The UK commercial mortgage glossary.

Net operating income divided by annual debt service. The single most-watched cover ratio on UK owner-occupier and trading-business commercial mortgages.

Net operating income divided by the loan amount. A rate-agnostic sanity check on whether a commercial mortgage stays serviceable when rates rise.

Earnings before interest, tax, depreciation and amortisation. The cash-flow figure UK lenders use as the numerator for DSCR on owner-occupier commercial mortgages.

Annual rent divided by annual interest, usually expressed as a percentage. The investment-property equivalent of DSCR on UK commercial mortgages.

Loan amount divided by total project cost. The cost-side counterpart to LTV, used on development and refurbishment-led commercial deals.

Loan amount divided by the lender's valuation of the property. The headline gearing metric on UK commercial mortgages.

Lender's recalculation of cover ratios using a higher assumed interest rate or weaker income, to test whether the loan still clears in a worse market.

A floating charge over all the assets of a company that secures every present and future liability owed to the lender. Standard ancillary security on UK commercial mortgages to corporate borrowers.

A document creating a charge over the assets of a UK company in favour of a lender. The corporate-side counterpart to a property mortgage.

Three-way agreement between first-charge lender, second-charge lender and borrower, recording the ranking and information rights between the two lenders.

The senior security a lender holds against a UK property. Ranks ahead of every other charge in a recovery and is the default position for a senior commercial mortgage.

Personal contractual undertaking by a company director to pay a corporate debt if the company defaults. Standard on UK commercial mortgages to limited-company borrowers.

A subordinated security ranking behind an existing first charge on the same property. Used for top-up capital raises where the borrower wants to keep an in-place first-charge mortgage.

Algorithmic valuation produced from comparable-sales databases, used by lenders for low-LTV, low-ticket residential and semi-commercial cases.

Two distinct meanings on UK commercial mortgages: (1) a tenant's financial standing, (2) a contractual undertaking in the loan agreement that the borrower must meet on an ongoing basis.

Loan structure where the lender, on default, can pursue any of the borrower's assets and (where given) any guarantor's personal assets, not just the property securing the loan.

Loan structure where the lender's only remedy on default is the property security itself, with no personal liability falling on directors or shareholders.

Lender-instructed survey of the property by a RICS-qualified surveyor, producing the figure used to size the loan.

Short-term commercial mortgage typically used to acquire, refurbish or refinance commercial property pending a longer-term exit. Priced monthly, term 1 to 24 months.

Loan secured by a first charge on UK commercial property, used to buy, refinance or release equity from a building used for business purposes.

Commercial mortgage where the property is let to a third-party tenant and the rent covers debt service. Sized off the rent and an ICR test.

Commercial mortgage where the borrower's own trading business occupies the property. Sized off the business's EBITDA and a DSCR test.

Commercial mortgage on a property with both commercial and residential elements. Common on UK shop-with-flat-above and pub-with-accommodation cases.

The transfer of loan funds from the lender to the borrower (or the borrower's solicitor) at completion. On staged loans, each tranche release after the first is also a drawdown.

Fee charged by the lender if the commercial mortgage is repaid before the end of an early-redemption protection window, usually the fixed-rate period.

Non-binding outline of the proposed commercial mortgage terms issued by the lender after credit indication, before full underwriting commits.

The repayment in full of a commercial mortgage. On redemption the first charge is discharged and the lender's security is released.