Industrial Property Finance Deposits and LTV in 2026

Start with the arithmetic, because it settles most of the confusion in one line. A £500,000 industrial unit at 70 percent loan to value means a £350,000 loan and a £150,000 deposit. The lender advances 70 percent of the value and you put in the other 30 percent. Nothing about that changes if you flip the wording: a 30 percent deposit and a 70 percent LTV describe exactly the same cheque.

That is the single most useful thing to hold onto when you are pricing a purchase, because almost every question about how much you need to put in is really a question about leverage. In this piece we set out the deposit and LTV bands we see across the industrial market in 2026, the down-valuation trap that quietly enlarges the stake, the way interest cover can shrink a loan below its headline LTV, and everything that has to be funded alongside the deposit itself. It is written from the desk we run at Industrial Property Finance, where we arrange this lending across the whole of the UK.

Deposit and LTV are the same number

The reason the two terms get muddled is that they are quoted from different directions. A lender talks in LTV because its risk is measured against the value of the asset it holds as security. A buyer talks in deposit because that is the cash leaving the account. But on any given deal the two always add to 100 percent of the purchase value. Seventy percent LTV is a 30 percent deposit. Sixty-five percent LTV is a 35 percent deposit. If you can do one subtraction, you can read any commercial mortgage term sheet.

Where it gets slightly less tidy is that the lender lends against value, and value is not always the price you agreed. We come back to that below, because it is the mechanism that catches most first-time industrial buyers off guard. The clean way to sense-check any deal before you go further is to run the figure through the deposit and LTV calculator and see the loan, the stake and the leverage side by side.

Typical deposit bands on an industrial unit

There is no single deposit for industrial property, because the underwriting question is different depending on why you are buying. For an owner-occupier, a trading business buying the unit it will operate from, we typically see deposits from around 20 percent, with strong covenants reaching up to 70 to 80 percent LTV. The lender is underwriting the business behind the purchase: its accounts, its profits, and whether the trading cash flow comfortably covers the mortgage.

For an investor buying a unit to let, deposits typically run higher, around 30 to 35 percent, which is 65 to 70 percent LTV. Here the lender is underwriting the income rather than the occupier: the rent roll, the tenant, the unexpired lease term, the estimated rental value and how quickly the space would re-let if it fell vacant. Industrial demand from retailers, manufacturers, logistics operators and growing SMEs against constrained supply keeps well-located units full, and that occupier depth is part of why leverage on good industrial stock holds up. The deposit is not a fixed rule so much as the output of that risk read. A lower deposit, meaning higher leverage, is available where the asset, the income and the borrower are all strong, and the commercial mortgage deposit guide on the parent site walks through the bands in more detail.

The down-valuation trap

Here is the mechanism that enlarges a deposit without anyone changing the LTV. Lenders advance against the lower of the price you agree and the valuation the surveyor returns. When those two match, the arithmetic is the clean version above. When the valuation comes in below the price, the loan is calculated on the lower figure and the gap falls entirely on you.

Take the same £500,000 unit at 70 percent LTV, but assume the valuation lands at £460,000. The loan is now 70 percent of £460,000, which is £322,000, not £350,000. The price you owe the seller has not moved. So your deposit is no longer £150,000. It is the £500,000 price less the £322,000 loan, which is £178,000. A £40,000 down-valuation added £28,000 to the cash you have to find, even though the headline LTV never changed. This is why we always stress-test a deal against a cautious valuation before a client commits, rather than assuming price and value are the same thing.

Interest cover can shrink the loan below its headline LTV

LTV sets the ceiling on the loan. It does not guarantee you reach it. On investment deals, lenders also size the loan so that the net rent covers the interest with a clear margin, commonly around 125 to 200 percent depending on the lender and on whether the rate is fixed or variable. That test is the interest cover ratio, and on lower-yielding assets it can bite before the LTV limit does.

If the rent will only service a loan smaller than 70 percent of value, the interest cover test wins and the loan is cut to fit. Your deposit rises to fill the difference, so the effective LTV lands below the headline number the lender advertises. It is worth understanding the mechanics here, and the note on interest cover and DSCR sets out how the ratio is built. The practical takeaway is that on an investment purchase you size the deposit against both the LTV cap and the cover test, then work to the larger of the two.

