The control of motor drive without considering iron loss affects the phase back electromotive force and the torque performance. This article investigates the performance of permanent magnet brushless direct current motor (PMBLDCM) modeling taking impact of iron loss into account. A disturbance observer based sensorless scheme is proposed for PMBLDCM model with precise estimation of the rotor angular position. The effect of unmodeled nonlinear parameters on iron loss of PMBLDCM are regarded as disturbances for the proposed sensorless approach. A linear feedback control law with optimal current vector formulation is introduced to minimize the current ripple and torque ripple resulting in reduced copper loss. In order to select optimum switching vector considering the effect of iron loss, a model predictive control technique is proposed for the three-phase three-level neutral point clamped voltage source inverter driven PMBLDCM. The proposed sensorless predictive control (SPC) algorithm is verified both by simulation and experiments. The SPC approach demonstrates improved performance compared to the conventional approach in which the effect of iron loss is not taken into account.