Commercial mortgages provide long-term finance for acquiring or refinancing income-producing commercial property. Unlike development finance, which is based on projected future value, commercial mortgage lending is primarily driven by the property's current income — specifically, the rental income coverage ratio relative to debt service costs.
Lenders typically require rental income to cover debt service by at least 125-150%, depending on the interest rate and the property type. Multi-tenanted properties with diversified income streams often achieve better terms than single-tenant assets, as the risk of total income loss is lower. The weighted average unexpired lease term (WAULT) is a key metric that influences both leverage and pricing.
Commercial mortgage terms range from 3 to 25 years, with interest rates available on fixed, variable, or hybrid bases. Longer fixes provide certainty but typically carry a premium. The right term structure depends on your investment strategy — if you plan to refurbish and reposition the asset within 5 years, a shorter fix with lower break costs makes more sense.
Aberdeen's market, traditionally tied to the oil and gas sector, is diversifying with energy transition creating new employment drivers. Dundee's V&A-anchored waterfront regeneration has catalysed residential development interest. The key to financing Scottish projects is working with lenders who understand the specific legal and planning differences north of the border.
Indicative Terms
Typical terms available for commercial mortgages in Leith. Actual rates depend on your project specifics and experience.
Interest Rate
From 5.5% p.a.
Loan to Value
Up to 75% LTV
Typical Term
3-25 years
Arrangement Fee
0.5-1.5% of facility
Rates shown are indicative and subject to individual assessment. Contact us for a bespoke quote.
Representative Deal
Acquisition of a multi-tenanted office building with 6 tenants on lease terms ranging from 2 to 8 years. WAULT of 4.3 years with 85% occupancy at acquisition. A 15-year fixed-rate commercial mortgage was secured at 70% LTV, with the lender excluding the vacant floor from income covenant calculations for the first 12 months to allow for letting.
GDV
£4,200,000
Loan Amount
£2,940,000
LTV
70% LTV
Loan Type
15-Year Fixed Commercial Mortgage
This is a representative example. Actual terms vary based on project specifics.
Common Questions
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