Special Servicer Advance Calculator

Servicer advances accrue during CMBS distress. This calculator tracks advance balance.

Annual tax advance

Annual insurance

Protective advance

Months in special

Advance rate

Total advances

$224,000

Accrued interest

$14,373

Payoff amount

$238,373

How the math works

Advances = annual × (months / 12). Interest accrues on rolling average balance at servicer rate.

Advance balances compound during the special servicing process — a 14-month workout with $200k in annual advances at 11% rate adds roughly $20-30k of interest alone. That stacks on top of principal and default interest, and borrowers routinely find themselves paying off more at resolution than they owed at transfer.

How to Use

Enter annual tax advance.
Enter annual insurance advance.
Enter annual protective advance (R&M, security).
Enter months in special servicing.
Enter advance rate on servicer draws %.
Read total advances and carry cost.

Frequently Asked Questions

What are advances?

Servicer 'advances' = payments servicer makes on behalf of borrower to preserve asset value: taxes, insurance, emergency R&M, utilities. Advances accrue interest at rate specified in PSA (typically prime + 2-5%).

Payoff priority?

Advances paid off first at workout — before principal, often before late fees. Servicer advances effectively senior to principal. For an 18-month special servicing workout, advances can hit 5-10% of principal balance.

Negotiation angle?

Servicer advances are one of the few non-principal items negotiable at loan modification. Reducing accrued interest on advances or capping ongoing advance rate gives borrower concrete cash-flow relief without touching core principal.