Interest Roll-up
Model compounding rolled-up interest and its effect on LTV at exit.
Introduction
Who this is for: Borrowers on facilities where interest is retained or rolled rather than serviced.
Why it matters: Rolled-up interest compounds. On a long facility the balance can grow enough to breach the lender’s LTV covenant even if the property value holds — which triggers default without anything having gone wrong operationally.
Typical scenario: A developer on an 18-month rolled-up facility checking the balance at exit against the lender’s 70% LTV covenant.
- Calculating rolled-up interest as simple rather than compound.
- Not projecting the exit LTV as the balance grows.
- Assuming an extension will be granted if the exit slips.
Inputs
Facility
months
Security
Analysis
£750,000 at 0.85% monthly, rolled for 18 months, grows to £873,429 — £123,429 of interest, of which £8,679 is compounding alone. Exit LTV is 69.9% against a 70% covenant.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Sensitivity
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Export
Live Results
Balance at Exit
£873,429
Total Rolled Interest
£123,429
LTV at Exit
69.87%
Covenant Headroom
£1,571