Commercial Loan Repayment Calculator

Use the calculator to compare monthly, fortnightly or weekly repayments on your commercial loan, test Principal & Interest against Interest-only (IO), and see how changing the rate or loan term affects the cost of the loan.

How To Use The Commercial Loan Repayment Calculator

Enter the commercial loan you want to model rather than the property’s purchase price.

• Loan Amount: Enter the amount you expect to borrow. For example, if you are buying a $1 million commercial property and plan to borrow $700,000, enter $700,000.
• Loan Term: Enter the number of years over which you want the repayments calculated.
• Interest Rate: Enter the commercial loan interest rate you have been quoted. If you do not have a rate yet, try several assumptions. This gives you a range rather than making a borrowing decision around one repayment figure.
• Repayment Type: Choose either Principal & Interest or interest-only.
• Repayment Frequency: Choose either Monthly, Fortnightly, or Weekly.

Select Calculate to see your estimated repayment and interest cost.

What Will The Commercial Loan Calculator Show You?

Your Repayment Amount

This is the estimated amount payable each month, fortnight or week based on the figures you enter.

For a business owner, the more useful question is often not simply whether the repayment is affordable today, but how comfortably it fits alongside wages, tax, stock, equipment, rent or other operating costs.

Total Loan Repayments

This estimates the total amount repaid over the selected loan term, including principal and interest for a Principal & Interest loan.

Total Interest Charged

This estimates how much interest could be paid if the rate, loan structure and repayment assumptions remained unchanged.

Your actual interest cost can be different if your rate changes, you make additional repayments, the loan is refinanced, the repayment structure changes or the facility does not remain in place for the full period.

What Determines Your Commercial Loan Repayments?

Commercial loan repayments are mainly determined by how much you borrow, the interest rate, the repayment period and whether the loan is Principal & Interest or Interest-only.

Loan Amount

Borrowing more generally means a higher repayment and more interest paid.

Deposit and equity, therefore, affect more than your LVR. They also determine how much debt the property or business needs to carry.

Interest Rate

A higher interest rate increases the cost of the loan.

The dollar impact becomes increasingly important as commercial loan sizes rise, which is why testing multiple rates can be more useful than relying on a single estimate.

Loan Term

A longer Principal & Interest repayment period generally lowers the regular repayment because the principal is spread over more time.

The trade-off is usually a higher total interest cost.

Repayment Type

Interest-only repayments are generally lower during the interest-only period because the principal is not being progressively repaid.

Principal & Interest repayments are generally higher, but reduce the debt over time.

How Are Commercial Loan Repayments Calculated?

For a Principal & Interest commercial loan, the repayment is calculated using:

• The amount borrowed
• The interest rate
• The repayment frequency
• The repayment period

Each repayment includes interest plus a portion of the principal.

Commercial Loan Repayment Formula

For a standard amortising Principal & Interest loan, the formula is:

Repayment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]

Where:

P = amount borrowed

r = interest rate per repayment period

n = total number of repayments

For an Interest-only loan, a simplified monthly calculation is:

Loan amount × annual interest rate ÷ 12

These formulas are useful for estimating standard repayments but will not reproduce every commercial facility. Different lenders can use different repayment structures, interest calculations, balloon amounts and facility terms.

Principal & Interest Vs Interest-Only Commercial Loan Repayments

Interest-only repayments can reduce the scheduled repayment in the short term, while Principal & Interest progressively reduces the debt.

The important comparison is not just today’s repayment.

If an interest-only period ends and the remaining principal must then be repaid over a shorter period, the later Principal & Interest repayment can be materially higher.

Compare both repayment types using the calculator above.

How Does The Loan Term Affect Commercial Loan Repayments?

A longer repayment period generally lowers the monthly Principal & Interest repayment but increases the total interest paid.

For example, consider a $500,000 commercial loan at an illustrative 7.00% p.a.:

So, extending the calculation from 15 to 25 years reduces the monthly repayment by about $960 but increases the estimated total interest.

Is The Repayment Term Same As The Commercial Loan Term?

No, it is not.

This distinction is easy to miss when comparing commercial loans.

For example, repayments might be calculated on a 20-year amortisation schedule while the commercial facility has an earlier maturity or review date.

When looking at an offer, check both:

• How long is the debt being amortised over?
• When does the facility itself mature or require renewal?

A repayment calculator can answer the first question. The loan agreement answers the second.

What Interest Rate Should You Enter?

If you already have a commercial loan quote, use the interest rate you have been offered.

If not, try several different rates rather than relying on one assumption.

Commercial property loan rates can vary according to factors such as:

• Loan amount and LVR
• Deposit or available equity
• Property type and location
• Whether the property is owner-occupied or an investment
• Lease and tenant
• Business and borrower financial position
• Loan structure
• Documentation
• Lender

This means a headline commercial rate may not reflect the rate available for your particular property or borrower profile.

Check out our page on commercial property loan interest rates.

What Happens If Commercial Loan Rates Rise?

Use the calculator to test whether the loan still works if the interest rate is higher than expected.

A simple approach is to calculate:

• Your expected rate
• Expected rate + 1 percentage point
• Expected rate + 2 percentage points

This is not a forecast of where rates will go. It is a way of testing how sensitive your cash flow is to a different interest-rate assumption.

The larger the loan, the more noticeable the dollar impact can become.

Broker Insight: The Repayment Is Only One Side Of The Deal

One of the biggest traps with commercial property finance is assuming:

“If I can afford the repayment, I should be able to get the loan.”

That is not necessarily how the lender will assess it.

For a commercial property transaction, assessment can extend to areas such as:

• Net rent after outgoings
• Who the tenant is
• How long is left on the lease
• The property’s type and zoning
• LVR and available equity
• Your other income and debts

Our brokers specifically highlighted actual net rental income, lease terms, tenant quality and LVR as key considerations in lease-doc and investment scenarios. The property questions they use to assess a deal also include zoning, net rent after outgoings, tenant and remaining lease term.

That means two commercial properties with the same purchase price and the same calculated repayment can still produce very different lending outcomes.

What Isn't Included In The Commercial Loan Repayment Calculator?

The calculator estimates loan repayments and interest. It does not calculate every cost or condition attached to a commercial loan.

Depending on the transaction, other costs may include:

• Application or establishment fees
• Commercial valuation fees
• Lender legal or documentation costs
• Ongoing lender fees
• Review or revaluation fees
• Government charges
• Break or early-repayment costs
• Discharge or refinancing costs

It also does not account for future rate movements or automatically identify non-standard structures such as balloon payments or residual amounts.

A low calculated repayment should therefore not be treated as the complete cost of a commercial facility.

Commercial Loan Repayments Vs Borrowing Capacity

A commercial loan repayment calculator estimates what a loan could cost. It does not calculate how much a lender will approve.

Your commercial borrowing position can also depend on:

• Available deposit or equity
• LVR
• Business or personal income
• Existing business and personal debts
• Property rental income
• Net rent after outgoings
• Tenant and lease
• Property/security type
• Business trading history
• Loan purpose and structure
• Lender policy

This distinction matters because “Can I afford the repayment?” and “Will a lender approve this loan?” are two different questions.

Do The Repayments Work For Your Business?

The calculator can tell you what the loan may cost under the assumptions you enter.

The next step is working out whether the property, income, deposit or equity and loan structure support the finance you need.

Home Loan Experts can assess the lending options behind the repayment figure and help you compare the structure and lender requirements as well as the cost.

Call us on 1300 889 743 or enquire online today for a free assessment.