How commercial LTV is worked out
LTV is the loan divided by the value of the property, as a percentage. For a commercial property the value is normally the lender's own valuation, and when you are buying it is often the lower of the price and the valuation. Combined LTV adds any other loan secured on the property, such as a second charge, to the loan before dividing by the value.
The largest loan a limit allows is the value times the maximum LTV. If the limit counts all the loans on the property, the other loans come off that figure first. Use the setting under the limit to choose which way your lender counts.
Worked example: a £650,000 loan on a £1,000,000 property
A £650,000 commercial mortgage on a property valued at £1,000,000 is 65.00% LTV. With a £100,000 second charge the combined LTV is 75.00%, and the equity after both loans is £250,000, which is 25.00% of the value.
Against a lender whose limit is 70%, the loan is within the limit and £50,000 below it, and the largest loan is £700,000. If the 70% limit counted both loans, the largest loan would be £600,000, so the borrowing would be £50,000 over. At the £700,000 largest loan, you would need £200,000 of equity after the second charge.
If you are buying: loan to cost
For a purchase, enter the price and the costs on top of it, such as legal and valuation fees. A £950,000 price with £45,000 of costs is £995,000 in all, so the £650,000 loan is 65.33% of the cost and 68.42% of the price. You would need £345,000 for the deposit and costs. At the largest loan of £700,000 you would need £295,000. If you are refinancing, enter zero for the price and these purchase figures are left out.
If the value falls
Enter a fall in value to test the loan. With a 15% fall the property is worth £850,000, so the LTV rises from 65.00% to 76.47% and the combined LTV from 75.00% to 88.24%. The value can fall by 7.14% before the 70% limit is reached, and £55,000 would have to be paid down to meet the limit at the lower value. A loan that is only just within the limit has no room for a fall.
What this calculator leaves out
Lenders also look at the income the property earns, the borrower and the type of property, and many lend the lower of what the LTV and the income allow. The limit you enter is your assumption, not a lender's published figure. This is a general commercial LTV calculation. Bridging lenders measure LTV on the gross loan and on the net cash advanced, which is covered by the bridging loan LTV calculator.
For a bridging loan on the gross and net bases, use the bridging loan LTV calculator .
To test whether the income covers the loan payments, use the DSCR commercial loan calculator .
Use the right country page
This page uses UK terms and pounds: valuation, commercial mortgage, second charge and deposit. The country choices above the inputs open separate local pages. Choosing United States opens the US commercial loan LTV calculation, which uses appraised value, CLTV and liens. The inputs reset and amounts are not converted.
Inputs for the UK commercial loan LTV calculator
Property value
The lender's valuation, or the price if that is lower.
Loan amount
The commercial mortgage you want, or the balance you owe.
Second charge or other loans
Other loans secured on the property, such as a second charge. Enter zero for none.
Lender's maximum LTV
The most the lender will lend against the value. The 70% shown is an illustration; use your lender's figure.
The limit applies to
This loan alone, or every loan secured on the property together.
Purchase price (if buying)
What you are paying for the property. Enter zero if you are not buying.
Legal, valuation and other costs
Costs of buying on top of the price. Used with a purchase price.
Fall in value to test
How far the value could drop. We show the LTV after it.
CALCULATOR QUESTIONS
UK commercial loan LTV calculation questions
How do I calculate LTV on a commercial property?
Divide the loan by the property value and multiply by 100. £650,000 on £1,000,000 is 65.00%.
What is the maximum LTV for a commercial mortgage?
Each lender sets its own and it varies with the type of property and the borrower. Enter your lender's figure; the 70% shown is only an illustration.
What is combined LTV?
The loan plus any other loans secured on the same property, divided by the value. £650,000 and a £100,000 second charge on £1,000,000 is 75.00%.
How much can I borrow at a given LTV?
Multiply the value by the LTV limit. At 70% on £1,000,000 the largest loan is £700,000, or £600,000 if the limit counts the £100,000 second charge too.
What is the difference between LTV and loan to cost?
LTV compares the loan with the value. Loan to cost compares it with the price plus the costs of buying. £650,000 against £995,000 of cost is 65.33%.
How far can the value fall before I breach the limit?
Enter a fall in value and read the LTV after it. With the figures above the value can fall by 7.14% before the 70% limit is reached.
What happens when I change country?
The United States option opens the separate US commercial loan LTV calculation, in dollars, with appraised value and liens. Your inputs are reset rather than converted.