United Kingdom. Commercial property lending
Commercial mortgage calculator UK: the real monthly cost
Commercial mortgages are quoted as a margin over a base rate and decided on something else entirely: whether the property's income covers the payments by enough of a margin for the lender's comfort. This calculator prices the loan on both repayment bases and shows the fees separately, then the guides explain the two tests, debt service cover and loan to value, that decide whether the quote survives credit.
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What a UK commercial mortgage is actually decided on, 2026
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Borrowers compare margins. Credit committees compare cover. This table sets out what a lender tests, what moves each test, and the question that settles it before you spend money on a valuation.
The Bank Rate figure is the Bank of England's published rate, 3.75% effective 18 December 2025, read on 15 August 2026 and cited below. No margin, fee level or minimum cover ratio is published here, because commercial lending is priced and credit-assessed per deal against the property, the income, the covenant and the borrower's experience, and no public source sets a market standard. Where a threshold is described as a lender minimum, that is a statement that lenders set one, not a claim about its level. The calculator's defaults are round numbers to edit.
| What the lender tests | What it is measuring | What moves it | What to ask, in writing |
|---|---|---|---|
| Loan to value | Loss if they have to sell | Valuation, not purchase price | Whose valuation, and do I pay for it whatever the outcome? |
| Debt service cover | Whether income covers payments with room | Rent or trading profit, and the payment basis | Is cover tested on capital and interest, or interest only? |
| Covenant strength | Who is actually good for the debt | Tenant quality, or your trading record | What tenant information do you need, and for how long a term? |
| Lease length against loan term | Whether income outlives the debt | Unexpired term and break clauses | What happens if the lease ends before the loan does? |
| Property type and use | How saleable the security is | Specialist use narrows the buyer pool | Is this property type inside your appetite at all? |
| Experience | Whether you have done this before | Track record with similar assets | What evidence of previous holdings do you want? |
| Personal guarantees | Recourse beyond the property | Loan to value and covenant | What guarantee is required, and is it capped? |
- Bank Rate has been 3.75% since 18 December 2025, down from 4.00% in August 2025 and 4.25% in May 2025.
- Debt service cover is usually the binding test on a commercial mortgage rather than loan to value, so income drives borrowing capacity more than equity does.
- Testing cover against interest only rather than capital and interest produces a materially more comfortable ratio, and lenders differ on which they use.
- An arrangement fee added to the loan rather than paid on completion accrues interest for the full term.
- Where the unexpired lease term is shorter than the loan term, the income securing the debt ends before the debt does.
Cite this page
“What a UK commercial mortgage is actually decided on, 2026”, Commercial Mortgage Calculator, https://commercialmortgagecalculator.uk/ (updated 2026-08-15). The Bank Rate figure is the Bank of England's published rate, 3.75% effective 18 December 2025, read on 15 August 2026 and cited below. No margin, fee level or minimum cover ratio is published here, because commercial lending is priced and credit-assessed per deal against the property, the income, the covenant and the borrower's experience, and no public source sets a market standard. Where a threshold is described as a lender minimum, that is a statement that lenders set one, not a claim about its level. The calculator's defaults are round numbers to edit.
Want this priced properly?
The calculator uses the margin you typed. What a lender will actually offer depends on the property, the covenant and the deal. Tell us the shape of it and a commercial mortgage broker will come back with real terms.
Read next
Every figure sourced and dated.
How much you can borrow on a commercial mortgage
Loan to value sets a ceiling and debt service cover usually sets the real limit. How the two tests interact, and which one binds first.
Commercial mortgage fees, and the one that compounds
Arrangement, valuation, legal and broker fees on a commercial mortgage, and why adding the arrangement fee to the loan costs more than it looks.
Is a commercial mortgage regulated, and what protects you
Most commercial property lending sits outside FCA regulation. What that means for complaints and compensation, and what to check instead.
The basis
- Rates are built as the Bank of England's Bank Rate plus a margin. Bank Rate has been 3.75% since 18 December 2025 (Bank of England). Some lenders price over their own cost of funds instead, which you cannot track independently; ask which yours uses.
- No margin is published here as typical. Commercial lending is priced per deal against the property, the covenant and your experience, and no public source sets a market rate, so the defaults above are round numbers to edit rather than a benchmark.
