied deals depend on business accounts.

13. What is a semi-commercial property?
A building with both business and residential use, such as a shop with a flat above.

14. How long does it take?
Four to eight weeks for a straightforward deal, longer for complex ones. Allow extra for overseas documents.

15. How much does a valuation cost?
Often a few hundred to a few thousand pounds, depending on the property.

16. Is a commercial mortgage regulated?
Usually not, where the borrower is a company or an investor.

17. Can I use a bridging loan first?
Yes. A bridging loan can fund a fast purchase before you refinance onto a commercial mortgage, but you need a clear exit.

18. Can I refinance an existing commercial property?
Yes. You can switch lender, release equity or replace a short-term loan, subject to the lender’s criteria.

19. What tax will I pay?
Stamp Duty Land Tax on purchase, possibly VAT, tax on the rent and potentially tax on a sale.

20. Will I pay tax abroad as well?
Possibly. Your country of residence may tax the same income. A double tax treaty may help.

21. Do lenders require a property manager?
Many do for investment property when you live abroad. Ask the lender.

22. What documents do I need?
ID, proof of address, accounts or tax returns, bank statements, proof of deposit and details of the property and lease.

23. Which countries do lenders accept?
Each lender has its own list. Check yours first.

24. Do I need a broker?
Not by law, but a specialist can save time by matching you to the right lender. Check their authorisation.

25. How is this different from an expat residential mortgage?
A commercial mortgage is for business or investment property and is assessed on the property and business as well as you. See our guide to expat mortgages for homes and buy to let.

Glossary

• Loan-to-value (LTV): the loan as a percentage of the property’s value.
• Interest cover ratio: the rent as a multiple of the loan interest.
• Owner-occupied: property used by the borrower’s own business.
• Investment property: property let to tenants.
• SPV: a limited company set up to hold a property or small group of properties.
• Personal guarantee: a promise by a director to repay if the company cannot.
• Semi-commercial: property with both business and residential use.
• Void period: time when a unit is empty and earns no rent.
• Balloon payment: a large final repayment due at the end of the term.
• Wet-ink signature: an original signature on paper rather than an electronic one.

Thinking About Commercial Property in the UK?

Speak to us before you make an offer. We will look at your country, structure and the property, and tell you which lenders are likely to say yes. Request a callback.

Risk warning: Your property may be repossessed if you do not keep up repayments on a loan secured on it. Rules and lender criteria can change and depend on your circumstances.