- Arrangement fee
- Typically 1%–2% of the loan
- Typical LTV
- Up to 75% for strong cases
- Valuation cost
- Usually several hundred to a few thousand pounds
- Term
- Commonly 10–25 years
Arrangement and facility fees
Most commercial lenders charge an arrangement fee, typically 1%–2% of the loan amount, which can usually be added to the facility rather than paid upfront. Some challenger banks charge a smaller non-refundable commitment fee on application, which is lost if the deal doesn't complete — worth clarifying before instructing.
Valuation and survey costs
Commercial valuations are more detailed than residential ones and priced accordingly, reflecting the specialist knowledge needed to assess a warehouse, retail unit or mixed-use building. Expect the cost to scale with loan size and complexity, and to be payable upfront regardless of whether the loan completes.
Legal fees on both sides
You'll typically cover your own solicitor's fees plus the lender's legal costs, since commercial security often needs more thorough title and lease review than residential conveyancing. Where the property is let, lease reviews and potentially a rent deposit deed can add further legal cost — factor this in early rather than at the eleventh hour.
Rate structure and its cost implications
Commercial mortgages are offered on fixed, tracker or variable structures, each with different cost profiles. Fixed rates typically carry an early repayment charge if you exit within the fixed period, whereas variable and tracker products are usually more flexible but expose you to rate movements. The right structure depends on how long you plan to hold the asset.
Ongoing costs beyond completion
Annual costs can include buildings insurance (often a lender condition), any covenant or management fees on larger facilities, and revaluation costs if the lender requires periodic reviews. These are easy to overlook when comparing headline rates but add up over a 10–25 year term.
Frequently asked
Can arrangement fees be added to the loan?
Usually yes, though some lenders prefer them paid upfront on lower-value facilities. We'll flag this early so it doesn't affect your available deposit.
Why do commercial valuations cost more than residential ones?
They require specialist surveyors familiar with the relevant asset class, and typically involve a more detailed assessment of income, covenant and market comparables rather than a straightforward market value check.
Is a fixed rate always more expensive?
Not necessarily at outset, but fixed products usually carry an early repayment charge if you exit or refinance during the fixed period, which can be costly if your plans change.
Do I pay the bank's legal fees even if the deal falls through?
Typically you're liable for costs incurred to that point, including any valuation and partially completed legal work, which is why it's worth being confident in the deal before instructing.
How much should I budget in total fees?
As a rough planning figure, budgeting for several percent of the loan amount across arrangement fee, valuation and legals is sensible, though this varies significantly with loan size and complexity.
Get a full commercial mortgage cost breakdown
Call 0345 2690628 and we'll set out every fee before you apply.
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