Owner-occupier vs commercial investment mortgage: which one do you need?

The single most common mistake we see on Bournemouth commercial mortgage enquiries is the wrong product applied for. Get this wrong on day one and you waste four weeks at the wrong desk before the credit committee tells you what we could have told you on the first call.

The headline test

Who occupies the property and pays the rent? If the borrower's own trading business will occupy the freehold, this is an owner-occupier case. If the property is let to a third party on a commercial lease, this is a commercial investment case.

Owner-occupier underwriting

Owner-occupier desks want two years of clean accounts, a sector the desk understands (defensive sectors price tightest: dental, GP, pharmacy, established skilled trades, MOT, day nurseries with Ofsted Good or above), and a property the lender will lend on.

LTV ceilings 70–75% on a clean owner-occupier deal. Allica Bank, Shawbrook, HTB, Cambridge & Counties and the high-street commercial desks are all active in the Bournemouth £400K to £5M bracket. Pricing 7.0–7.5% pa for strong covenants.

Commercial investment underwriting

ICR thresholds 140–160% of stressed mortgage interest. Lease length matters as much as rent level. LTV ceilings 65–75% depending on lease length, covenant and asset type. Pricing 7.5–9.0% pa.

The grey zone: family lets and the FCA regulated perimeter

If part of the residential element of a mixed-use property is let to (or occupied by) the borrower or a close family member, the loan can drop inside the FCA regulated mortgage perimeter. We are not FCA-authorised; we refer those cases to a regulated broker.

Contact us to talk through your case.