Mortgage guide
How is affordability calculated on Commercial mortgages?
For investors Commercial mortgage lenders will use the lease income of the security property, which is the property you are buying or remortgaging.
- Published
- 4 Aug 2026
- Last reviewed
- 4 Aug 2026
- Reading time
- 2 min
How is affordability calculated on Commercial mortgages?
For investors Commercial mortgage lenders will use the lease income of the security property, which is the property you are buying or remortgaging.
For business owners Commercial mortgage lenders will use the NET PROFIT of the security property, which is the property you are buying or remortgaging. Using the EBITDA method, the figure used may be adding in or deducting parts of your accounts that will change upon completion, such as swapping your rent against your new mortgage payment.
If you’re purchasing a property as an individual, the financial stress test applied by lenders might be more stringent compared to basic rate taxpayers. For instance, a basic rate taxpayer could be assessed at 125%, whereas a higher rate taxpayer might be evaluated at 145%. For five-year fixed mortgages, lenders often use the pay rate of the product for stress testing, say 5.89%. As an example, for a basic rate taxpayer earning £600 per month in rent, the calculation would be: £600 x 12 / 1.25 / 0.0589, resulting in a maximum loan of £97,792.
Commercial mortgage calculator
Choose owner occupier for a business buying or refinancing premises it trades from, assessed on adjusted net profit before tax from the latest accounts, or investment for property let to tenants, assessed on lease income.
Commercial mortgage criteria
For context, these are the wider product terms covered by this guide. Availability and eligibility depend on your circumstances and the lender.
| Criteria | Detail |
|---|---|
| Max Loan to Value (LTV) | 80% LTV Care Home Mortgages, 100% LTV Medical Commercial Mortgages, 75% Commercial Investment |
| Max Term | Up to 40 years |
| Completions | From 4 weeks |
| Repayment options | Capital repayment and Interest only |
| Commercial mortgage rates | From 6.19% |
| Rate options | Variable, Base Rate Tracker, 2, 3 or 5 year fixed mortgage options |
| Valuation methods | Going concern/Investment (Market value 1, MV1), MV2, MV3 or bricks and mortar |
| Flexible Leases | Rolling leases, weak covenants and short time remaining accepted |
| Adverse credit | Accepted on some products on a case by case basis |
| Locations | Available in England, Scotland, Wales and Northern Ireland |
| Experience | Not required on certain products |
For context, these are the wider product terms covered by this guide. Availability and eligibility depend on your circumstances and the lender.
| Feature | Detail |
|---|---|
| Max Loan to Value (LTV) | 65% |
| Product fee | 5% (4.74% for existing customers) |
| Fixed rate (5 years) | 6.34% |
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Frequently asked questions
How is affordability assessed on a commercial mortgage?
For investors, commercial lenders assess the lease income of the security property. For business owners, lenders assess the net profit of the occupying business on an EBITDA basis, adjusting for items that will change on completion.
How is commercial mortgage affordability stress-tested?
For investment property, on the cases we arrange the rent must cover 125% of the interest at a stressed rate, rising to 145% for higher-rate taxpayers or weaker leases. As an illustration, with interest modelled at a 5% stress rate, 125% cover means the rent must support interest at an effective 6.25%, and 145% cover at 7.25%. The stress rate is the lender's own assessment rate, which can differ from the product's pay rate and depends on the lender and the product, so an adviser checks the lender's current assessment rate. Owner-occupied property is tested on the business's profit instead.
Can you get a 90% commercial mortgage?
Yes, 90% loan-to-value commercial mortgages are possible, but only in limited sectors such as healthcare properties, pharmacies, or certain convenience stores with strong trading history. For most other commercial properties, maximum lending is typically capped at around 70% to 75% LTV.
What is a commercial mortgage?
A commercial mortgage is an asset-backed loan secured against commercial, semi-commercial or large-scale investment property. Lenders assess it on income sustainability and asset risk rather than personal income multiples, and pricing is set case by case, usually as a margin over Bank Rate.
What is commercial lending?
Commercial lending refers to loans secured against property used for business purposes, such as offices, retail units, or industrial premises. Terms, rates, and deposits are individually assessed and typically differ from residential mortgages.
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