Commercial mortgage rates change daily based on market benchmarks (SONIA and the Gilt/swap curve), lender appetite, and deal-level risk. The best way to evaluate pricing is to compare the full term sheet: rate index and spread, fees, amortization, prepayment, reserves, covenants, and timing.
Clopton Capital sources lender quotes across banks, challenger banks, life companies, CMBS, and private lenders so you can compare options side-by-side.
In the UK market, interest rates are not “one size fits all.” Lenders price risk based on several macro and micro factors:
Market Benchmarks: Floating rates are typically priced as a margin over SONIA (Sterling Overnight Index Average). Fixed rates are usually pegged to the Gilt/swap curve plus a lender spread.
Property Fundamentals: Occupancy levels, in-place Net Operating Income (NOI), lease rollover (WAULT), and tenant credit quality.
Leverage and Coverage: Your Loan-to-Value (LTV) or Loan-to-Cost (LTC) ratio, as well as the Debt Service Coverage Ratio (DSCR).
Asset Type: Industrial and multifamily (BTR) currently command tighter spreads than secondary retail or office.
Sponsorship: The borrower’s track record, liquidity, and net worth.
Structure: Whether the loan is recourse or non-recourse, and the depth of interest reserves required.
Use this checklist to ensure you are looking at the “all-in” cost, not just the headline interest rate:
Index + Spread: For floating loans, check the margin over SONIA and any rate cap requirements.
Fees: Compare origination fees, legal fees, third-party report costs, and exit fees.
Amortization: Is it full-term interest-only, or does it transition to a 20–30 year schedule?
Prepayment: Understand the cost of exiting early (Yield Maintenance, Defeasance, or Step-down).
Required Escrows: Factor in required reserves for taxes, insurance, Capital Expenditure (Capex), and tenant improvements (TI/LC).
The “ESG” Premium: Properties with EPC ratings of A or B are increasingly qualifying for “Green Mortgages,” which often feature a 0.10% to 0.25% discount on the margin.
SONIA Spreads: Most floating-rate commercial loans are now quoted as SONIA + 2.25% to 3.50%.
Amortisation vs. Interest-Only: Choosing a full interest-only period (common in bridge and some investment loans) may result in a slightly higher interest rate compared to a traditional capital-and-interest repayment structure.
Send us your rent roll and Trailing 12-month (T-12) financials, and we will return competitive lender options.
Both. Permanent “investment” loans are often fixed to provide certainty. Bridge or short-term value-add loans are typically floating (SONIA + a spread).
Different capital sources (e.g., a bank vs. a debt fund) price risk differently. One may offer a lower rate but require a higher down payment or more restrictive covenants.
It depends on your business plan. If you are doing a “value-add” play, higher proceeds (leverage) might be more important than a slightly higher interest rate.
You can lower your rate by reducing leverage (Lower LTV), improving the property’s DSCR, stabilizing occupancy, and providing “lender-ready” financial reporting.
Because commercial pricing is so deal-specific, we focus on providing customized quotes based on your specific property and sponsorship profile.
