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Commercial remortgaging is the process of refinancing or negotiating a new deal on a mortgage for a commercial property. 3 key reasons why a business owner may choose to remortgage are:

To save money – if interest rates have fallen
To release equity – often for a new investment
When the existing loan term with the current lender has ended

How do commercial remortgages work?

Quite simply, a commercial remortgage replaces your existing loan and agreement with a new one. Just like your initial commercial mortgage, remortgages are considered in a very bespoke manner, reviewing each case individually. Typically, that means there are no “off-the-shelf” products however some lenders do have set pricing.

Residential Remortgage vs. Commercial Remortgage

The key difference to remember between a residential remortgage and a commercial remortgage is that a commercial remortgage can only be applied to non-residential property.

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How to remortgage a commercial property

The first step in remortgaging your commercial property is to find a specialist, experienced broker like Coreco Commercial. We understand the market and we know where to source the best deal. We’ll discuss your loan requirements in detail with you to ensure we find a term and an interest rate tailored to you.

Most commercial mortgages can be remortgaged however the lower the outstanding balance the harder it is to find a lender. Our expert advisors can help you find the best time to remortgage to ensure a range of competitive rates. We can also help if you’ve had trouble finding a new lender due to the low outstanding balance as we work with a range of specialist lenders.

When Should You Remortgage Your Commercial Property?

When considering whether to remortgage your commercial property, you should evaluate the pros and cons of doing so. This is something we can discuss in detail with you to ensure you are making the right choice for your business or investment property.

Advantages of commercial remortgaging

Choosing to remortgage your commercial property can have various benefits, including releasing equity, the chance for lower interest rates, commercial investment, shorter terms and variable interest rates.

Release equity

Some people may choose to remortgage their commercial property in order to release equity. Providing enough equity has been built up, these funds can be released and used elsewhere, such as for other investment opportunities.

If the value of the commercial property has increased, it may also be possible to borrow against the increased value, realising the gain, and therefore giving you further money to use elsewhere.

Remortgaging to a lower interest rate

Interest rates are continually changing and so are your circumstances, therefore many people look for opportunities to benefit from decreased interest rates. While rates are currently higher than we’ve seen in previous years this presents an opportunity to remortgage at a cheaper rate in the future, if rates drop.

Switching your mortgage when interest rates are low will help to save you money on your monthly repayments. Remortgaging to a shorter term with lower interest rates can help you to achieve capital gains.

Switching from owner-occupier to commercial investment

Remortgaging your commercial property may also give you the opportunity to switch to a different mortgage type, should there be a need to. There are 2 different types of commercial mortgage: an owner-occupied mortgage and a commercial investment mortgage.

An owner-occupied mortgage is suitable for someone who wants to purchase, or in this case remortgage, a property for their business to operate within.

A commercial investment mortgage is suitable for someone wishing to purchase, or remortgage, a commercial property to then rent out such as office space, retail unit, warehouse or industrial space.

Reducing the commercial mortgage term

If interest rates fall, there may be an opportunity to refinance your existing commercial mortgage to one with a shorter term, without largely affecting your monthly repayments. Doing so should reduce the term of your loan and, in some cases, even see lower monthly repayments.

Switching between fixed and variable interest rates

As we’ve mentioned, interest rates continually rise and fall over time, therefore you may want to choose a fixed or variable mortgage depending on the circumstances. For example, choosing a fixed mortgage allows you to lock into a lower interest rate, offering you stability and protection against increases in interest. However, if interest rates fall even further, you won’t be able to benefit from these even lower rates. If you opt for a variable interest rate, you will be able to benefit from interest rates as they drop and experience lower repayments, saving you money. Likewise, this is also true in reverse, so if interest rates climb, you will then be required to pay more. As experienced mortgage brokers, we can help you come to a decision on this for an option that suits you best.

 

How to Apply for a Commercial Remortgage and Eligibility Criteria

Of course, like with any mortgage, a commercial remortgage requires the thorough preparation of various documentation, financial statements, liabilities and more – again, this is something we can help you with.

Key Considerations When Applying for a Commercial Remortgage

There’s a lot to consider when applying for a commercial remortgage, and that’s why it’s always best to discuss this with an experienced broker. We will discuss the pros and cons with you and explain the application process thoroughly. We will also make sure you are aware of early repayment charges which may apply to your existing mortgage, plus any costs associated with potential new options.

Why Use a Broker for Your Commercial Remortgage?

The first step in a commercial remortgage is contacting an experienced mortgage broker, like ourselves. We know the market like the back of our hands and commercial mortgages are what we do. We’ll clearly and openly present your options to you and help you consider which solution suits you and your circumstances the best… even if that means remaining with your current lender. Our aim is to help you secure the best financial solution for you and your business.

 

Where can I find current commercial mortgage rates?

Commercial mortgage interest rates vary. Typically, owner-occupied mortgages come in at a lower rate than commercial investment mortgages, and of course, the higher the risk, the higher the interest rate. A variety of factors are considered when determining a rate, including loan size, credit history, type of lender and the financial strength of the business.

For more information, guidance and support on your commercial mortgage, contact the Coreco Commercial team. We are personal, professional and progressive in supporting you with your commercial remortgage application. Contact us today to discuss commercial remortgages and let us support you on your exciting business journey.

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