Commercial Investment Mortgage Leicester
Long-term mortgages secured against income-producing commercial property: offices, retail, industrial, mixed-use. Up to 75% loan-to-value. Interest cover ratio test 140 to 160% stressed. Interest rates 6.5 to 8.5% pa. 5 to 25 year repayment terms. Limited company SPV, LLP and individual structures all supported.
LTV
Up to 75%
Rate
From 6.5% pa
Term
5 to 25 years
ICR
140 to 160%
What is an investment commercial mortgage and how is it underwritten?
A commercial investment mortgage is long-term debt secured against a let commercial property held as an income-producing asset. The borrower is typically a limited company SPV (the dominant structure for new acquisitions across the Leicester market), an LLP, or an individual investor; the security is the property; the affordability test is rent against the cost of borrowing. Unlike a residential buy-to-let mortgage, which tests personal income and rental yield against ASTs, commercial investment underwrites against business tenancies on FRI (full repairing and insuring) leases.
The headline underwriting metric is the interest cover ratio (ICR): gross rent divided by interest cost, typically required at 140 to 160% stressed at a notional rate 1 to 2% above pay rate. Some lenders also test DSCR (debt-service coverage ratio) on a fully-amortising basis at 130 to 145% cover. Loan-to-value commonly stretches to 65 to 75% for income-producing assets with a clear lease.
Tenant covenant and lease length are the second-order drivers, and they matter as much as LTV. A 10-year unbroken lease to an investment-grade tenant on a Meridian Business Park office building prices materially better than three two-year leases to local independents on a secondary Belgrave Road parade. Vacant or part-let assets fund through specialist desks at tighter LTVs and wider interest rates, typically via commercial bridge-to-let with an agreed term-out exit.
Investment commercial lending sits outside FCA regulation in almost all cases: it is a business borrowing against a business asset, not a residential mortgage. Stamp duty land tax applies on purchase at the standard commercial rates (0% to £150K, 2% £150K to £250K, 5% above £250K). For limited company SPV structures we factor SDLT, valuation, legal and arrangement fees into the all-in deposit requirement before submission.
Pricing and lender appetite across the Leicester investment market
1. Asset and rent appraisal
We review the property, the lease, the tenant covenant and the rent roll. ICR and DSCR modelled at three lender stress rates so you see where each desk will land.
2. Indicative terms in 48 hours
Three to five lender quotes, interest rate, LTV, term, fees, ICR comfort, conditions. You pick the preferred route.
3. Credit pack
Property file, lease, tenant accounts (where covenant matters), borrower SPV pack, deposit proof. Sent to chosen lender.
4. RICS Red Book valuation
Includes market rent assessment and estimated rental value (ERV), both important to the underwrite. Typically 2 to 3 weeks.
5. Credit approval and legal pack
Approval typically 1 to 3 weeks post-valuation. Legals 3 to 5 weeks (longer if leasehold or complex tenant pack).
6. Drawdown and SDLT
Funds drawn at completion. Stamp duty paid by buyer. ICR sometimes monitored through life of facility on larger or multi-let assets.
Investor profiles we routinely place across Leicester
- Investors buying let offices on Meridian Business Park at J21 of the M1, the East Midlands largest out-of-town office park
- Investors buying converted hosiery warehouse offices in the Cultural Quarter (Rutland Street, Halford Street, Orton Square)
- Landlords acquiring let retail on Granby Street, the Highcross catchment, Queens Road in Clarendon Park and Belgrave Road
- Industrial investors buying let units on Braunstone Frith, Optimus Point, Grove Park and the Beaumont Leys industrial belt
- Limited company SPV structures for new acquisitions; individual investor purchases at the smaller end
- Refinancing existing investment portfolios off maturing 5-year fixes
- Waterside and Pioneer Park mixed-use investment buyers backing the wider 500 million pound regeneration
- Hands-off investors buying long-WAULT trade-counter assets let to national covenants
Where Leicester commercial investment volume actually sits
Leicester runs one of the most diversified regional commercial investment markets in the East Midlands. A city of around 370,000 people inside a wider urban area of c. 560,000, anchored by the c. 40,000-student two-universities economy (University of Leicester and De Montfort University), a deep food manufacturing base (Walkers at Beaumont Leys, Samworth Brothers at Hamilton), the Space Park Leicester life sciences and high-tech cluster (Rolls Royce, Airbus, Northrop Grumman, UK Space Agency, Satellite Applications Catapult and Maxar tenants on Corporation Road) and the Magna Park Lutterworth distribution complex (DHL, Toyota, Argos). The Meridian Business Park and city-centre office cluster anchors the institutional end; the £500K to £3M bracket we work most often is the deep volume zone: secondary offices around Charles Street and the Cultural Quarter, retail in the Highcross catchment and the Granby Street spine, industrial along Braunstone Frith and the Thurmaston Lane corridor in Beaumont Leys, and semi-commercial parades on Queens Road in Clarendon Park, Melton Road in Highfields, Belgrave Road and Bell Street in Wigston. Industrial yields on modern units near J21 currently sit at 6.5 to 8% net; multi-let retail and converted Cultural Quarter offices at 7 to 9%. Interest rates currently 6.5 to 8.5% pa depending on covenant and LTV. Shawbrook, InterBay Commercial, Cynergy Bank, LendInvest, NatWest, Lloyds, Barclays and Santander all compete on Leicester investment cases.
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Exploring Commercial Investment Mortgage for your Leicester scheme?
Free-of-charge scheme assessment. Indicative terms within 48 hours.