How much can I borrow?
Estimate the indicative maximum loan your store's trading income will service on a debt service cover basis, with the implied loan to value.
Your estimate
Illustrative only. Not a quote or advice. Not an offer of finance.
How the borrowing calculator works
On a self storage facility, lenders size the loan from the trading income, not just the price. A store has no single tenant on a long lease, so the lender looks at the net operating income, often called EBITDA, and applies a debt service cover ratio so that income comfortably covers the loan interest. We take your annual net operating income and divide by the cover ratio to find the maximum annual interest the store can service. We then divide that by the interest rate to find the indicative maximum loan.
The formula is maximum annual interest equals net operating income divided by the cover ratio over one hundred. Maximum loan equals maximum annual interest divided by the rate over one hundred. If you enter a price, the implied loan to value equals the maximum loan divided by the price multiplied by one hundred.
Why debt service cover drives the loan
Lenders want headroom so a store can still pay its mortgage through a dip in occupancy, a discounting war on the local high street or a rate rise. They usually set cover ratios between 125 and 145 percent, and price the loan accordingly. A higher ratio means a stronger cushion but a smaller loan. On a newer store still filling up, remember that occupancy typically takes 3 to 5 years to stabilise, so the income may cap the loan below the headline loan to value of 60 to 70 percent. To model the deposit and monthly cost once you have a loan figure, use our commercial mortgage calculator.
Worked example
On a store producing 90,000 pounds of net operating income a year, at a 7.5 percent rate and a 130 percent cover ratio, the maximum annual interest is about 69,200 pounds and the indicative maximum loan is roughly 923,000 pounds. Enter a 1.3 million pound price and the implied loan to value is around 71 percent, just above the usual self storage range, so the lender would likely trim the loan slightly. Send us the deal for a real view.
How much can I borrow: common questions
How do lenders decide how much I can borrow on a self storage facility?
The main test is debt service cover. Unlike a property let on a single lease, a self storage facility earns its income from hundreds of short licences, so lenders size the loan from the store's trading income, its net operating income or EBITDA, and want that income to cover the loan interest by a comfortable margin, typically 125 to 145 percent. The price and loan to value, usually 60 to 70 percent of the trading valuation, then act as a second cap. Enter your net operating income, rate and cover ratio to see the indicative maximum loan.
What is a debt service cover ratio or DSCR?
Debt service cover ratio, sometimes shown as interest cover, is the trading income divided by the loan interest. A 130 percent ratio means the net operating income is 1.3 times the interest, leaving a 30 percent cushion. Lenders use this to make sure a store can still pay its mortgage if occupancy dips or rates rise. Higher cover means a lower maximum loan.
Why is my borrowing capped below the loan to value figure?
Because trading income has to service the debt. On a store still building occupancy, which typically takes 3 to 5 years to stabilise, the income may only support a loan below the headline loan to value, so debt service cover becomes the binding constraint. Enter a price in the calculator and we will show the implied loan to value alongside the income based maximum.
Want to know what you can really borrow?
Send us the store and its trading figures and we will come back with a view on the loan and likely terms within one working day.