Yes, you can refinance a commercial property to reduce the cost of an existing mortgage, by remortgaging and taking a new deal with a lower rate or longer term, or to raise cash by taking out on a property you already own..
Commercial Property Refinance
Unlock the wealth in your business property Making your business premises work to bring the funds you needSpeak to one of our experts020 4525 5312
- A cost effective way to raise finance
- £50,000 – No Maximum
- Rates from 2% over base rate
- Non-status and full status
- Terms up to 20 years
- Up to 80% Loan to Value available
- Adverse Credit – no problem
- Individual arrangements tailored to your circumstances
- Funds for any business purpose
- Repayments geared to your turnover
- Effective funding for growth
- Refinance based on land, commercial or residential property
Commercial Property Refinance
Are you thinking of buying new premises, acquiring a supplier or competitor, or funding to hit ambitious growth plans?
There are many reasons why you might want to invest a large sum of money in your business. Getting the funds you need in the form of equity release at the most competitive rates can be essential.
Table of Contents
If you are looking at the most cost-effective way for your business to raise cash, property refinancing may be the solution.
What is Commercial Property Refinancing?
Suppose your business has been established for a few years and has acquired – or even started to acquire its own premises. In that case, you could be sitting on a valuable and appreciating asset.
Commercial property refinancing lets you access that wealth and use it to provide the scale of funding your business needs while keeping costs down.
Speak to our experts about a commercial property loan today.
Can you refinance a commercial property?
Yes, you can. A commercial business mortgage refinancing is smilier to residential remortgaging, as it involves switching from one mortgage product to another by using the same property as security.
Why remortgage a commercial property?
The most common reason for commercial financing is to secure a better interest rate or better loan terms. Commercial financing often means higher interest rates than residential loans, refinancing when rates are lower could help you lower your monthly payments, which will increase cash flow. It’s also possible to refinance to secure a better loan term.
Speak to an expert mortgage broker today!
Reducing your outgoings
If reducing outgoings rather than raising additional cash is your priority, refinancing can still be the solution.
You do not need to have paid off your current mortgage to arrange a new one. Over time, your property will probably have appreciated in value, and the chances are that you can get a better deal on your existing loan.
If you want to reduce the monthly repayments on your current mortgage, cut the demand on your cash flow and release funds for use elsewhere in your business, refinancing your current commercial mortgage could help. On the other hand, you may simply pay off an existing loan and replacing it with a new one may be a practical solution.
How does commercial property financing work?
In simple terms, any Commercial Mortgage is a loan secured on your property assets.
This means that if you were to fail to make the repayments, the lender would have the right to seize the property and sell it to recoup the secured loan they gave you.
This sounds like a considerable risk, but it works in your favour as the risk to the lender is small, the interest rate they charge can be reduced.
As a result, the costs of a commercial mortgage can be cut, making it among the lowest cost lending that is commercially available.
So, if you want to raise cash, a commercial mortgage can be the most cost-effective solution available. In addition, with the current low interest rates and high property values, it could be the simplest way to get the funds you need.
It works by letting you take out a new commercial mortgage on your existing property. If you own the property outright, all the money you raise is yours to use in any way you wish.
If you are refinancing an existing commercial mortgage, you can repay your original loan and use any surplus cash to help build your business.
In both cases, you repay the loan over the time agreed and regain full title to your business premises when the funds are paid off. The chances are that by doing so, you will be able to take advantage of rates that are currently low.
How much can I borrow If I remortgage my commercial property?
Business owners can borrow as much as they need, from upwards of £25,000, as long as they meet the lender affordability criteria.
How to arrange commercial property refinance
Many commercial lenders will be able to provide property refinance, and most will have similar requirements.
Lenders are likely going to want to see financial information such as:
- Balance sheets
- Business plan
- Statements showing profit and loss
- Cash flow data
- Details of your plans for the future
- Details of your personal finances
- Credit rating and history.
Commercial lenders will also want to know more about the property's current market value you wish to refinance. The condition and type of the premises will be important, and if the valuation has changed since you took out your original mortgage, this could impact the loan-to-value calculation for a new loan.
Before taking the plunge and refinancing a commercial mortgage, business decision-makers should ensure they are fully informed about the process and consider all of the pros and cons.
While there are clear benefits to refinancing, there are drawbacks too, so businesses must think carefully about whether it is the best option in the long term.
Speak to our experts if you're worried about credit approval and repayment fees.
