How much deposit do you need for a commercial mortgage?
The short version
- Most commercial mortgages need a deposit of roughly 20 to 40 per cent of value, which is a loan to value of 60 to 80 per cent.
- There is no single legal minimum. The figure is set by the lender, the sector and how reliable your income is.
- A 10 per cent deposit is uncommon on standard terms, but extra security such as your home or another property can lift the loan toward 100 per cent of the purchase price.
- Reliable healthcare income, such as NHS notional rent, supports a smaller deposit because it gives the lender confidence the loan will be repaid.
The deposit is usually the first number a buyer wants. This article explains the minimum deposit for a commercial mortgage in plain terms, why most healthcare cases land between 20 and 40 per cent, whether you can buy with a 10 per cent deposit, and how to fund the gap if you are short.
It sits under our hub on commercial mortgages for healthcare premises. Figures here are indicative and depend on your case and the lender.
What is the minimum deposit for a commercial mortgage?
There is no fixed legal minimum deposit for a commercial mortgage. Each lender sets its own maximum loan to value, and the deposit is simply the difference between that and the price. For owner-occupier healthcare cases the common range is a deposit of 20 to 40 per cent of the value, which corresponds to a loan to value of 60 to 80 per cent.
Where you land in that range depends on the strength of the business, the type of property and the reliability of the income. A surgery with NHS notional rent will usually need less deposit than a brand-new private clinic with no trading history. You can convert a deposit into a loan to value with our loan to value calculator.
There is no statutory minimum deposit. There is only the maximum a lender will advance against your income, and the deposit is whatever is left.
Can you buy commercial property with a 10 per cent deposit?
On standard terms, a 10 per cent deposit on a commercial mortgage is uncommon. Most lenders want more skin in the game because, unlike a home, a specialist commercial building can be slower and harder to sell if things go wrong.
It is not impossible to borrow more than 80 or 90 per cent of the price, but it usually requires extra security rather than a thinner cash deposit. If you offer a lender a second property, often your home, as additional security, the loan can in some cases reach close to 100 per cent of the purchase price. The cash you put in is small, but the lender is no less covered because it has a charge over two assets instead of one.
Why reliable income reduces the deposit
Deposit and income are linked. A lender accepts a smaller deposit when it is confident the loan will be repaid, and the clearest source of that confidence in healthcare is contracted income.
| Income profile | Effect on deposit | Why |
|---|---|---|
| NHS notional rent or long NHS contract | Toward the lower end, around 20 to 25 per cent | Predictable, government-backed income reassures the lender |
| Established private practice with steady accounts | Mid range, around 25 to 35 per cent | Good history, but income is not contracted |
| New or unproven trading | Higher end, 35 to 40 per cent or more | Little track record, so the lender wants more cushion |
This is why packaging matters. Presenting the income clearly, with the contracts behind it, can be the difference between a 25 and a 35 per cent deposit. See GP surgery finance for how NHS notional rent is treated.
Funding the deposit
If you do not have the full deposit in cash, there are recognised ways to bridge it, each with trade-offs.
Equity in another property
Releasing equity from a home or another commercial asset, often as additional security rather than cash.
Partner or director contributions
In a partnership or company, pooling contributions across the owners.
Business savings or retained profit
Using cash the business has built up, while keeping enough working capital.
A vendor or staged arrangement
Occasionally the seller leaves part of the price in, though lenders treat this carefully.
We work through which of these a lender will accept for your case. Model the resulting loan and payments with our commercial mortgage repayment calculator, and read more on the affordability test in how difficult it is to get a commercial mortgage.
Deposit is not the only number
It is easy to fixate on the deposit, but a lender cares as much about whether you can afford the payments. Even with a large deposit, a loan that profit does not comfortably cover will struggle. The affordability test is DSCR, the ratio of profit available for debt service to the cost of the loan, and most lenders want it comfortably above 1.25. Test yours with the DSCR calculator.
We are an arranger and introducer, not a lender. Most commercial mortgages are unregulated, but where a deposit is part-funded by security over your home that element is regulated and referred to an authorised firm.