Commercial Mortgage Calculator
Estimate the monthly payment on a commercial mortgage, and how comfortably net income covers it.
Calculator
Commercial Mortgage Calculator
Estimate the monthly payment on a commercial mortgage, and how comfortably net income covers it.
Optional: net operating income, to see the debt service cover (DSCR).
Commercial mortgages are unregulated business lending, assessed on the covenant and the property rather than personal affordability rules, and Section 24 does not apply to commercial property. This is an estimate only, not a quote or an offer of finance.
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How commercial mortgage affordability is assessed
A commercial mortgage, whether for an office, shop, warehouse or mixed-use building, is priced and assessed differently from a residential or buy-to-let loan. Rates are typically higher and terms shorter, reflecting the higher risk and lower liquidity of commercial property.
Lenders usually focus on the debt service cover ratio, or DSCR, the net operating income divided by the annual mortgage payment. A DSCR of 1.3x means the income covers the debt payment with 30% to spare, a common minimum many commercial lenders look for, though the exact figure varies by lender and sector.
Unlike residential buy-to-let, Section 24's mortgage interest restriction only applies to individual landlords letting residential property. Commercial property held personally, in a partnership or through a company follows ordinary business tax rules, where finance costs are generally deducted in working out taxable profit.
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A calculator gives you the shape of the answer. We confirm your exact figure and the reliefs that apply to you. Tell us about your situation for a no-obligation review.
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FAQ
Frequently asked questions
Requirements vary, but 1.25x to 1.4x net operating income to debt payment is common, with higher-risk sectors or shorter leases often needing a bigger buffer than well-let, long-lease property.
No. Section 24's restriction on mortgage interest relief applies only to individuals letting residential property. Commercial property finance costs are generally deductible in the normal way when working out taxable profit.
Commercial lending is unregulated and carries more risk: values can be more volatile, tenants can be harder to replace, and the loan is assessed on the business and property rather than a salaried income, so lenders price in a higher margin.