UK commercial mortgage calculator

Repayment vs interest-only

On a repayment basis every monthly payment covers that month's interest plus a slice of capital, so the debt is gone at the end of the term. On an interest-only basis the payment covers interest alone: cheaper month to month, but the entire loan is still owed at the end and needs an exit, a sale or a refinance. On the default above, £350,000 at 7.5% over 20 years, the repayment basis costs £2,819.58 a month and clears the debt; interest-only costs £2,187.50 a month, £525,000.00 in interest over the term, and leaves £350,000 to repay at the end.

Owner-occupiers usually take repayment: the business ends up owning its premises outright. Investors often prefer interest-only because the lower payment helps the rent meet the lender's cover test, accepting the refinancing risk at term end. Part-and-part structures, repaying some capital while keeping payments down, sit between the two and are common in commercial lending.

Worked examples

### Monthly payment, total repayable and total interest on a UK commercial mortgage across common amounts, rates and terms. Interest-only totals include repaying the capital at term end. Interest only; fees are extra.

| Amount | Rate | Term | Basis | Monthly payment | Total repayable | Total interest |
| --- | --- | --- | --- | --- | --- | --- |
| £250,000 | 6.9% | 15 years | Repayment | £2,233 | £401,961 | £151,961 |
| £350,000 | 7.5% | 20 years | Repayment | £2,820 | £676,698 | £326,698 |
| £500,000 | 7.5% | 25 years | Repayment | £3,695 | £1,108,487 | £608,487 |
| £500,000 | 7.5% | 25 years | Interest-only | £3,125 | £1,437,500 | £937,500 |
| £1,000,000 | 8% | 20 years | Repayment | £8,364 | £2,007,456 | £1,007,456 |

Source: FundBiz commercial mortgage calculator worked examples

Repayment rows are amortising (reducing-balance). Rounded to the nearest pound. Excludes arrangement fees (commonly 1% to 2%), valuation, legal and broker fees, and any early repayment charges. Compare the £500,000 rows: interest-only is cheaper per month but costs more in total interest, and the capital still falls due at the end.

LTV and DSCR: the two ratios that size the loan

Loan-to-value caps how much you can borrow against the property: typically up to around 75% for owner-occupier deals and around 65% for investment deals, so the deposit is 25% to 35% or more. Debt-service cover caps what the cash flow supports: trading profit (owner-occupier) or rent (investment) has to cover the repayments with headroom, commonly 1.25 times or better for trading businesses and 130% to 150% rental cover for investment deals, tested at a stressed rate. The lower of the two caps decides the loan. Run your own numbers with the DSCR calculator or the quicker affordability ratio check.

On rates: variable commercial mortgages are typically priced as a margin over the Bank of England base rate, currently 3.75% (effective 18 December 2025, auto-refreshed on FundBiz from the Bank of England's published data). Where your deal prices within the market, and the published lender figures behind it, is covered on current business loan interest rates.

Before you compare quotes

Compare like bases. An interest-only quote will always look cheaper per month than a repayment quote. Put both through this calculator on the same basis before judging either.

Add the fees in. Arrangement fees of 1% to 2%, commercial valuation fees, both sides' legal costs and any broker fee sit on top of the interest shown here.

Check the stress test, not just the payment. Add roughly two points to the rate and confirm the deal still covers. That is closer to the number the lender will actually test.

For how commercial mortgages work end to end, see the commercial mortgage hub, how commercial mortgage rates are priced, and the documents, timeline and fees lenders expect. Buying before a mortgage can complete? Bridging finance covers the gap; buying a business that comes with its freehold, see business acquisition loans.

FAQs