- Refinancing could enable you to access any equity tied up in commercial property, freeing up working capital
- You may be able to enjoy a lower interest rate to reduce your costs
- You may be able to extend the term of your borrowing to reduce your monthly repayments.
- Refinancing a commercial mortgage can be an expensive process with arrangement fees, plus other costs. Your solicitors and your accountant may need to be involved and more than likely charge for their time.
- If you are changing from one provider to another, your current lender might charge you for early repayment of the loan.
- Interest rates cannot be permanently fixed and may increase considerably after any fixed period expires.
- If refinancing means you will be paying off your mortgage for longer, you could end up paying more overall.
Commercial property solutions from Rangewell
Commercial Property Funding involves significant expenses. Therefore, once you have weighed up the benefits and drawbacks and have decided that refinancing is the right option, you need to ensure that you know the actual costs details of any new loan, such as the interest rate and the fees involved.
It is essential to have expert knowledge to ensure you have the kind of funding that will help you reduce your outgoings or raise the funds you need at the minimum cost.
At Rangewell, we have access to the full range of funding from lenders across the market. It lets us use our property finance expertise to support your business plans – and ensure that you have the financial solutions you need.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
What rates can I expect for a commercial remortgage?
If you’re planning on using the property as a premise for your own business, the interest rate is likely lower than if you intend to let the property. Owner-occupied commercial mortgages can be anywhere from 2.25% to 12%, but most loans come in between 2.35% and 6.5%. Our partners have competitive interest rates.
How to qualify for the best rates?
If you're wondering how to get the best mortgage rate, it's based on your credit score, loan size, mortgage product, and even the location of your property. Rates will vary from lender to lender.
Bad credit history and commercial refinance
You can get approved for a business loan with bad credit, but getting approved is more straightforward with better credit. If you have bad credit, you may have to look beyond traditional lenders. Speak to Rangewell to see how we can help.
Last update: 8 April 2023
Frequently asked questions
Have a question?
Refinancing means getting a new mortgage to replace the original and is done to allow a borrower to obtain a better interest term and rate. The first loan is paid off, with a second loan arranged on more favourable terms.
Commercial equity loans use the equity you've built up in a property to provide cash. These loans are typically offered by banks but can be offered by private lenders. Commercial Equity Financing is also ideal for business owners that need additional funds to pay bills or expand their business.
You should consider commercial remortgaging if you'd like to:
- Reduce interest rates and lower monthly payments
- Release equity for investments
- Improve your cash flow
- Access finance for business growth
- Get a more competitive loan with better terms for your premises
Commercial mortgage rates can vary from around 2.25% to 12%. Generally speaking, most loans come in between 2.35% and 6.5%. Speak to our experts if you're looking for a fixed rate or variable rate option.
One of the most common reasons to refinance is to lower interest rates on your existing loan. Refinancing is a good idea if you can reduce your interest rate by 2%. However, lenders say 1% savings is enough of an incentive to refinance.
Generally speaking the deposit for a commercial mortgage is between 25% and 40%, but many factors can affect this figure. There may be a broker fee to take into consideration, so bear that in mind.
Commercial property finance comes in many different types, and sometimes it can be challenging to know what’s right for you. Here are some examples of various commercial property finance products available on the market.
- Commercial Mortgages
- Property Development Finance
- Bridging Finance
- Auction Finance
- Portfolio Finance
- Mezzanine Finance
To find out about other commercial mortgage products available, speak to our experts!
The main difference between a commercial mortgage and a residential mortgage is that the value of the land is much larger. So if you’re thinking about residential investments for additional income, you’ll need a commercial mortgage.
If you're a sole trader, limited company or developer - get in touch to see how you can help!
It’s not uncommon for property owners to borrow against their equity by remortgaging to get a lump sum, which will often be used to reinvest in your business.
If you want to remortgage to release equity, then contact Rangewell; we can help you find a deal with a new lender to help you release the cash you need.
A lower rate means less interest and will mean you can pay down your debt faster and for less money. As a result, you’ll have more cash to put towards upgrades, renovations, or remodelling. Not sure how commercial remortgages can help your financial situation? Get in touch with Rangewell, and we can provide you with expert advice.
Download Rangewell’s free and detailed guide to Commercial Property Finance
What types of funding are available for commercial property?
How do commercial mortgages differ from residential mortgages
How can refinance free up funds?
What are the costs?
What are the restrictions?
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