Understanding how much you may be able to borrow against a commercial property is an important first step in assessing a commercial property investment or business premises of purchase. Our Commercial Mortgage Calculator provides a quick estimate based on the property’s estimated purchase price or valuation, together with the expected monthly rental income the property will generate. It applies to a lender-style Interest Coverage Ratio (ICR) stress test to estimate the maximum loan amount the rental income could support, subject to a maximum loan-to-value (LTV) limit.
Property value validation
Monthly rental income validation
Please note: The figures generated by this calculator are estimates only and should not be relied upon as a mortgage offer or personalized advice.
A commercial mortgage calculator helps you estimate how much you may be able to borrow against a property used for business purposes or commercial investment.
Unlike a residential repayment calculator, this tool takes a commercial lending approach by applying an Interest Coverage Ratio (ICR) stress test. It estimates the maximum loan your rental income can support at a notional stress rate, then caps that amount at a maximum LTV percentage.
The calculator can help you:
Estimate the maximum loan based on rental income and the ICR stress test
Understand the property's loan-to-value position
See whether rental income or LTV is the limiting factor
Get a quick initial indication before speaking to an adviser
Compare different property values and rental income scenarios
It can be used as a starting point for both purchases and remortgages of commercial and semi-commercial property.
The amount the calculator estimates is based on two calculations.
The calculator applies to a standard commercial lending stress test. It calculates the maximum loan the monthly rental income could support when tested at a notional interest rate of 5.5% per annum, with a required Interest Coverage Ratio of 125%.
The calculator also applies a maximum LTV cap of 75%. Even if the rental income could support a larger loan, the result will not exceed 75% of the property's value.
The maximum commercial mortgage is therefore the lower of:
The amount supported by rental income under the ICR stress test
The amount allowed under the 75% LTV cap
The calculator uses the following steps to produce the estimate.
Annual Rent = Monthly Rental Income x 12
The following example is for illustration only.
Property value: £500,000
Expected monthly rental income: £2,000
ICR: 125%
Stress rate: 5.5%
Maximum LTV: 75%
Annual rent = £2,000 X 12 = £24,000
Maximum loan (ICR) = £24,000 / (0.055 X 1.25) = £24,000 / 0.06875 = £349,091
Maximum loan (LTV) = £500,000 X 0.75 = £375,000
Final maximum loan = Minimum (£349,091, £375,000) = £349,091
In this case, the property's value would allow up to £375,000, but the rent only supports £349,091.
Property value: £400,000
Expected monthly rental income: £2,500
ICR: 125%
Stress rate: 5.5%
Maximum LTV: 75%
Annual rent = £2,500 X 12 = £30,000
Maximum loan (ICR) = £30,000 / 0.06875 = £436,364
Maximum loan (LTV) = £400,000 X 0.75 = £300,000
Final maximum loan = Minimum (£436,364, £300,000) = £300,000
In this case, the LTV cap is the limiting factor. The rental income could support £436,364, but the calculator caps the result at £300,000 (75% of property value).
The Interest Coverage Ratio (ICR) stress test is the standard method used by commercial mortgage lenders to assess whether a property's rental income is sufficient to support the borrowing.
The stress rate is used for the affordability calculation and may be higher than the initial rate you pay.
An ICR of 125% means the rent must equal at least 125% of the mortgage interest used in the stress test.
The lender's risk appetite
The mortgage product selected
Your tax position
Personal or limited-company ownership
The length of the initial product period
The type of property
Your experience as a commercial property investor
Because lender calculations differ, the figure shown by the calculator should only be treated as an initial estimate.
Loan-to-value, or LTV, compares the mortgage amount with the property's value.
For example, borrowing £300,000 against a property valued at £400,000 would represent 75% LTV.
A larger deposit reduces the LTV and may provide access to a wider selection of mortgage products and rates, subject to lender criteria.
In practice, commercial mortgage deposit requirements vary:
Standard commercial property: typically 25-30% deposit, or 70-75% LTV
Higher-risk properties or applicants: may require 35-40% deposit
Strong applications with established trading history: may access up to 75-80% LTV
Our commercial mortgage calculator gives a useful estimate, but lenders vary in how they apply the ICR test and assess commercial applications.
The calculator estimates the maximum loan amount only. It does not provide a complete picture of the cost of purchasing or refinancing a commercial property.
Tax treatment depends on individual circumstances and may change. Appropriate tax and legal advice should be obtained where required.
The calculator uses a simplified ICR and LTV model to provide an estimate. The actual mortgage amount available may be affected by:
The calculator does not distinguish between interest-only and capital repayment methods. In practice, commercial mortgages can be structured either way.
The monthly payment covers only the interest charged. This results in lower monthly payments but does not reduce the original mortgage balance. You will need a credible repayment strategy, which may include selling the property or refinancing at the end of the term.
Each monthly payment covers the interest and repays part of the original loan. The monthly payment will be higher than an equivalent interest-only mortgage, but the balance reduces over time. The appropriate repayment method will depend on your circumstances, cash flow, and the lender's criteria.
Yes. You can use the calculator without charge or obligation.
A Commercial Mortgage Calculator is a useful starting point, but choosing a commercial mortgage involves more than comparing the expected rent with the maximum loan. Rental income requirements, mortgage fees, property type, ownership structure, tenant covenant, lease terms and your longer-term plans may all affect which options are available.
Pure Capital can help you explore commercial mortgage products and understand the potential borrowing costs based on your full circumstances.
