Product types
Owner-occupier commercial mortgage
Commercial mortgage where the borrower's own trading business occupies the property. Sized off the business's EBITDA and a DSCR test.
Owner-occupier commercial mortgage is a UK commercial mortgage where the borrowing entity also trades from the property. A solicitor buying its office freehold. A care home operator buying the building it already runs. A manufacturer buying its production unit. The property income, if any, is incidental; the credit is the trading business’s cash flow.
How owner-occupier deals are sized
Two parallel tests, both must clear:
- DSCR: business EBITDA versus loan service. Typical thresholds 1.30 to 1.40x for general trading freeholds, 1.40 to 1.60x for goodwill-heavy sectors (hospitality, healthcare, care homes).
- LTV: loan size against the lender’s valuation. Typical ceiling 70 to 75%.
The binding test is whichever produces the smaller loan. In our experience on UK owner-occupier deals it is usually DSCR that binds, especially on smaller businesses or in goodwill-heavy sectors.
Typical UK pricing as of May 2026
Owner-occupier 5-year fixes sit in the 6.0 to 7.5% per annum range. Variable-rate deals sit slightly tighter at the floor but with more disclosure risk. Term 5 to 25 years, with most deals at 10 to 15 years on capital-and-interest amortisation.
A worked broker example
A Greater Manchester engineering business buying its trading premises. Purchase price 1.5 million. Filed-accounts EBITDA averaged across three years 250,000. The business wants 1.05 million (70% LTV).
- LTV test: 1.05 million on 1.5 million valuation = 70%. Clears.
- DSCR test: 1.05 million at 6.5% per annum interest-only is 68,250 annual service. DSCR is 3.66x. Clears comfortably.
The deal clears both tests easily and would price at the lower end of the 6.0 to 7.5% range. If the business had only 120,000 EBITDA, DSCR would drop to 1.76x (still clearing) but the lender would price tighter or insist on a lower loan amount to maintain comfortable cover.
Owner-occupier versus investment
The split matters because it changes the underwriting completely. On investment, ICR tests rent against interest. On owner-occupier, DSCR tests business EBITDA against service. A property used by a sister trading company under an intra-group lease is occupier-led even where there is technical rent, because the rent is funded by the same trading cash flow that backs the loan.