Glossary definition
ICR (Interest Cover Ratio)
A measure of how comfortably a property's rental income covers the interest payments on a loan, calculated as annual rental income divided by annual interest costs. Most lenders require a minimum ICR of 125% to 145% for buy-to-let and commercial mortgage lending.
Definition
A measure of how comfortably a property's rental income covers the interest payments on a loan, calculated as annual rental income divided by annual interest costs. Most lenders require a minimum ICR of 125% to 145% for buy-to-let and commercial mortgage lending. ICR requirements vary by lender and are sometimes stressed at higher notional interest rates to account for potential rate increases.
See also
Closely related terms.
DSCR (Debt Service Coverage Ratio)
A financial metric that measures the ability of a property's net operating income to cover its annual debt service obligations, calculated as net operating income divided by total debt service.
Gross Yield
The annual rental income from a property expressed as a percentage of its purchase price or market value, before deducting any expenses.
Net Yield
The annual rental income from a property expressed as a percentage of its purchase price or market value, after deducting all operating expenses such as management fees, maintenance, insurance, and void periods.
Further reading
Guides that touch this term.
Guide
Commercial Mortgages in the UK: A Complete Guide
Everything you need to know about commercial mortgages in the UK - from eligibility criteria and rental coverage ratios to how lenders value multi-let properties and what lease length matters.
4 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
Development Finance vs Bridging Loans: Which Do You Need?
Two of the most common short-term property finance products, but they serve very different purposes. We break down the rates, terms, and scenarios where each makes sense.
8 min read readRead
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