Guide
Is a commercial mortgage regulated, and what protects you
Updated
Borrowers often assume the protections around a home loan follow them into commercial property. Usually they do not, and the difference is worth understanding before you sign a facility letter.
Why most of it is unregulated
Consumer protections in UK lending broadly attach to individuals borrowing against a home they or a close relative occupy. A commercial mortgage to a company against an investment or trading property normally falls outside that.
That does not make it unsafe. It means the facility letter is the protection rather than a rulebook that fills gaps in your favour.
What may not be available
The Financial Ombudsman Service and Financial Services Compensation Scheme routes a consumer relies on may not be open to a corporate borrower, and the FCA's Consumer Duty is directed at outcomes for retail customers.
Some borrowing, particularly where a director gives personal security or where a property is partly residential and occupied by the borrower, can fall into regulated territory. It is a question worth asking rather than assuming either way.
Read the covenants
Commercial facilities carry ongoing obligations: minimum cover ratios tested periodically, loan to value covenants, and rights for the lender to revalue during the term. A breach can trigger a default even when every payment has been made on time.
Those clauses decide what happens on your worst day, and they are negotiable at offer stage and immovable afterwards.
Check the firm
The FCA's Financial Services Register is free and public. Search any lender or broker before sending documents or paying a fee, even where the facility itself is unregulated, because many firms here are authorised for other activities.
The FCA's scam guidance describes the pattern that recurs in commercial finance: urgency, an upfront fee, and an entity whose name is close to but not the same as the firm you were introduced to.