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.
If you are looking at the most cost-effective way for your business to raise cash, property refinancing may be the solution.
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.
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.
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!
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.
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.
Business owners can borrow as much as they need, from upwards of £25,000, as long as they meet the lender affordability criteria.
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:
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.
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.
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.
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.
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.
Our goal is very simple - to help businesses find the right type of finance as quickly, transparently and painlessly as possible.
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?
The downsides and how to avoid them
Paperwork you need to provide with your application
Key terms to check
Can refinancing a commercial mortgage help businesses with cash flow?
Do all lenders have to be authorised and regulated by the Financial Conduct Authority?
Is a bridging loan classed as short term business finance?
Must my business have a registered office in England/be registered in England to qualify for a business mortgage?
What interest rate can I expect with property development finance?
What about commercial owner-occupied/residential mortgages or buy to let mortgages?
Am I able to refinance an existing commercial mortgage?
Download this free resource on financing a commercial property
Have a question?
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..
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.
Our finance experts are waiting to answer questions and discuss your finance options. Get in touch with us and we'll be happy to help.
