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Commercial Mortgages for Car and MOT Garages UK Guide: Essential Tips and Insights

The automotive industry in the UK is thriving, with over 40 million registered vehicles and the growth of electric vehicles driving a new motoring boom. Car garages play a major role in keeping these vehicles on the road, and for many, taking the leap into commercial property ownership with a commercial mortgage is an essential step towards business growth.

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Commercial mortgages are loans secured on non-residential properties, typically used for purchasing or refinancing land and property for commercial use. For car garages, securing a commercial mortgage means having collateral in the form of the business premises, enabling growth and the opportunity to expand.

Key Takeaways

  • Commercial mortgages offer car garages the opportunity for growth and expansion
  • Understanding eligibility criteria and the roles of brokers, lenders, and solicitors is crucial for success
  • Financial aspects, including repayment terms and rates, should be carefully considered before taking the next steps with commercial mortgages

Understanding Commercial Mortgages

When considering business finance for your car garage in the UK, it’s essential to understand the basics of commercial mortgages. Commercial mortgages are property loans tailored to businesses in various industries, including car dealers, petrol stations, repair shops, and other automotive trades. These mortgages can help you secure a property to expand or develop your business operations.

A key aspect of commercial mortgages is their interest rates. Typically, the rates for commercial mortgages are slightly higher than residential mortgages. This is due to the greater perceived risk involved in lending to a business compared to an individual. However, interest rates can vary greatly depending on the borrower’s credit history, the property’s value, and the lender’s assessment of the business’ financial stability.

Apart from interest rates, commercial mortgages come with various factors to consider. Some of these factors include the loan-to-value (LTV) ratio, repayment terms, and fees associated with the mortgage. When planning your business finance strategy, it’s essential to understand how these factors can impact your property investment and overall financial success.

Lenders will often require an assessment of your business’ financial stability and your personal credit history when considering a loan application. This assessment may include a review of your business plan, financial statements, and any existing debt or financial commitments. Additionally, many lenders may also require a deposit or down payment on the property, which may vary depending on the value of the asset and the amount you wish to borrow.

When applying for a commercial mortgage, it’s essential to research various financing options available in the market. A Mortgage Broker and Adviser can provide valuable assistance in finding the right commercial mortgage tailored to your needs and industry requirements. They can help you to navigate the complex world of commercial property finance, ensuring you find a suitable mortgage with competitive terms and interest rates suitable for your business.

In conclusion, understanding commercial mortgages is essential for any business seeking to invest in UK car garage properties. By researching the various aspects of these mortgages and seeking professional advice, you can secure the financing required to grow your business and achieve long-term success.

Eligibility Criteria for Commercial Mortgages

When it comes to applying for a commercial mortgage for your car garage, there are several factors lenders consider. Understanding the eligibility criteria can help you better prepare your application and increase your chances of success.

Firstly, your credit score plays a crucial role in determining your eligibility. Lenders assess your credit rating to determine the risk associated with lending to your business. A higher credit score increases your chances of securing a favourable mortgage deal. It’s essential to review your credit report and address any outstanding issues before applying for a commercial mortgage.

Another important factor considered by lenders is the financial health of your business. As the owner of a car garage, it’s crucial to demonstrate a steady cash flow and strong financial performance. Lenders will analyse your business’s income, debts, and overall financial stability to gauge the ability to repay the mortgage. Ensuring your financial records are up-to-date and well-documented is essential for a successful application.

Small businesses, in particular, need to be aware of the additional challenges they may face when applying for a commercial mortgage. Lenders may require proof that your car garage has been successfully operating for a minimum number of years. Additionally, lenders may require a more substantial deposit for small businesses to reduce their risk. It’s crucial to consider these factors and plan accordingly to improve your chances of meeting the eligibility criteria.

In summary, understanding and addressing the key eligibility criteria for a commercial mortgage, including credit score, financial health, and specific requirements for small businesses, is crucial for securing a mortgage that suits your car garage needs. Careful preparation and a focused approach can help you successfully navigate the application process and achieve your goals.

Broker and Lenders

When you are looking for a commercial mortgage for your car garage in the UK, it is essential to work with a knowledgeable broker who can connect you with the best mortgage lenders. A broker will help you navigate the complex world of commercial mortgages, ensuring you get the right deal to secure your property.

