Commercial property loan rates are quoted for the borrower and property, rather than set at one market-wide rate. Compare the interest rate together with arrangement fees, legal and valuation costs, repayment structure and any cost of leaving the agreement early.
Published by Business Loan Options. Sources checked 4 October 2026.
Section 01
What are commercial property loan rates today?
There is no single rate that every UK business can obtain. NatWest describes its commercial mortgage pricing as dependent on individual circumstances. A rate advertised elsewhere needs to be checked against the relevant property, borrowing amount, security and applicant criteria.
At our check on 4 October 2026, the Bank of England reported Bank Rate at 3.75%. This is useful context, but it is not the rate charged on a commercial property loan. Use the Bank's current page when reviewing a later quotation.
Sources: NatWest — commercial mortgages and deposit guidance; Bank of England — current Bank Rate
Section 02
Fixed rates, variable rates and lender margins
A fixed rate applies for the agreed fixed period. A variable rate follows the reference specified in the contract, which may be a lender's own base rate rather than Bank Rate directly. Ask the lender to identify the reference, margin, review dates and any minimum rate.
For a hypothetical variable offer using a 3.75% reference plus a 3 percentage-point margin, the opening rate is 6.75%. If that reference increases by one percentage point and the margin stays unchanged, the rate becomes 7.75%. Those figures explain the mechanism; they are not a NatWest quote.
Also separate the fixed-rate period from the loan term. A rate fixed for five years within a longer repayment schedule does not fix every future payment. Get the terms for the period after the fix in writing.
Sources: NatWest — commercial mortgage rates
Section 03
Monthly repayment examples for a £350,000 loan
These calculations use a £350,000 capital-and-interest loan repaid through 240 equal monthly instalments over 20 years. Each scenario assumes the stated nominal annual rate stays unchanged for the whole period, monthly interest, no fees and no payment holiday.
| Annual rate assumed | Monthly repayment | Interest over 20 years |
|---|---|---|
| 6% | £2,507.51 | £251,802.09 |
| 7% | £2,713.55 | £301,251.11 |
| 8% | £2,927.54 | £352,609.66 |
| 10% | £3,377.58 | £460,618.18 |
Totals use unrounded monthly payments. Actual daily-interest conventions, fees and changing rates can produce different results.
Section 04
Compare fees and cash required at completion
Build a comparison sheet with separate lines for net borrowing, fees paid in cash, fees added to the loan, monthly repayments and the balance still outstanding at the end of the facility. This makes an apparently cheaper rate easier to test.
For example, an assumed 2% arrangement fee on £350,000 is £7,000. If paid upfront it increases completion-day cash. If added to the loan it increases borrowing, interest and potentially the loan-to-value ratio. The 2% is an example, not a standard fee.
A proposed interest-only payment should not be compared directly with a capital-and-interest payment as though both repay the same debt. Ask how the capital will be repaid and what happens if a planned sale or refinance is delayed.
Section 05
How to improve the quality of a rate comparison
Send shortlisted lenders the same summary: property use, purchase price, desired loan, available deposit, borrowing entity and relevant trading or rental information. Ask for pricing under the same repayment assumptions so differences are visible.
A practical comparison should answer three questions: how much cash leaves the business before completion, what payments must it carry during ownership, and what cash or refinancing is needed to exit? Choose the structure only after all three are understood.
- Ask whether a rate is indicative or part of a formal offer.
- Request the total interest and fees for the proposed structure.
- Check break costs, overpayment terms and the rate after any fixed period.
- Keep a separate estimate for taxes, repairs and working capital.
Common questions
What is a good commercial mortgage rate?
Assess a rate against quotations for the same borrower, property, loan-to-value and repayment structure. A low headline rate can be outweighed by fees or an expensive exit. No single rate is suitable for every case.
Are the example rates on this page available to apply for?
No. They are assumed rates used to show repayment sensitivity. A lender must price and approve your own case.
Does a Bank Rate cut reduce every commercial mortgage payment?
No. The effect depends on the contract's reference rate and whether the rate is fixed. Check when changes apply, rather than assuming a change in Bank Rate immediately changes your payment.
Sources
Primary sources and further reading
Facts and status were checked against the following sources on 4 October 2026. External pages can change. Worked examples use the assumptions stated alongside them.