Understanding Commercial Mortgage Rates

Typical commercial mortgage rates

Most commercial mortgages will be offered with a choice of fixed interest rate or a variable interest rate, sometimes referred to as a floating rate. Both rates can be beneficial for your business, depending on what your needs are and what your business values the most. 

Choosing which interest rate to go for should be a crucial step in your commercial mortgage decision making. Fixed rates are great if you want stability and a clear idea of how much you will pay on a monthly basis, whilst variable rates offer lower introductory interest, but can fluctuate up or down depending on the financial market’s effect on the NatWest Bank base rate. 

Differences between Fixed and Variable Interest rates

Fixed Interest Rates

A fixed interest rate gives you security that your repayments will not increase over your agreed term.

When interest rates are low, a fixed interest mortgage allows you to secure the low rate and benefit from lower repayments. 

With our commercial mortgage product, you can have the rate fixed for up to 15 years, meaning you know how much you will pay on a monthly basis.

Fixed rates are usually higher than variable interest rates, meaning repayments will be greater when the two are compared directly. 

Although, they can protect your business from the volatility of the financial market or other situations where stability is more valuable.

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Variable Interest Rates

A variable interest rate is affected by the financial market, meaning it can increase as well as decrease.

Smaller repayments thanks to the lower introductory rate when compared to a fixed rate. 

If commercial real estate equity to rises in value quickly, or you are planning to repay the mortgage fast, it could save you money.

As variable rates are affected by the financial market, there is a risk of uncertainty in how the rate will change with time.

The rate may increase your monthly repayments, although it can also fall over time, meaning you end up seeing a reduction in your commercial mortgage repayments.

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What happens when the agreed rate term finishes?

When your agreed fixed or variable rate period comes to an end, we will happily discuss your options. For most NatWest mortgages, the rate will go to our SVR (Standard Variable Rate), unless you decide to remortgage to a new rate.

Which commercial mortgage is right for me?

You value stability and want predictable payments

Unaffected by fluctuations caused by the financial market

If your biggest concern is stability and predictable repayments, a fixed rate could be the answer. It’s not exposed to the NatWest Bank base rate or the financial market movements that affect variable rates. You know how much you pay on a monthly basis, and can fix the rate for up to 15 years.

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You value potential lower payments but understand the risk

Interest rate affected by fluctuations on the financial market

If you believe the interest rates will remain stable, or even see a decrease, a variable rate could be the perfect choice for you. You need to take the risk of rates going up into account, as that is a possibility with a variable rate.

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Let us help you choose between fixed and variable rate


Our Commercial Mortgage offering can be tailored to your needs. Whether you want stability of a fixed rate, or want to benefit from lower variable rates, we can discuss your options and help you make the decision. 

If you want to switch your commercial mortgage with us, simply enquire online. We’ll be in touch to talk through possible solutions tailored to your business and property.

Additional support for your business

Thinking about Business premises?

There are several factors to consider before you decide on your business premises. We could help with the decisions and suggest ways you could finance it.

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Understand commercial re-mortgaging

Commercial re-mortgaging is a refinancing method for mortgages secured against commercial real estate. Find out more about commercial re-mortgaging with us.

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NatWest Commercial Mortgage

Owning your own premises could be a great way of growing your business without the constraints of renting. Find out more about commercial mortgages.

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