Working with an experienced broker, like those found at Commercial Mortgage Broker UK, will provide you with a wide range of options from various lenders. Your broker will help you identify suitable mortgage lenders by assessing their terms, interest rates, and loan amounts to match your specific needs.

It is essential to understand that commercial mortgage rates for car garages can differ significantly among lenders. Rates typically start from 4.5% and can vary depending on factors such as the amount borrowed and the loan term. Your broker will assist in finding the lowest possible rates to make your investment affordable and sustainable in the long run.

Mortgage lenders are more likely to lend to businesses with a proven track record, a strong business plan, and sufficient collateral for the loan. It is crucial to present your case in the best possible light to increase your chances of securing a commercial mortgage. A broker can help you do this by guiding you through the application and documentation process.

In conclusion, working with a proficient broker and a reliable lender is vital when it comes to obtaining a commercial mortgage for your car garage in the UK. By engaging the services of a professional broker, you are ensuring that you find the most suitable mortgage lender and secure the best possible deal for your investment.

Acquiring Commercial Mortgage for Car Garages

In the UK, acquiring a commercial mortgage for your car garage can feel like a daunting process. However, by understanding your options, you can find the right solution for your business needs. Here, we will provide guidance on how to obtain a commercial mortgage for car garages and showrooms.

Firstly, you’ll want to determine the amount you need to borrow. This may include the cost of the property, renovations, and any additional expenses to get your garage up and running. Keep in mind that commercial mortgage providers typically offer loans for up to 75% of the property’s value. You’ll need to provide a deposit for the remaining amount, which can vary depending on the provider.

Purchasing a car garage or showroom comes with its unique challenges. For example, you may need to consider any necessary modifications to meet environmental regulations due to the rise of electric vehicles in the UK. Therefore, it’s crucial to factor these costs into your commercial mortgage application and ensure you have adequate funds to cover these expenses.

Moreover, when applying for a commercial mortgage, be prepared to present a well-structured business plan that includes projected financials and demonstrates the viability of your car garage or showroom. Lenders often require evidence of past experience in the automotive industry or proven managerial capabilities, so be sure to highlight any relevant qualifications or experience.

In conclusion, acquiring a commercial mortgage for your car garage or showroom in the UK requires thorough research and an understanding of the various options available. Ensure you have a solid business plan, factor in all expenses, and take your time comparing different mortgage providers to find the best deal. This will help you start your journey towards a successful car garage business in the UK.

Financial Aspects

When considering a commercial mortgage for your car garage, it is important to understand the financial aspects of this arrangement. First and foremost, you need to be prepared for the associated costs. These include the deposit, which generally falls around 30% of the property’s value, and the fees for the loan itself, such as arrangement or valuation fees.

Interest rates play a crucial role in determining the overall cost of your commercial mortgage. In the UK, you can choose between a fixed interest rate or a variable interest rate. Fixed rates provide peace of mind by offering consistent payments for the entirety of an agreed term. This allows you to manage your budget with more certainty. On the other hand, variable interest rates can offer lower initial payments, but they fluctuate depending on the market, which may affect your ability to plan financially.

It’s worth noting that commercial mortgages generally have higher interest rates than residential ones, as lenders consider the commercial sector to be riskier. The exact interest rate will depend on the loan-to-value (LTV) ratio, which typically has a cap of around 70%. Additionally, the term of the commercial mortgage can vary from five to 40 years, making it essential to assess the long-term implications of your decision.

Understanding rent as a part of your commercial mortgage for car garages is an important factor to consider. By purchasing your property instead of renting, you build equity into your business and can benefit from potential increases in property value. However, if your operational expenses are high, the additional responsibility of a commercial mortgage may become more difficult to manage, affecting your abilities to reinvest in your business.

In conclusion, it is essential to consider the different financial aspects of commercial mortgages for car garages, such as deposit, fees, interest rates, and rent. Ensure that you understand the implications of your choice, both in cost and the flexibility of your financial planning. By doing so, you can make an informed decision that will help ensure the growth and success of your business in the long run.

