Commercial mortgage affordability calculator (DSCR)

What DSCR means, plainly

Debt service cover ratio, or DSCR, measures how comfortably trade covers the loan payments. A DSCR of 1.25 means the income is 1.25 times the annual debt service, so there is a 25 percent buffer above what the loan strictly costs. Lenders want that buffer because it protects the loan if trade dips, and on commercial pub lending a cover of around 1.25 times or more is a common starting expectation, though it varies by property and lender.

This calculator works backwards from your income. It takes your annual net operating profit or adjusted EBITDA, divides it by the target DSCR to find the annual debt service the trade can support, then sizes the largest capital and interest loan whose payments fit within that amount at the rate and term you enter.

Which income figure to use

Use the income that genuinely services the debt. Lenders look at the fair maintainable trade, the level a reasonably efficient operator should sustain, and the adjusted EBITDA that flows from it, not turnover or barrelage on their own. For a tied or tenanted site, account for the rent and any tie on supply; for a free-of-tie or freehold free house, the trading profit after a realistic operator's drawings. Treat the result as an indicative maximum rather than a guaranteed loan size.

Because the output is driven by your inputs, model a sensible income and a realistic rate. If you are unsure which income figure a lender would accept on your pub, that is exactly the kind of thing we work through when we set out indicative terms.