How to refinance a commercial mortgage

commercial property glass building
commercial property glass building

Similar to refinancing a residential mortgage, refinancing a commercial mortgage involves switching from one commercial mortgage to another in order to release capital or save money.

If you’re looking to refinance a commercial mortgage, you’ve landed in the right place. We’ve created a helpful guide outlining everything you need to know about refinancing a commercial mortgage.


What is a commercial remortgage?

In simple terms, a commercial remortgage is a refinancing method for mortgages secured against a commercial property. Many commercial property owners choose to remortgage their property in order to save money on their repayments or even raise funds for their existing business or a new business venture.


How does a commercial remortgage work?

The process involved in refinancing a commercial mortgage is relatively simple and involves property owners replacing their existing loan with a new one. Your mortgage broker will talk through all the options available to you and try to find the best deal for your circumstances. All rates and terms will be discussed, providing a great opportunity for you to ask any questions.

With a commercial remortgage, you can:

  • switch to a better deal with a new provider
  • release equity from your commercial property
  • borrow against the value of your commercial property
  • switch from owner-occupier to commercial mortgage.


How much can you refinance up to?

If you’re thinking of refinancing your commercial mortgage, there is no rule on how much you can borrow. However, the lender you choose will need to be confident that you can afford to make the new repayments.

The rates you will be able to access will depend on your level of risk. You should also consider that the vast majority of commercial mortgages will come with a lender arrangement fee which is usually between 1%  to 2% of the total loan amount. You will also need to factor in valuation and legal work charges when budgeting.


How does it differ from a standard homebuyer remortgage?

The main difference between a commercial and homebuyer remortgage, is that commercial remortgages are designed to be applied to loans that are backed by non-residential real estate. Commercial mortgages are tailored for the commercial sector and their business needs, unlike residential mortgages which are designed for homes and residential properties.


Pros of commercial remortgages

Commercial remortgages offer a number of benefits, including the ability to raise funds quickly, gain access to competitive loan terms, improve cash flow if needed, and access better deals.

Despite there being lots of benefits, you should also consider that refinancing a commercial mortgage also means that you may be taking on a considerable amount of debt. With this in mind, you should always weigh up whether this is the best option for your business.


Why choose Stewart Hindley?

If you’re considering buying a commercial property or you’re looking to refinance a commercial mortgage, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you. Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding commercial mortgages.

Stewart Hindley
Specialist financial experts helping you secure commercial loans across the hospitality, leisure and commercial property sectors.

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