Key Details on Repayments

When considering a commercial mortgage for your car garage in the UK, it’s essential to understand the key details regarding repayments. This will ensure you can plan your finances effectively and meet your obligations without any difficulty.

Repayment terms for commercial mortgages vary depending on your lender and your specific circumstances. Generally, the term length can range from 3 to 25 years, with the option of either capital repayment or interest-only repayments for a set period. It’s crucial to carefully evaluate your business’s cash flow and financial projections before committing to a particular repayment term.

You might encounter situations where you’d need some flexibility with your repayments to accommodate unexpected financial challenges. In such cases, you can explore the possibility of a capital repayment holiday. This is a temporary break from making capital repayments, during which you only make interest payments on your debt. It is typically granted for a limited period, such as 6 or 12 months, and is subject to your lender’s approval. Keep in mind that taking a capital repayment holiday will extend your loan term and potentially increase the overall cost of borrowing.

In the context of debt, commercial mortgages for car garages should be manageable, ensuring your business remains financially stable. To achieve this, you should have a clear understanding of your current debt levels, and avoid overextending your borrowing. It’s essential to assess how the new commercial mortgage will fit into your existing debt structure and avoid jeopardising your business’s financial health.

In conclusion, when seeking a commercial mortgage for a car garage, it’s important to be aware of the key details regarding repayments. This includes exploring repayment terms, understanding the implications of debt, and considering options like capital repayment holidays. By adopting a realistic and informed approach to managing your repayments, you can ensure your business remains financially secure and continues to thrive.

Key Role of Solicitors

In the process of obtaining a commercial mortgage for a car garage in the UK, solicitors play a crucial role. They offer valuable guidance and expertise throughout the various stages of acquiring a commercial property loan. As a client, understanding how they can support you is essential in making the process smoother.

Firstly, your solicitor will help you understand the legal aspects of a commercial mortgage agreement. They are well-versed in the complexities involved in property law and can simplify the terms for you, ensuring that you have all the information you need to make informed decisions. This is especially important when it comes to negotiating the terms and conditions of your mortgage contract.

Secondly, solicitors can assist you in conducting due diligence on the car garage property you are planning to purchase. They will carry out essential searches to identify any potential issues, such as planning restrictions, environmental concerns, or disputes involving the property. This information is crucial in protecting your investment and avoiding potential legal complications in the future.

Another vital aspect your solicitor handles is the preparation and review of essential documents like the mortgage deed, the sale and purchase agreement, and any other contracts involved in the transaction. Their expertise ensures that these legal documents are properly drafted and meet your requirements, ultimately providing you with legal protection throughout the transaction.

In addition, solicitors are responsible for liaising with other parties involved in the commercial mortgage process, such as the lender, the valuer, and the other party’s solicitor. This coordination is essential to make sure all the necessary paperwork is completed and submitted on time, helping you avoid unnecessary delays or setbacks.

Finally, your solicitor will oversee the completion of the transaction, ensuring that funds are correctly transferred and the ownership of the property is legally transferred to you. This final step is crucial, as it helps you avoid any potential disputes or difficulties relating to the property’s ownership.

Remember, engaging a knowledgeable and experienced solicitor is essential when pursuing a commercial mortgage for a car garage in the UK. Their expertise will undoubtedly be an invaluable resource, helping you navigate the complexities of property law and secure your investment confidently.

Commercial Mortgage and Small Business Owners

As a small business owner, acquiring a commercial mortgage can be a vital step in purchasing a car garage or expanding your existing facilities. The key to securing a solid commercial mortgage is a well-crafted business plan that outlines your future projections and objectives.

When considering a commercial mortgage for a car garage, it’s essential to understand that these loans typically cover around 75% of the property’s value. As such, you need to have a clear idea of the investment required to complete your desired purchase or development plans. For most small businesses, this means establishing a feasible budget and researching the local market thoroughly.

To start the process, you should contact an experienced commercial mortgage broker so they can contact various lenders to gauge their offerings and requirements for a commercial mortgage. Some lenders in the UK market, with a minimum loan value of £35,001 and terms of up to 25 years, on fixed or variable rates . Make sure to compare their rates and conditions, as mortgages may differ from lender to lender.

