Calculate Your Commercial Mortgage

Use our commercial mortgage calculator to estimate your monthly payments for a commercial mortgage. This type of mortgage is intended for properties used by one or more businesses.

If you’re seeking information on buy-to-let mortgages for properties purchased through a limited company, please refer to our buy-to-let mortgage calculator.

Our calculator provides sample monthly payments based on the current commercial mortgage rates for your loan-to-value ratio. Please note that this is not a complete mortgage illustration, nor does it guarantee the rates you may receive.

The actual rate and monthly payment will vary depending on factors such as the rental income from an investment property or the financial status of the business occupying the property.

How are commercial mortgages calculated?

Commercial mortgages are determined by several key factors, including the loan amount, interest rate, loan term, and the borrower’s creditworthiness. Below is a breakdown of these essential considerations:

  • Loan amount: This refers to the sum the borrower intends to borrow. Lenders assess the property’s value and the borrower’s repayment capability to determine the feasible loan amount.
  • Interest rate: The interest rate charged on the loan often depends on market conditions, the borrower’s creditworthiness, and the duration of the loan.
  • Loan term: This is the period over which the borrower is expected to repay the loan. Terms can vary widely, from a few years to decades, based on the agreement between the lender and the borrower.
  • Collateral: Commercial mortgages are typically secured loans, with the purchased or refinanced property serving as collateral. The value of this collateral influences the maximum loan amount that a lender might offer.
  • Borrower’s creditworthiness: Lenders evaluate the borrower’s credit score and history to gauge the risk of lending. Borrowers with robust credit histories are generally more likely to secure favourable terms. Some lenders may accommodate those with less favourable credit; working with a specialist broker can help navigate these options.

In sum, the specifics of a commercial mortgage depend on a mix of these factors, shaped by the lender’s evaluation of both the borrower’s financial stability and the property’s worth.

What are the monthly payments for a commercial mortgage?

The monthly payments on a commercial mortgage are influenced by various factors, such as the loan amount, the interest rate, and the loan term. Additionally, the type and location of the property can also impact the payments.

You can estimate your monthly payments using a commercial mortgage calculator like the one provided here.

Please keep in mind that these calculations are illustrative. The actual monthly payments for your commercial mortgage may differ based on the specific terms of your loan.

Can I get a commercial mortgage with no deposit?

No, a deposit is required for a commercial mortgage.

If you don’t have cash savings for a deposit, you can consider using the equity from any other property you own as a source. This approach is often used by property investors looking to expand their portfolios.

It’s common for landlords to re-mortgage existing rental properties to release equity for reinvesting in new purchases. Similarly, you can also tap into the equity of your personal residence to fund a deposit for a commercial mortgage.

However, it’s crucial to proceed with caution. Borrowing against property comes with the risk of repossession if you fail to maintain mortgage payments. Careful planning and consideration of the risks involved are essential.

Is it possible to get an interest-only commercial mortgage?

Yes, obtaining an interest-only commercial mortgage is possible.

In an interest-only commercial mortgage, the borrower pays only the interest charges for a set period, usually several years. During this time, the principal amount—the initial sum borrowed for purchasing the property—does not decrease.

Such mortgages are popular among commercial property investors looking to minimise monthly payments while owning a property. The lower payments provide flexibility, allowing them to allocate funds to other investments or property enhancements.

However, interest-only mortgages carry risks. The entire principal amount must be repaid at the end of the term or refinanced. If property values fall or refinancing is not possible, the borrower might face difficulties repaying the principal, potentially leading to property repossession by the lender.

It’s crucial to weigh the potential risks and benefits carefully when considering an interest-only commercial mortgage.

How can I get a commercial mortgage?

Securing a commercial mortgage involves several steps and can vary by lender and the type of property you wish to finance. Here are some general steps to guide you through obtaining a commercial mortgage:

  • Assess Your Financing Needs: Start by determining how much you need to borrow and the purpose of the loan. This clarity will help you identify the appropriate lender and mortgage product for your situation.
  • Compare Lenders: With your borrowing needs in mind, explore options from lenders experienced in commercial mortgages. Consider working with a specialist commercial mortgage broker who can help navigate the vast number of available lenders to find the best fit for your needs.
  • Prepare Financial Documents: You will need to provide various financial documents, such as a business plan, financial statements, tax returns, and bank statements. Organising these documents in advance can expedite the application process. A broker can greatly assist by handling most of this preparation.
  • Complete the application: Choose a lender and fill out their commercial mortgage application, which will ask for details about your business, finances, and the property you intend to finance. Your broker will handle this step and proceed only after you have reviewed and agreed to the recommended product.
  • Underwriting and Approval: The lender will review your application and conduct a financial analysis. They may also require a property valuation to confirm its market value aligns with the loan amount. This step is crucial to determining whether they will approve your mortgage.
  • Final Approval and Funding: Upon approval, the funds will be disbursed to you, enabling you to complete the property purchase.

The process of obtaining a commercial mortgage can be intricate and time-consuming, emphasising the importance of partnering with a reputable lender and possibly a specialist broker. This partnership can ensure thorough due diligence and streamline the administration involved, providing you with peace of mind throughout the process. Remember, commercial mortgages are not regulated by the Financial Conduct Authority, so selecting a well-established broker can be particularly beneficial.