Owner-occupier
Owner-occupier commercial mortgages
Written by Chris Canham, commercial finance broker with nearly 30 years in financial services. Last reviewed .
Buying the premises your business trades from, underwritten on your accounts rather than on a tenant's rent.
What it is
The lender is underwriting the business, not just the building.
With an investment mortgage, the lender is relying on a tenant's rent to cover the debt. With an owner-occupier mortgage, the tenant is your own business, so the lender is relying on your trading profit. That makes it an affordability-led decision: the lender is underwriting the business as much as the building.
Lenders rebuild your profit figure from the accounts. They start with EBITDA, add back one-off costs and items such as rent you will no longer pay once you own the premises, and adjust for directors' remuneration. Up-to-date management accounts and a short explanation of the numbers often matter as much as the last set of filed accounts.
Most business owners are really comparing buying with continuing to rent. Owning fixes your occupancy cost and builds an asset. Some choose to buy through a SIPP or SSAS, with the business paying a market rent to the pension scheme. That route has its own rules and tax consequences, so take advice from your pension adviser first – we arrange the finance once the structure is agreed.
Use cases
Who this is for.
Buying out a landlord
Purchasing the freehold of premises you already occupy under a lease, so the rent you were paying goes towards an asset you own.
Trade counters and workshops
Light industrial and trade premises for established trading businesses, underwritten on the accounts.
Professional practices
Dental, veterinary, accountancy and legal practices, where some lenders will also take account of the goodwill in the business.
Hospitality premises
Pubs, restaurants and hotels underwritten on trading accounts and the trading potential of the site.
Pension purchases
Buying through a SIPP or SSAS, with the business paying a market rent to the scheme.
Expansion into a second site
Funding a second premises while continuing to trade from the first, with the lender looking at the group's combined position.
Key criteria
What lenders want to see.
| Measure | Typical position |
|---|---|
| Maximum LTV | Lender-dependent, set by the business and the property |
| Trading history | Usually at least two years of filed accounts |
| Debt service cover | Trading profit must cover the stressed payment with a margin |
| Term length | Medium to long term |
| Repayment basis | Usually capital and interest |
| Security | First charge, often with a debenture and personal guarantees |
Management accounts and a short business plan usually matter more than the last set of filed accounts.
Go deeper
Read with the commercial mortgage guide.
Owner-occupier lending is one part of the commercial mortgage market. Read our commercial mortgage guide for how lenders assess income, security and cover, then use the affordability calculator to test what your trading profit will support before you make an offer.
Questions
The things people ask first.
Related case studies
All case studies
CommercialSpecialist security, placed with the right lender
The scaffolding yard — the asset most lenders won't touch
Directors of an established scaffolding company raising finance secured on their operating yard — specialist commercial land with limited comparable evidence that mainstream lenders decline on sight.
CommercialOwner-occupier pub purchase with Allica Bank
Buying the pub — a challenger-bank commercial mortgage
An established hospitality operator buying the freehold of the Surrey pub their business trades from — with an asbestos report, source-of-deposit evidence and guarantor legal advice all needing to be unblocked.
Thinking about buying rather than renting?
Send your last two years of accounts and the asking price, and you will get an affordability view back.
We aim to respond the same working day.
Or book a 30-minute call at a time that suits you.