What owning the building would cost each month
Enter the loan you would need, the interest rate you are offered and the term, and see the monthly repayment to set against the rent you pay now. The result depends on the figures you put in and what a lender is prepared to offer, so treat it as a starting point.
Year by year
| Year | Interest Paid | Capital Paid | Balance |
|---|
What the monthly repayment figure does not show you
The calculator works out a monthly repayment, which you can set against the rent you pay now. A lender's own assessment can produce a different figure from the one shown, and no result here amounts to a mortgage offer.
The loan-to-value you assumed may not be on offer
The repayment figure depends on the deposit you can put down against the loan-to-value (LTV), the loan expressed as a percentage of the building's value, that a lender is willing to offer. Lenders differ on this. Together says it lends at most 70 per cent of a commercial property's value (read 4 October 2026), while Commercial Trust gives 80 per cent as the maximum loan-to-value for an owner-occupier commercial mortgage, a mortgage taken out by a business to buy the premises it trades from (read 4 October 2026). If the deposit you can actually raise sits below what a lender wants at your chosen LTV, the monthly figure the calculator shows will need revisiting. How a commercial mortgage differs from your home loan sets out more of what lenders look for before they settle a deposit and a term.
The personal guarantee behind the loan
A commercial mortgage to a limited company is very often backed by a personal guarantee, a director's own commitment to repay the loan if the company cannot. That commitment sits outside the monthly repayment entirely; it only becomes visible if the business gets into difficulty. The personal guarantee on a premises loan explains what signing one commits a director to.
Repairs and insurance move to you
Under most leases, a landlord carries some or all of the building's repairs and buildings insurance. Buy the premises and those costs become the owner's, year on year, outside whatever the lender charges in interest and capital repayment.
Purchase tax depends where the building is
Buying brings a purchase tax: Stamp Duty Land Tax in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland, or Land Transaction Tax in Wales, depending on where the premises stand. None of that is in the monthly figure, because it is paid once, on completion.
Moving away is harder once you own
A lease usually ends, or can be ended, at a point the business chooses. A building that is owned has to be sold before the business can move on, and a sale takes its own time and its own costs. The flexibility a lease gives a growing or changing business is the thing a repayment figure cannot put a number on.
What the monthly figure leaves out
A lower monthly cost than rent is not the whole comparison. These are the commitments and costs that sit outside the calculation and usually surface later, once the purchase is already under way.
-
Who is guaranteeing the loan
A lender will often ask the directors to guarantee the mortgage personally, so the company's debt can become a personal one if repayments are missed.
-
Repairs and insurance
A tenant's landlord usually carries these. An owner carries them directly, for as long as the building is held.
-
Purchase tax on the building
Stamp Duty Land Tax, Land and Buildings Transaction Tax or Land Transaction Tax applies depending on where the property sits, and is due on completion.
-
How easily the business could move
A lease ends and the business can relocate. A freehold has to be sold, which takes longer and is not guaranteed at a chosen time.
-
Who actually owns the building
The company, a director personally, or a pension scheme can each buy the premises, and the choice changes who carries the debt and who holds the asset.
-
What changes from a residential mortgage
Deposit size, term length and how the rate is set usually differ from the mortgage the business owner already knows from buying a home.
Some of these are decided at purchase, before a mortgage offer is made, so they are worth raising with a lender or adviser early.