Test the Repayments, Cover and Cash Needed Before You Apply
Use this free commercial mortgage calculator to see what borrowing against a commercial property could cost each month, how much cash you would need to complete and whether the rent or the business profit can carry the loan. Enter the property value, your deposit, the term and the rate, and the calculator shows your repayments, total interest, loan-to-value and a stress test of the kind lenders run.
It works for offices, shops, warehouses, industrial units and other business premises, whether you trade from the building or let it to a tenant. If you need to borrow for general business purposes, such as equipment, stock or working capital, our business loan calculator is the better tool. For current pricing, see our commercial mortgage rates.
Commercial Mortgage Calculator UK
Estimate repayments, cash needed and whether the rent or business profit can carry the loan.
Get a formal quote
Happy with the figures? Open the form below and your results are added to the message box for you. Add your details and anything else we should know, send it, and a specialist will come back with lender options and a formal quote.
How to Use the Commercial Mortgage Calculator
Start by choosing whether you are buying a property or refinancing one you already own, and whether the building will be owner-occupied or let to a tenant. Your answer sets the maximum loan-to-value and the affordability check applied to the results, because lenders treat the two kinds of deal differently.
Next, enter the property value and your deposit, or the amount you want to borrow. Add the term and the interest rate, and choose between capital and interest repayments or interest-only. If you add the arrangement fee and your valuation and legal costs, the calculator also shows the cash you need to complete.
The last step depends on the deal. For an investment property, add the yearly rent and the calculator tests it against the interest. For an owner-occupied property, add the yearly profit available to pay the loan and it tests that against the full repayments.
What the Results Show
The calculator gives you the monthly payment, the interest you will pay across the term and the total repayable. It shows your loan-to-value and compares it with the ceiling a lender is likely to apply to that type of property.
It also shows the cash needed to complete, which adds your deposit, Stamp Duty and fees together. Stamp Duty is estimated for England and Northern Ireland using the non-residential rates, which are 0% on the first £150,000, 2% on the next £100,000 and 5% above £250,000. Scotland and Wales have their own taxes, and the rates can change. Confirm them before you commit.
Finally, the calculator runs the cover test. For an investment, it divides the rent by the interest at a stressed rate, and for an owner-occupier it divides business profit by the annual loan payments. It then shows the largest loan the property value allows and the largest loan the cover test allows, and the lower of the two is the realistic ceiling.
Loan Term, Repayment Type and Balloon Payments
Three settings move the monthly payment more than people expect, so check them before you trust the result.
Take a £350,000 loan at 6.75%. Spread over 15 years it costs about £3,097 a month and about £207,500 in interest. Stretch it to 25 years and the payment drops to about £2,418, but the interest climbs to about £375,500. A lower payment today means more paid overall. Commercial terms usually sit between 3 and 25 years, with a few lenders going longer.
Repayment type changes the picture again. On a capital and interest loan every payment chips away at the balance, which reaches zero at the end. On interest-only, the same £350,000 costs about £1,969 a month, but nothing is repaid. You still owe the whole £350,000 when the term ends, and the lender will want to know how you plan to clear it, usually by selling the property or refinancing.
Some commercial loans also carry a balloon. A portion of the debt is left over at the end of the term, and the monthly payments are smaller to make room for it. That final sum has to come from a sale, a new loan or your own cash, so settle the plan before you sign.
Change one setting at a time in the calculator and watch the monthly payment and the rent cover together. If a deal only works on a long interest-only term, expect more questions from the lender.
What Is a Commercial Mortgage?
A commercial mortgage is a loan to buy, refinance or raise money against property used for business, such as offices, warehouses, shops and units. The property is the security, and terms commonly run from three to 25 years. For mixed-use buildings, a semi-commercial mortgage may fit better.
How much you can borrow, the rate and the terms depend on the property, the strength of the business or tenant behind it and the deposit you can put in. For many owners, a commercial mortgage is a way to own the premises instead of renting them.
Rental or Owner-Occupied: Two Different Deals
A calculator treats every loan the same way, but a lender does not. The biggest factor in how your application is assessed is whether you will trade from the property or let it out. The two are priced and tested separately.
An owner-occupied commercial mortgage is for a business buying the premises it operates from, such as a dental practice buying its surgery or a manufacturer buying its unit. The lender leans on the trading business to judge affordability, and loan-to-value can reach 75% and sometimes 80%.
An investment commercial mortgage is for a property you will let to a tenant and hold for the income. The rent has to cover the interest by a clear margin, and loan-to-value usually sits between 65% and 75%, because the income depends on a tenant staying in place and paying.
Take a £400,000 property. As an owner-occupied purchase, a business with solid accounts might secure 75%, which is £300,000. As an investment, the same building might be capped at 70%, which is £280,000, and the rent would have to clear the interest by at least 125% before the lender agrees. The same building produces two different loans, two different deposits and two different sets of questions.
How Lenders Stress Test the Numbers
The figure a calculator gives you is a starting point. Before a lender agrees to anything, it runs the deal through its own affordability test, and that test is harder than the pay rate suggests.
For an investment property, lenders use the interest cover ratio (ICR). It sets the yearly rent against the yearly interest at a stressed rate, and most commercial lenders want rent to cover the interest by 125%, with some asking for 140%. A figure of 100% would mean the rent barely pays the interest, which lenders will not accept.