- Capital and interest and interest only are both shown, so this is also a commercial interest only mortgage calculator: commercial terms are frequently written on one basis and quoted on the other. The gap between the two lines is the capital you are repaying, not a saving.
- Fees are shown separately from the loan. Lenders will often add the arrangement fee to the advance, which spreads it but charges interest on it for the full term; the calculator assumes you pay it on completion so the two options can be compared.
- Not modelled: early repayment charges, exit fees, and the cost of any required valuations during the term. Ask for all three in writing before you compare quotes.
- Debt service cover is calculated here against the capital and interest payment. Some lenders test it against interest only, which produces a much more comfortable number; ask which basis yours uses, because it changes how much you can borrow.
Commercial Mortgage Calculator is an independent introducer site operated by Ellul Solutions Ltd. We are NOT authorised or regulated by the Financial Conduct Authority, and we are neither a lender nor a broker. We do not advise, arrange or recommend any mortgage, facility or firm: we introduce you to lenders and brokers by passing your details to them, and they deal with you directly. We may be paid a commission for that introduction by the firm we introduce you to, and it never changes what you are quoted. Nothing here is financial, legal or tax advice. No rate or margin is published on this site because commercial lending is priced per deal against the property, the income, the covenant and the borrower's experience, and no public source sets a market rate. Some borrowing can fall inside FCA regulation, particularly where a property is partly residential and occupied by the borrower, so take advice on your own arrangements rather than assuming either way. Check any lender or broker on the FCA's Financial Services Register before sending documents or paying anything.
Common questions
How much can I borrow on a commercial mortgage?
Two tests apply and the tighter one wins. Loan to value measures the loan against the lender's valuation, and debt service cover measures annual income against annual debt service. On most commercial property the cover test binds first, so income drives your borrowing capacity more than your deposit does. It also matters whether cover is tested against a capital and interest payment or an interest only one, because the difference can be tens of thousands of pounds of capacity.
What rate will I pay on a commercial mortgage?
It is normally quoted as a margin over a base rate. The Bank of England's Bank Rate has been 3.75% since 18 December 2025. We publish no margin, because commercial lending is priced per deal against the property, the income, the covenant and your experience, and no public source sets a market rate. Ask whether your margin sits over Bank Rate or over the lender's own cost of funds, since the second is not something you can track independently.
Should I add the arrangement fee to the loan?
It is easier on cash and more expensive. An arrangement fee added to the advance accrues interest for the whole term, so on a twenty year facility a fee of a few thousand pounds costs considerably more than its headline. The calculator on this page shows fees separately from the loan precisely so you can price it both ways before choosing the convenient option.
What is debt service cover and what ratio do lenders want?
Annual income available to service debt, divided by annual debt service. Lenders set a minimum and we do not publish a level, because it varies by lender, property type and covenant and no public source sets a standard. What is worth asking is the basis: cover tested against interest only produces a much more comfortable ratio than the same loan tested against capital and interest, and lenders differ on which they use.
Is a commercial mortgage regulated by the FCA?
Usually not. Consumer protections broadly attach to individuals borrowing against a home they or a close relative occupy, and a commercial mortgage to a company against investment or trading property normally falls outside that. So the Ombudsman and FSCS routes may not be open to you and the facility letter is your protection. Some arrangements can fall into regulated territory, particularly where a property is partly residential and occupied by the borrower, so it is worth asking rather than assuming.
What happens if my lease is shorter than the loan term?
The income securing the debt ends before the debt does, and lenders price and structure around that. Expect a shorter term, a lower loan to value, or a requirement to address the lease before drawdown. Ask specifically what happens at the break or expiry, because the answer determines whether you are refinancing on your timetable or the tenant's.
What should I check before committing to a valuation?
Whether the property type is inside the lender's appetite at all, whose valuer is used, who pays and whether you see the report. You will normally pay whatever the outcome, so appetite questions belong before instruction rather than after. Also ask what rate the debt service cover is stress tested at, since that decides whether you get the loan while the offered rate only decides the payment.
Sources
Price the cover, not just the payment
Both repayment bases, the fees separately, and the loan to value and debt service cover that decide whether a quote survives credit.
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