Commercial Property Refinance: Unlock the wealth in your business property

Getting the funds you need at the most competitive rates can be essential, especially when if you are thinking hundreds of thousands of pounds.

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?

If your business has been established for a few years and has acquired – or even started to acquire its own premises, you could be sitting on a valuable and appreciating asset. By buying rather than leasing your property, whether it is an office, warehouse, factory or depot, you have been building up a store of wealth.

Commercial Property Refinancing lets you access that wealth, and use it to provide the scale of funding your business needs, while keeping costs down

Reducing your outgoings

If reducing outgoings rather than raising additional cash is your priority, refinance can still be the solution.

You do not need to have paid off your current mortgage to arrange a new one. Your property will probably have appreciated in value, and the means that the chances are that you can get a better deal on your existing loan. So if you want to reduce the monthly repayments on your current mortgage, cut the demand on your cashflow and release funds for use elsewhere in your business, refinancing your current commercial mortgage could help. You may be able to simply paying off an existing loan and replacing it with a new one may be an effective solution.

How Mortgage Refinancing works

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 loan they have made you.

This sounds like a risk but, in fact, it works in your favour. Because 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. With 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 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 to arrange Commercial Property Refinance

Many commercial lenders will be able to provide property refinance. Most will have similar requirements.

Lenders will want to see a significant amount of financial information.  They will need to understand your business and see balance sheets, statements showing profit and loss and cash flow data, and possibly details of your plans for the future. They may also need to see details of your personal finances, and will expect you to have a good credit history.

They will also want to confirm the current market value of the property you want 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 have an impact on 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 it is crucial for businesses to think carefully about whether it is the best option in the long term.

The advantages

• 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

The disadvantages

• Refinancing a commercial mortgage can be an expensive process with arrangement and other fees. Solicitors and your accountant may need to be involved, and will 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 major expense. Once you have weighed up the benefits and drawbacks and decided that refinancing is the right option, you need to ensure that you know the real 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.