For an owner-occupied property, lenders use debt service coverage, shortened to DSCR. It compares the business profit available for debt with the full annual loan payments, capital as well as interest, and it is quoted as a multiple. Lenders commonly set the floor at 1.25 times, and our explanation of the debt service coverage ratio covers how it works. Strong trading accounts make this test straightforward, while thin margins or a recent dip in profit make it harder.
On top of either test, many lenders calculate the cover at a rate well above the one you will pay. A deal that works at the pay rate can still be declined if it fails at the stressed rate, which is a main reason two lenders reach different conclusions on the same property.
Worked Examples
Buying a property. A buyer purchases a commercial property for £500,000 with a 30% deposit of £150,000 and borrows £350,000. At 6.75% over 20 years on a capital and interest basis, repayments come to about £2,661 a month, and the interest across the 20 years is about £288,700.
An investment under stress. A landlord borrows £350,000 on an interest-only basis at 7% against a unit let for £40,000 a year. Annual interest is £24,500 and the rent covers it 163%. A lender testing at 9% sees interest of £31,500, which puts the cover at about 127%. That passes a 125% test and fails a 140% one, even though the rent has not changed.
An owner-occupier. A café owner buys the freehold of a unit they have rented for years. The price is £250,000, a 25% deposit puts down £62,500 and the loan is £187,500. At 7% over 15 years, repayments are about £1,685 a month, which is £20,224 a year. If the café has £32,000 a year available for debt, the DSCR is about 1.58 times, comfortably above a 1.25 minimum. The mortgage payment also replaces the rent the business was paying before.
What Rates and Costs to Expect
Pricing moves with the market, and our commercial mortgage rates page has the current figures. At the time of writing, owner-occupied deals start from about 5.5% at lower loan-to-value, and investment deals start from around 6%, with rates rising as the loan-to-value goes up.
Arrangement fees typically fall between 1% and 2% of the loan, and valuation and legal costs come on top. On a £500,000 loan, upfront costs commonly total several thousand pounds before legal fees, and a straightforward case often takes four to eight weeks from application to completion.
Before You Rely on the Numbers
A calculator gives a rough idea and not a decision. Lenders look at risk as well as figures, and they weigh the deposit, the type of property, how long the business has traded, the strength of its accounts and the location. Use the results to judge whether a deal is realistic, then take it to someone who can look at the whole picture.
Assumptions Behind the Calculator
The calculator assumes monthly payments at a fixed rate over the term you enter. The loan-to-value ceilings and cover levels are typical market figures, not any one lender’s criteria, and the Stamp Duty estimate covers non-residential property in England and Northern Ireland only. Fees you do not enter are not included, and variable rates, valuation shortfalls and lender-specific charges can change the real figures. The results are estimates and not an offer of finance.
Frequently Asked Questions
Will the calculator tell me exactly what I will pay?
It gives you a close estimate to work from, not an exact figure. The real rate depends on your business, the property and the lender. A commercial mortgage broker can give you a quote based on your deal.
How much deposit do I need for a commercial mortgage?
Most lenders ask for at least 25% of the property value, which means a loan of up to 75%. Some owner-occupied deals go higher, and a larger deposit usually brings a better rate because the lender takes less risk.
What if my business is new?
It is harder, but still possible. Some lenders will consider projections, the strength of the directors or other assets you own. The calculator still shows the payments you would be taking on.
Can I use the calculator for a property I want to let out?
Yes. Pick the investment option and add the yearly rent, and the calculator tests it against the interest. Lenders treat investment and owner-occupied deals differently, and the loan-to-value and rates will vary.
How do ICR and DSCR differ?
ICR compares rent with interest and is used mainly for investment properties. DSCR compares business profit with the full loan payments, capital and interest, and is used mainly for owner-occupied properties. Both are a test of whether the income can carry the loan.
Can the calculator tell me if I will be approved?
No. It runs the numbers, but approval depends on the lender, your business, your credit and how strong the deal looks on paper. The calculator shows whether a deal is worth taking further.
Should I speak to a broker before applying?
It usually saves time. Commercial lenders do not share the same criteria, and one may like a deal that another will not touch. A broker can match the deal to the right lenders before anything is submitted, which protects your credit file from avoidable declines.
Can I get a more accurate quote than the calculator gives?
Yes, but only once someone looks at the deal in detail. The calculator points you in roughly the right direction, and the real terms emerge when a broker presents the case to lenders.
Speak to a Specialist
If the figures look close, it is worth checking how a lender would actually see the deal. A quick review from a specialist commercial finance broker can highlight better options or flag problems early, before you commit time or money.
Commercial Finance Network is directly authorised and regulated by the Financial Conduct Authority. Commercial mortgages and other business finance are not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it.
Call us on 03303 112 646 / 01494 622 111 or email info@cfnuk.com to discuss a commercial mortgage for your property.
Related Pages
- Business Loan Calculator – estimate repayments and total cost on a business loan for equipment, stock or working capital
- Bridging Loan Calculator – estimate monthly costs and fees on short-term bridging finance
- Buy to Let Mortgage Calculator – test rent against interest on a residential investment property
- Limited Company Commercial Mortgages – how buying commercial property through a company or SPV works
- Commercial Mortgages – whole-of-market access to owner-occupied and investment commercial mortgage lenders