Preparing a robust business plan is crucial. Your plan should demonstrate your understanding of the current market and competition, as well as your unique selling points and projected growth. It should also include financial forecasts, balance sheets, and break-even analysis, to showcase your anticipated revenue and profits. This information will help lenders assess your ability to repay the loan and manage the car garage effectively.

Along with a comprehensive business plan, it’s important to have a clear vision of how your car garage will operate, whether it’s servicing petrol-powered vehicles, electric vehicles, or a combination of both. The automotive industry is evolving, with millions of vehicles registered in the UK and the increasing popularity of electric cars (source). Keeping up with these trends will ensure your garage remains competitive and profitable.

In summary, acquiring a commercial mortgage for your car garage hinges on having a strong business plan, a realistic budget, and a clear understanding of the local market. By following these guidelines and maintaining a competitive edge, you’ll be well-equipped to thrive in the automotive industry.

The Benefits and Drawbacks

In this guide, we will discuss the benefits and drawbacks of commercial mortgages for car garages in the UK. It’s essential to understand the various aspects of this financial product to make an informed decision.

One of the primary benefits of a commercial mortgage for your car garage is that it provides you with a level of stability. By owning the premises, you have more control over the space and can make decisions that positively impact your business. Additionally, the interest payments on a commercial mortgage are tax-deductible, which could significantly reduce your tax liabilities. As the property value increases over time, your investment and business capital may also see a boost.

A commercial mortgage offers you the flexibility to use the funds for various purposes within the automotive trade, including new and used car dealerships, petrol stations, repair shops, body shops, and commercial vehicle dealers. This adaptability allows you to grow and expand your business as per your unique requirements.

However, there are some drawbacks to commercial mortgages for car garages. One of the major concerns is the potential for financial risk. Taking on a mortgage requires a long-term financial commitment, and it’s vital to understand how that will impact your business’s cash flow. Defaulting on a commercial mortgage could lead to the loss of your property and jeopardise your business assets.

Another potential drawback is the responsibility that comes with property ownership. As the owner, you are responsible for maintenance costs and any necessary repairs. Additionally, if you choose to sell the property in the future, it may take longer to find a buyer or obtain the desired sale price, compared to a residential property.

In summary, commercial mortgages for car garages in the UK offer several benefits such as stability, tax deductions, potential for capital growth, and flexibility for business expansion. However, it’s crucial to consider the drawbacks like financial risk, responsibility, and potential resale challenges before making a decision. Weighing the pros and cons and assessing how they apply to your unique situation will help you make the best choice for your business.


In the UK, a number of major banks as well as specialist lenders have been involved in providing commercial mortgages for car garages. They have helped various businesses expand, improve their premises, and grow their customer base. 

The lenders we work with has a strong reputation for providing financing solutions to businesses in the automotive sector. They have catered to the needs of car garages seeking commercial mortgages, offering competitive interest rates and flexible terms. They understands the challenges faced by car garages and supports them throughout the mortgage application process.

One particular example involves a client who wanted to purchase a car garage with a commercial mortgage. The bank provided the necessary funds, and the client was able to refurbish the premises, meeting all the modern industry standards. This successful case highlights lender’s dedication to helping car garages with their financial needs.


These case study demonstrate how our lenders, provide valuable financial assistance and support to car garages in the UK. They offer a variety of tailored commercial mortgage options that help businesses expand, grow, and succeed.

Commercial Mortgage Rates

When considering a commercial mortgage for your car garage, it’s essential to be aware of the current commercial mortgage rates and interest rates in the UK. These rates are significant as they directly impact your monthly repayments and the overall cost of your loan. In this section, we will discuss the factors that influence commercial mortgage rates and where to find competitive rates.

Firstly, commercial mortgage rates tend to be higher than residential mortgage rates. This is because they are often considered riskier to the lender due to the nature of commercial properties and businesses. However, this does not mean you cannot find a competitive rate. Lenders will assess various factors when determining your specific rate, such as your credit history, business financials, loan-to-value (LTV) ratio, and the overall condition of the property.

