How commercial mortgage interest works
Commercial mortgage rates are agreed with each borrower and are often a margin above the Bank of England base rate, so they can change over time. This calculator assumes one rate for the whole term.
Interest is worked out each month on the balance you still owe, at one twelfth of the annual rate. Early payments are mostly interest; as the balance falls, more of each payment repays the loan.
Worked example
Borrowing £350,000 at 7% over 20 years on a repayment basis costs £301,251.11 in interest. Interest-only, you'd pay £490,000.00 in interest over 20 years and still owe the £350,000.
Paying less interest
A larger deposit, a shorter term or switching from interest-only to repayment all reduce the total interest.
Inputs for the commercial property loan interest rate calculator
Property price
The price of the commercial property.
Deposit
What you're paying upfront. A bigger deposit means borrowing less and paying less interest.
Interest rate (per year)
The annual interest rate on your mortgage. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over. A longer term means paying interest for longer.
Repayment type
Interest only means paying interest on the full loan for the whole term.
CALCULATOR QUESTIONS
Commercial property loan interest rate calculator questions
How much interest will a commercial mortgage cost?
Enter your figures above. For example, £350,000 at 7% over 20 years costs £301,251.11 in interest on a repayment basis.
Are commercial mortgage rates fixed?
They can be fixed or variable; variable rates often track the Bank of England base rate.
Is interest-only more expensive?
Over the whole term, yes, because the balance never falls.
Why do I pay more interest at the start?
Interest is charged on the balance you owe, which is highest at the start. As you repay, the balance falls and so does the interest.