Industrial property mortgages

How much can you borrow against an industrial unit?

Most lenders advance up to around 65 to 70 percent loan to value against an income-producing industrial or logistics property, on loans from around 150,000 pounds to 50 million pounds and more. The loan to value ceiling is only the first test. The second is interest cover: the lender sizes the mortgage so the net rent covers the interest payments with a clear margin, commonly somewhere around 125 to 200 percent depending on the lender and whether the rate is fixed. On a high purchase yield the loan to value usually binds first; in a higher rate environment the interest cover test often sets the final number instead. On multi-let estates the cover calculation runs off the net rent after an allowance for voids, management and non-recoverable costs, and most lenders stress it at an interest rate above the day-one pricing, so the achievable loan is always a little lower than the back-of-envelope figure suggests. Smaller lots are not penalised either; plenty of lenders compete for loans of 150,000 to 500,000 pounds on workshops and starter units, and the preparation matters just as much at that end of the market.

The quality of the income moves the answer too. A distribution warehouse let to a national logistics operator on a ten year lease supports more debt than a small unit let to a local startup with two years unexpired, because the lender is pricing the risk of a void and a re-letting at the estimated rental value. A long income, investment-grade covenant on a big-box asset is among the most bankable security in the market, while short or granular income on a multi-let estate is priced for the re-letting depth instead. We model both ceilings against the actual rent, the lease terms and the realistic interest rate before any application goes in, so you know your borrowing capacity and the deposit you need before you bid, not after a valuation lands.

What are industrial unit mortgage rates and repayment options?

Interest rates on industrial commercial mortgages start from around 6 percent and move with loan to value, lease quality and the lender's cost of funds. A well-let unit or distribution warehouse at moderate leverage with a strong covenant prices at the keen end of the range; a short lease, a weak covenant or pushed leverage costs more. You can fix the rate for an initial period for payment certainty, or take a variable rate over a reference rate if you expect to sell or refinance within a few years. Arrangement fees typically run at 1 to 2 percent, with valuation and legal costs on top, and early repayment charges on fixed rates vary widely between lenders, which matters if you expect to sell or refinance inside the fixed period.

Repayment structure matters as much as the headline rate. Interest only keeps payments low and suits an investor prioritising cash flow, while a full repayment profile reduces the debt over the term and can earn slightly finer pricing or a higher advance because the lender's exposure falls every year. Many industrial loans blend the two, part repayment with a balance left at maturity. We model each repayment structure against the rent the unit actually produces, so the mortgage fits your plan for the asset rather than dictating it. If you expect rates to fall, a shorter fix or a variable rate without early repayment charges preserves the option to reprice later, and we set out what each path costs in cash terms over a realistic hold period.

How do lenders assess an industrial investment mortgage?

An investment lender underwrites the lease first. It reads the rent passing against the estimated rental value, the unexpired term, any breaks, the repairing obligations and the tenant covenant, a national logistics operator and a two-person fabrication firm are very different credits paying very different rents. On a multi-let estate it looks at the weighted average unexpired lease term across the tenancy schedule, the spread of tenants and the letting history, because granular income from many small occupiers diversifies risk even though it takes more management. On a single let distribution warehouse the opposite logic applies: one strong covenant on a long lease concentrates the risk but commands the keenest terms. The weighted average unexpired lease term, the WAULT, is the single number most credit papers quote, and on multi-let industrial it is naturally short, three to five years is common, which is exactly why lenders care about the depth of re-letting demand on the estate. Lenders also ask who pays for repairs: full repairing and insuring leases keep the net rent clean, while internal repairing terms leave costs with the landlord that the cover calculation must absorb.

It then underwrites the building, because the lease only matters if the property can be re-let when it ends. Eaves height, yard depth, loading access, power supply, dock levellers and parking decide how deep the occupier market is, and the EPC rating decides whether the property can still be legally let as MEES standards tighten. Use class matters too: B2 general industrial, B8 storage and distribution or E(g)(iii) light industrial each carry different appetite, and a big-box logistics warehouse draws a different lender set from a terrace of small workshops. We present the asset the way credit teams want to read it, whether it is a single starter unit or an investment-grade logistics building, which shows in the terms offered.

What deposit do you need for an industrial unit mortgage?

Plan for a deposit of around 30 to 35 percent of the purchase price on an investment purchase, the mirror of the 65 to 70 percent loan to value most lenders will advance. On top of the deposit sit the transaction costs: stamp duty land tax, the lender's valuation fee, legal costs for both sides and the arrangement fee, which together commonly add several percent to the cash required. Owner-occupiers buying their own premises can often put down less, because lenders will stretch loan to value where a strong trading business supports the repayments. As a marker, on a 1 million pound investment purchase expect to commit around 350,000 pounds of deposit plus tens of thousands more in duty and costs before the keys change hands.

The deposit does not always have to be cash from savings. Equity in another property can be released by refinancing it, or a second charge can support the purchase, and where you already own units, a portfolio facility can cross-collateralise them to reduce the cash deposit on the next acquisition. Each route has a cost and a risk, and some lenders dislike fully borrowed deposits, so the funding stack needs assembling honestly. We structure the whole package, deposit included, and tell you which lenders will accept it before you commit. Lenders also expect you to keep a sensible cash reserve after completion, because a void month or an unexpected repair should not put the loan under strain.

Can you refinance or remortgage an industrial unit you already own?

Yes, and for many owners the remortgage is where the value sits. If the property has been re-let at a higher rent, the lease has been re-geared or values have moved on since the current loan was arranged, a refinance can cut the interest rate, extend the term or release equity against the higher valuation to fund the next purchase. Industrial and logistics rents have grown ahead of most other commercial property in recent years, with prime rents averaging around 12.55 pounds per square foot (Savills, 2025), so loans arranged even a few years ago are often secured against stale figures. Even without releasing equity, repricing a loan arranged when rates were higher can cut the annual cost materially, and the saving compounds over the remaining term.

A remortgage is underwritten exactly like new money: the lease, the covenant, the interest cover and the building. We review the whole market at each refinance rather than rolling onto the incumbent lender's renewal terms, because loyalty is rarely rewarded in commercial lending. Where you hold several units, an estate or a mix of industrial and logistics assets, we also look at portfolio facilities that bring the properties under one loan, which usually releases more capital and simplifies the banking, at the price of cross-default between the properties. The right answer depends on how long you intend to hold each asset, and we put the comparison in writing so the decision is yours on full information.