A key aspect to focus on is the LTV ratio. Generally, commercial lenders offer between 65% to 75% LTV, which means you will have to provide a substantial deposit. The higher your deposit, the lower your LTV ratio and the better the deal you are likely to secure. To improve your chances of securing a favourable rate, ensure your business financials are up-to-date and strong, your credit history is in good standing, and the property meets the lender’s criteria.

To compare commercial mortgage rates for car garages in the UK, you can turn to a variety of sources. You can either approach lenders directly or use an experienced broker who can guide you in securing the best possible deal for your needs.

In conclusion, understanding commercial mortgage rates and interest rates is crucial in obtaining a suitable and cost-effective loan for your car garage. By considering the factors that affect these rates and utilising the available resources, you should be able to secure a competitive commercial mortgage tailored to your business requirements. Remember to consult with professionals and carry out thorough research to ensure the most favourable outcome.

Conclusion and Next Steps

As you’ve now gained valuable insight into commercial mortgages for car garages in the UK, it’s crucial to explore the next steps that will help you secure the best possible deal for your business.

First, consider seeking professional consultation to ensure you’re making informed decisions and weighing up all available options. Expert consultants can assist you with understanding the market intricacies and offer tailored advice to help you navigate the process successfully.

During your consultation, it is essential to establish a strong connection with your relationship manager. This person will act as your primary point of contact throughout the commercial mortgage process, offering support and guidance as needed. By fostering a positive relationship, you can trust your manager to be deeply invested in your success, ensuring they work diligently on your behalf.

Next, prepare for a thorough assessment of your business and finances. Provide accurate and up-to-date financial information, demonstrating your ability to meet the repayment schedule of the commercial mortgage. Remember that attention to detail is crucial at this stage, as lenders will scrutinise your data to determine risk factors and assess your creditworthiness.

Taking these next steps will set you on a favourable path towards securing your commercial mortgage for a car garage. With a clear understanding of the process, a strong relationship with your manager, and a well-prepared assessment, you’ll be in the best possible position to realise the growth and success of your business in the UK automotive industry.

Frequently Asked Questions

What is the required deposit for a car garage commercial mortgage?

The required deposit for a car garage commercial mortgage typically ranges between 25% to 50% of the property value. The exact amount depends on various factors, such as your creditworthiness, business experience, and the lender’s requirements. Keep in mind that a higher deposit may result in more favourable mortgage terms, such as lower interest rates or longer repayment terms.

What are the best commercial mortgage rates for car garages in the UK?

Commercial mortgage rates for car garages vary depending on factors like the amount being borrowed, the loan-to-value ratio, the creditworthiness of the applicant, and prevailing market conditions. It is essential to shop around and compare offers from different lenders to secure the best possible rates. Remember that it’s not just about the interest rate but also the repayment terms and fees that may affect the overall cost of the mortgage.

Which lenders provide commercial mortgages for car garages?

Various lenders in the UK offer commercial mortgages for car garages, including banks, building societies, and specialist finance providers. It is crucial to research different lenders and their specific criteria, as this may impact your eligibility for a commercial mortgage. Also, consult a commercial mortgage broker to help you find appropriate lenders and guide you through the application process.

How do I compare commercial mortgages for car garages?

When comparing commercial mortgages for car garages, you should pay attention to several factors, including:

  • Interest rates
  • Loan-to-value ratio
  • Fees, such as arrangement fees or early repayment fees
  • Loan term and repayment terms
  • Lender’s reputation and financial stability
  • Flexibility, such as the ability to make overpayments or take payment holidays.

Keep in mind that getting a lower interest rate may be less important if associated fees or repayment terms are less favourable. Comparing these factors will help you find the right commercial mortgage for your car garage.

Can a new business secure a commercial mortgage for a car garage?

Yes, a new business can secure a commercial mortgage for a car garage. However, you may face specific challenges, such as having limited trading history or a less established credit score. Lenders may require additional financial information and a more substantial deposit to offset the perceived risk of lending to a new business. Your determination and thorough preparation can help convince lenders of the viability of your new business.

How do commercial mortgage calculators work for car garages?

Keep in mind that these calculators are only a starting point and may not reflect the exact terms you’ll receive from a lender. Always consult with a financial professional when making decisions about commercial mortgages for your car garage.

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