What sits on top of the deposit

The deposit is not the whole of the cash you need at completion, and treating it as such is one of the more common planning errors we see. Commercial stamp duty land tax is charged on the purchase and is a separate cash outlay on top of the stake. Arrangement fees on the finance itself are typically 1 to 2 percent of the loan, and there are valuation and legal costs to fund as well.

Then there is VAT. Many commercial units are sold with VAT charged on the price, which you generally reclaim, but you have to fund it in the meantime, and that cash gap can be large relative to the deposit. Budgeting for the VAT float and the stamp duty at the same time as the deposit is what keeps a completion on track. The stamp duty calculator on the parent site will give you the tax figure to add into that total so the number you plan around is the real cash-to-complete, not just the deposit line.

Funding the stake and evidencing where it came from

Lenders care about two things regarding the deposit: that it exists, and that they can see where it came from. Source of funds evidence is a standard part of underwriting on any owner-occupier mortgage, and getting it ready early removes most of the friction late in a deal. Retained business profits, the sale of another asset, savings, or a director’s loan into the buying company are all routine sources, but each needs a clean paper trail from origin to completion account.

Where a buyer is short of cash but strong on the asset, part of the stake can sometimes be raised against equity in another property, which changes the shape of the funding but not the lender’s need to see the money and its provenance. On development and heavier-refurbishment purchases, mezzanine can sit behind the senior loan to reduce the cash a borrower puts in, which is the next point.

The 100 percent and 90 percent question

The two questions we are asked most often are whether you can borrow the whole price and whether a small deposit is enough. On a straight commercial mortgage, a 100 percent loan is not realistic. Lenders lend against the asset, and they want the borrower to have real capital at risk, which is the point of the deposit. Where borrowers do get close to the full cost, it is usually by adding additional security. If you have equity in another property to pledge, the lender can advance a high percentage of the target unit’s price because its overall exposure across both assets stays within its comfort zone. That is a different structure from a genuine no-deposit loan, and the 90 percent commercial mortgage guide sets out when high leverage is achievable and when it is not.

The other route to a smaller cash stake is a layered stack. Senior debt sits at its normal LTV, and mezzanine as a second charge tops the funding up to around 85 to 90 percent of cost in return for a higher preferred return, often in the 8 to 15 percent range. That reduces day-one cash but raises the blended cost of the money, so it is a trade, not free leverage. As a point of context on the wider market, UK industrial and logistics investment reached £10.5 billion in 2025, so this is a well-capitalised asset class where lenders compete for good deals, which helps a strong borrower on terms.

Common questions on industrial deposits and LTV

What is the minimum deposit for a commercial mortgage? For a strong owner-occupier buying its own premises, deposits start from around 20 percent, which is up to 80 percent LTV. For an investment purchase let to a tenant, expect around 30 to 35 percent. The exact figure is set by the asset, the income or trading covenant, and your track record, and it can rise if a valuation comes in below the price or if the interest cover test caps the loan.

Is a 10 percent deposit enough? For a commercial or industrial purchase, no, not on its own. A 10 percent deposit implies 90 percent LTV, and standard commercial lending does not reach that on the strength of the target asset alone. Getting there usually means pledging additional security or layering mezzanine behind the senior loan, both of which change the structure and, in the mezzanine case, the cost. If you are relying on 90 percent leverage to make a purchase work, that is the conversation to have with our industrial property finance team before you exchange, and the numbers behind these bands are easy to model on the deposit and LTV calculator first.

We arrange industrial property finance as a finance arranger and introducer, not a lender, and we do not provide financial, legal or tax advice. Industrial property finance for limited companies, investors and business borrowers is unregulated commercial lending that sits outside the Financial Conduct Authority’s regulated mortgage perimeter. Some lending, for example to an individual secured on a property linked to their home, can be a regulated mortgage contract, and we refer those cases to an appropriately authorised firm. All rates, deposits and figures here are indicative and depend on the deal. Industrial Property Finance is operated by Lenzie Consulting Ltd, registered in England and Wales, company number 08174104, registered office Lynch Farm, Kensworth, Dunstable, LU6 3QZ.