Commercial Mortgage Calculator
Payment = P × [ r(1+r)^n ] ÷ [ (1+r)^n − 1 ] (r = monthly rate, n = amortization months)
Why commercial mortgages differ
A residential mortgage calculator will mislead you on a commercial loan, because commercial debt separates two things residential debt combines: the amortization period and the loan term.
A commercial loan might amortize over 25 years but mature in 10. You make payments as though it were a 25-year loan, and then the entire remaining balance — the balloon — comes due at year 10. This calculator shows both.
Worked example
$8,750,000 at 6.75%, amortizing over 25 years with a 10-year term:
- Monthly payment: $60,454.76
- Annual debt service: $725,457
- Balance due at the end of year 10: $6,831,745
Over those ten years you repay $1,918,255 of principal and still owe $6.83 million. That balloon is the number that matters. You are not paying off this loan; you are renting money for ten years and then refinancing or selling.
What to plan for
- Refinance risk. Rates and values at maturity are unknowable. A loan that works today can be unrefinanceable in ten years.
- Prepayment structure. Yield maintenance and defeasance can make early exit very expensive. Read the loan documents.
- Lender sizing. Lenders size from income, not from what you want to borrow — see DSCR and debt yield.