Commercial Mortgage Calculator: Estimate Monthly Repayments

It’s important that you understand your potential commercial mortgage repayments before taking on commercial borrowing.

Small differences in rates, fees or your mortgage term can have a significant impact on your borrowing costs.

Try our free commercial mortgage calculator now to understand your potential commercial mortgage costs.

Commercial Mortgage Calculator UK

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HOW DO I USE THE COMMERCIAL MORTGAGE CALCULATOR

Step 1 – Input your desired loan amount. The maximum loan to value (LTV) is usually 75% of the property value. You can calculate the LTV by multiplying the property value by the desired LTV and then pressing the percent key on your calculator.

For example, for 75% LTV on a £200,000 property you would input 200,000×75%. The result in this case would be £150,000.

Step 2 – Input the interest rate that you’re likely to pay. Information on likely rates based on a number of circumstances can be found further down the page.

Step 3 – Finally, input the number of years you’d like to borrow over. Terms between 3-25 years are usually realistic for commercial lending.

Once you’ve done this, hit calculate and your results will be shown.

Calculate Monthly Mortgage Repayments

When calculating your potential commercial mortgage costs, there are 4 factors that have a big impact on your monthly repayments. They are:

  • Loan amount
  • Interest rate
  • Loan term
  • Repayment type (interest-only vs capital repayment)

If you’re looking to manage your monthly repayments, the key variables that should be considered are the loan size, choosing between a fixed or variable rate and the repayment type (interest only is cheaper than repayment).

Choosing to borrow on an interest only basis can mean big savings on a monthly basis, but will increase your total cost of credit over the full mortgage term. If you’re unsure how to best balance this, consider seeking expert advice from an experienced commercial mortgage broker.

How Commercial Interest Rates Are Calculated

Commercial mortgage rates are calculated on a perceived risk basis.

The main factors that impact the rate charged are:

  • Loan-to-value (LTV)
  • Credit profile
  • Business performance/income (where your business will be occupying the property)
  • The tenant and lease profile (for commercial investment mortgages)
  • Property type and use
  • Loan size and term

Beyond this, your chosen interest type and choice of lender can make a big difference.

Your interest rate type comes down to a clear choice between a fixed rate or variable rate product.

Fixed rates offer you the benefit of predictable monthly repayments for the duration of the fixed term, although this may mean a slightly higher initial cost.

Variable rates will rise or fall in line with changes in the wider economy.

It’s also important to remember that each lender has their own product range, criteria and risk appetite. In general, high street banks will offer the lowest interest rates, but also have the lowest risk appetite.

Challenger banks tend to take a more relaxed approach to risk, but charge slightly higher rates to offset this.

Commercial Lending Fees to Include in Your Calculation

When calculating your commercial mortgage costs, you should also consider the following fees:

  • Lender arrangement fees – This fee is charged by the lender for setting up the loan. It is often a percentage of the loan amount, often 1.5-2%, and can be added to the loan in most cases.
  • Broker fees – These fees are paid for sourcing and arranging the finance and can vary significantly across the market. At ABC Finance, we offer whole of market access and bespoke advice with no broker fees.
  • Valuation fees - Commercial property valuations are usually more detailed and expensive than their residential counterparts. This fee is usually paid post offer.
  • Legal fees – The borrower typically pays both their own and lender’s legal costs.
  • Exit fees / early repayment charges - Important when repaying or refinancing early, especially within a fixed rate period.
  • Commitment or drawdown fees - Some lenders charge for reserving or releasing funds. This fee is usually deducted from the lender arrangement fee.