Owner-occupier or investor: how commercial lenders treat you differently

Commercial mortgage lenders treat a buyer who will run a business from the property differently from one who will let it to others. Knowing which category you are in helps you prepare, and may help you choose the right lender.

Owner-occupier: buying your own premises

An owner-occupier buys a building to trade from, such as a workshop, office, shop or warehouse. The lender is mainly interested in whether your business can afford the payments.

Lenders commonly ask for:

• Several years of trading accounts, often two or three
• Recent management information and business bank statements
• Details of existing borrowing
• Information about the property and how you will use it

Lenders look at your business's profit and cash flow, and sometimes the directors' personal position. A business with a good record can often access more lenders.

Investor: buying to let to others

An investor buys a property to receive rent. The lender focuses on the property and the income it produces.

Lenders commonly look at:

• The rent compared with the loan payments, often called rental cover
• The tenant, including how long they have been trading and the strength of their accounts
• The length and terms of the lease, and when it can end
• Whether the property is easy to re-let or sell

A vacant property, or one with a short lease, can be harder to finance than one let to a good tenant on a long lease.

Mixed-use and multi-let property

Some buildings are partly occupied by the owner and partly let, or have several tenants. Lenders will look at each part, and the way they treat it can vary, so tell your adviser the full picture at the start.

Why it matters

The category can change the lenders available, the amount they will offer and the information they need. It can also affect the paperwork: for example, an owner-occupier buying through a limited company may need to show how the company will pay the loan. Being open about your plans at the start avoids delays.

Find out more

Read more about commercial mortgages, or see our local pages for Harlow and Southend-on-Sea.

Talk it through

If you would like to talk through a purchase, get in touch.