Refinancing a Commercial Property

A mortgage is a major financial commitment and many business owners and homeowners are searching for cheaper deals. Refinancing your commercial property is a great way to fund business investment.

We’ve created a helpful guide to support you through your refinancing process.

What is a Commercial Refinance?

Commercial refinancing is a method of refinancing your business property and is a great way to boost the profitability of your property. The process involves taking out a new mortgage, either with your existing lender or a new one, and then using the funds to pay off your previous mortgage, the idea being that the new mortgage will hopefully be on better terms that the old one.

Many businesses use refinance to develop and improve existing investments in the business.

How Does Commercial Refinancing Work?

The refinancing process for both commercial and residential properties is very similar. When refinancing your property, you can decide if you want to find a new lender or stay with your existing lender.

Brokers will aim to source the best deals for your business. Discussing the loan to find the option best suited for you is an important step before agreeing to any new contracts.

When Should You Refinance Your Property?

The most common reason that people choose to refinance their property is that their current mortgage deal is coming to an end. There are plenty of other reasons that lead people to seek refinancing of their property. These include:

To lower interest rates
To improve cash flow
To extend your premises
To release equity for further investment

How Much Can I Borrow?

Businesses can borrow as much as necessary upwards from £25,000. This is on the basis that the loan meets the lender's affordability calculations. Commercial lenders will take various factors into account to calculate how much your business can afford to borrow.

The amount that you can borrow will also largely vary betweenlow and high risk businesses. Companies are considered low-risk if they usually get the highest loan-to-value (LTV) and the best rates. You may also be considered low-risk if you have good credit, large equity and a good trading history.

What to Consider When Refinancing?

There are some risks when refinancing your commercial properties. It is important to remain aware of Early Repayment Charges (ERCs) as these may apply to your current financing if you work on a fixed rate.

Lending fees and associated costs may also be applied to new loans.

How Can Eatons Help?

Here at Eaton's, our team of expert lawyers can make the process of refinancing a property as easy and stress-free as possible. Contact us today