Interest Cover Ratio (ICR) Calculator
Determine your company’s maximum borrowing power based on rental revenue. Model 125%, 135%, and 145% lender stress hurdles across commercial and SPV debt panels.
Stressing SPV Debt for Buy-to-Let & Commercial Property?
Review our specialist SPV Buy-to-Let Mortgages facility or consult our BTL vs Limited Company Mortgages Guide.
Interest Cover Ratio (ICR) & Stress Test Calculator
Verify if your property rental revenue satisfies UK commercial and SPV lender stress-testing requirements.
Calculated at 5.5% stress rate. Minimum required rent at 125% hurdle is £3,438/mo.
Stress Rate Sensitivity (Max Borrowing Matrix at 125% ICR)
Understanding ICR Hurdles by Entity & Asset
Lenders grade covenant hurdles according to tax treatment, lease structure, and tenant covenant strength.
SPV Limited Company
Full corporation tax relief on 100% of mortgage interest enables lenders to offer the lowest 125% cover hurdle on residential BTLs, HMOs, and MUFBs held within dedicated corporate SPVs.
Highest Borrowing LeverageMixed-Use Assets
Reflecting properties with ground-floor commercial tenancies and upper residential flats. Blends commercial lease risk with residential demand stability.
Balanced Commercial HurdlePure Commercial Units
Applies to offices, warehouses, retail parks, and factories. Requires a 45% gross rental surplus buffer to manage commercial tenant breaks, lease re-gears, and potential void periods.
Conservative Commercial StandardFrequently Asked Questions on ICR
What is the Interest Cover Ratio (ICR) for a commercial mortgage?
The Interest Cover Ratio (ICR) is an underwriting benchmark that compares the property gross rental income against the monthly mortgage interest payments at a specified notional stress rate. It ensures that the rent provides a sufficient surplus buffer to absorb tenant void periods, property repairs, insurance, and interest rate increases.
Why do Limited Company SPVs benefit from lower 125% ICR hurdles?
Under UK tax law (Section 24), private individuals cannot deduct full mortgage interest from rental profits before income tax. However, UK Limited Companies and corporate SPVs pay Corporation Tax (19% to 25%) strictly on net corporate profits after deducting 100% of commercial mortgage interest costs. Because corporate landlords retain more net cashflow, commercial lenders apply a lower 125% ICR hurdle compared to the 145% or 160% required for individual higher-rate taxpayers.
How does taking a 5-year fixed rate mortgage impact the ICR stress test?
Under Bank of England Prudential Regulation Authority (PRA) guidance, many specialist lenders allow 5-year fixed-rate commercial mortgages to be stress-tested at the actual pay rate (e.g. 5.25%–5.75%) rather than an elevated floating stress rate (such as pay rate + 2.0% or 6.5%). This unlocks substantially higher borrowing capacity on the same rental income.
What is top-slicing in commercial mortgage underwriting?
Top-slicing occurs when an experienced corporate borrower uses surplus trading profits from their wider operating business or wider property portfolio to bridge a marginal rental shortfall on an individual property ICR assessment.
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Contextual Guidance & Transaction Facilities
Need to Maximise Loan Sizing on Your Rental Income?
Different lenders evaluate ICR covenants differently. We match your rental cashflow with specialist lenders offering 5-year fixed pay-rate stress and portfolio top-slicing.
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Commercial mortgages arranged for corporate entities are not regulated by the Financial Conduct Authority (FCA). Your property or assets may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.