Top Commercial Mortgage Lenders in the UK
Commercial-property borrowing rebounded strongly in 2024, with new lending hitting £65 billion according to UK Finance’s Business Finance Review 2024 Q4. Yet net lending remains negative as firms pay down legacy pandemic debt, so lenders are competing harder than ever for quality transactions. Knowing which provider offers the right blend of loan-to-value, speed and sector appetite can save thousands in fees and interest.
Market snapshot
A twin-track market has emerged:
- High-street banks: Lloyds, Barclays, HSBC, NatWest and Santander, still write most low-risk, owner-occupied deals at margins around +2.5% over Bank Rate (see the latest NatWest commercial-mortgage guide).
- Challenger & specialist banks: Shawbrook, Aldermore, Paragon, Close Brothers, Metro Bank and Atom Bank, now account for roughly a third of new SME facilities, a trend highlighted in the British Business Bank’s Small Business Finance Markets Report 2025.
Share of new commercial-mortgage lending (2020-2025)
The lenders listed here sit outside the traditional high-street “big five,” yet they now write roughly one in three new commercial-mortgage deals for UK SMEs.
Why this matters: The chart makes it clear that high-street banks have seen their share of new commercial-mortgage lending slip from about 80 percent in 2020 to 67 percent in 2025, while challenger and specialist lenders surge from 20 percent to 33 percent. In practice, that means SMEs today are far more likely to secure funding from a Shawbrook, Paragon or Aldermore than they were five years ago. Greater lender diversity brings faster credit decisions, more interest-only options and bespoke covenants for semi-commercial or short-lease assets—choices that were scarce when the big five banks dominated.
High-street lenders still offer the lowest rates for prime, owner-occupied premises, but this shift underscores why modern borrowers should compare both camps. Funding Agent’s commercial-mortgage comparison tool lets you weigh challenger quotes against traditional bank offers before you commit.
High-street leaders and what they do best
Lloyds Bank
Lloyds remains the UK’s largest commercial-property lender, offering up to 70% LTV on 25-year terms and favouring professional-practice premises and light-industrial stock, a stance confirmed in its latest annual results.
Barclays
Barclays competes hard in healthcare and care-home finance, underwriting forward-looking income rather than historic profits; brokers quote margins of 2.6–3% over base for sub-£5 m transactions.
HSBC UK
HSBC funds owner-occupied and investment stock up to 75% LTV, making it a go-to for expanding regional chains that need tickets up to £10 million.
NatWest / RBS
NatWest offers green-property discounts of up to 20 bps for borrowers upgrading to EPC-B, aligned with the bank’s £200 billion climate-finance ambition reported by Reuters.
Santander
Santander shows appetite for hospitality and roadside retail, funding freeholds up to 65% LTV where other banks are cautious.
Challenger & specialist stand-outs
Why specialists win on speed
Moneyfacts broker tables indicate challenger completion times average six weeks versus ten weeks for high-street banks, thanks to in-house valuation panels and delegated legals, an efficiency confirmed in Clifton Private Finance’s 2025 rate commentary.
Cost components beyond the headline rate
Pricing equals margin + base rate + fees. Arrangement charges run 1–2%, valuations £900–£3,000, and early-repayment penalties up to 3% in year 1. Clifton’s analysis shows fee differentials of more than £20,000 on a £1 m loan when borrowers ignore ancillary costs.
How the costs stack up: On a £1 million commercial mortgage with a 75% margin over Bank Rate, most businesses will pay around 3.5% in interest margin annually. Added to that are lender fees, typically a 1.5% arrangement fee, about 0.2% in valuation charges and roughly 0.1% in legal expenses, bringing the total annual borrowing cost to ~5.3%. Since some of those fees are upfront but added to your loan, the effective interest can be higher over the term. The chart above visualises this breakdown to help SMEs compare true cost, not just headline rate, with standard arrangements.
Green-mortgage incentives
Banks like NatWest, Barclays and HSBC shave 10–30 bps off margins for properties upgraded to EPC-B. NatWest alone has deployed £110 billion in climate and sustainable finance, with a new £200 billion target by 2030 (Reuters climate-finance report).
Key takeaways
- High-street banks remain cheapest for low-risk owner-occupied assets.
- Challenger banks excel in speed, flexible underwriting and semi-commercial stock.
- Green discounts can shave margin if you retrofit to EPC-B.
- Compare total cost of debt, not just rate, Funding Agent’s tools can help.
Ready to shortlist? Start with Funding Agent’s commercial mortgage comparison to match LTV, loan size and sector needs before your broker sends applications.
