A commercial mortgage is long-term senior debt secured against income-generating commercial property, often used to refinance completed developments such as retail units, offices, or mixed-use schemes. In UK property development finance, this type of exit loan is based primarily on the asset’s rental income and yields rather than resale value. These loans are structured with amortising or interest-only terms and are typically arranged with institutional or commercial lenders. Developers use commercial mortgages to hold the asset post-completion, especially where the intention is to build a long-term commercial investment portfolio.
As a form of Exit Loan, a commercial mortgage provides a stabilised, income-led refinancing route once a scheme is operational and generating rent. It is often assessed alongside a Buy-to-Let (BTL) Mortgage, although the underwriting focus differs due to tenant mix, lease structures, and asset class complexity. The facility is secured against the Mortgaged Property, with covenants typically linked to income durability and occupancy levels. Lenders will closely monitor leasing progress, with metrics such as Time to Full Let (Commercial) influencing both loan sizing and ongoing risk assessment.
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