A commercial mortgage is a different loan from the one on your house.
For a director whose lease is ending or whose rent has gone up and who is weighing up buying the premises instead.
Deposit, loan-to-value and the personal guarantee compared
The deposit, the loan-to-value a lender will offer, and the personal guarantee are the three places a commercial premises mortgage is set up differently from the mortgage on your home.
| Mortgage | Deposit | Loan-to-value | Personal guarantee |
|---|---|---|---|
| Home mortgageThe loan most directors already know from buying their own house. | Set by the lender against the property and the buyer's income, with no fixed share published across the market. | Varies by lender and credit profile, with no single published maximum across residential lenders. | Not required. The loan is secured against the property itself. |
| Commercial premises mortgageThe loan a business takes out to buy the premises it trades from. | NatWest gives 25% of the property's value as a typical deposit for a commercial mortgage (read 4 October 2026). | Together lends at most 70% of a commercial property's value (read 4 October 2026). Commercial Trust gives 80% as the maximum loan-to-value for an owner-occupier purchase (read 4 October 2026). | Lenders will usually ask the directors to guarantee the loan personally, on top of the security of the building. |
The commercial figures come from NatWest (read 4 October 2026), Together (read 4 October 2026) and Commercial Trust (read 4 October 2026). Lenders set their own criteria case by case, and these published figures can change, so they are a starting point for a conversation with a lender.
The personal guarantee: why your home loan never asked for one
Your home mortgage is secured against the house. If the payments stop, the lender's recourse is the property, and nothing more. A commercial mortgage for your business premises usually asks for something extra: a personal guarantee from the directors, a separate promise that if the company cannot repay the loan, the directors will.
Why a company's limited liability is not enough on its own
A limited company is built to separate the business's debts from the owner's personal assets. A lender financing the company's purchase of its own premises is relying on that company's trading income to make the repayments, and a company with a shorter trading history or thinner accounts carries more uncertainty than a house bought by an individual with a salary. The personal guarantee is how the lender moves some of that uncertainty back onto the people running the business.
What signing one actually commits you to
A personal guarantee is a separate legal agreement, signed alongside the mortgage, in which a director agrees to cover the loan personally if the company defaults. It can extend to the full outstanding balance or to a capped amount set out in the agreement. It sits outside the company's balance sheet entirely, so it survives even if the company itself has limited assets to call on.
Where more than one director is involved, a lender may ask each of them to guarantee the loan individually, jointly, or in some combination of the two, and the wording of the agreement decides which applies.
Why a home loan never asks this of you
You are already personally liable for your own mortgage, because you are the borrower. A personal guarantee exists specifically because the company is the borrower on a commercial mortgage. It is the clause that reconnects the two.
Nothing on this page is financial, mortgage or legal advice. The terms a lender actually offers, and whether a guarantee is required at all, depend on that lender's own assessment of the business and should be checked directly with the lender or a regulated adviser.
Valuation, legal costs and purchase tax
Buying a house and buying the building your business trades from come with a similar-looking bill: a deposit, a valuation, legal fees, purchase tax. The amounts and the reasons behind them are often different.
Valuation
A residential valuation checks that a house is worth what you are paying for it. A commercial valuation does more: the surveyor is assessing the building as a trading asset, which can mean looking at the condition of the premises, how it is used and what it would be worth if the business left and someone else had to let or sell it. That wider assessment is one reason commercial valuations tend to cost more and take longer than the valuation on a house.
Legal costs
A commercial purchase usually involves more for a solicitor to work through than a residential one. Leases, planning history, environmental checks and any existing tenancies on the building can all need to be reviewed, where a house purchase rarely raises more than a handful of standard searches. That extra work is reflected in the legal fees.
Purchase tax, and why it depends on where the building is
Buying a property means paying a purchase tax, and which tax applies depends on which nation the building is in: Stamp Duty Land Tax in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland, and Land Transaction Tax in Wales (GOV.UK, read 30 September 2026). The rules and thresholds for each are set separately, so a figure that applies in England will not necessarily apply to the same purchase in Scotland or Wales.
- England and Northern Ireland: Stamp Duty Land Tax
- Scotland: Land and Buildings Transaction Tax, administered by Revenue Scotland
- Wales: Land Transaction Tax, administered by the Welsh Revenue Authority
Because the rate and the rules sit with a different authority in each nation, the purchase tax due on a commercial premises is worth checking against the rules for the nation the building is actually in.