Are you thinking about refinancing your commercial property to release cash or cut costs? It could be a good move, but it’s not as simple as calling your bank and signing a new deal.
Behind the scenes, refinancing commercial property depends on getting the legal side right, from valuations and title checks to new mortgage deeds and registration. It’s a detailed process that needs a solicitor with experience handling commercial property transactions.
Why refinance a commercial property?
Refinancing is often a practical way to free up funds, reduce monthly repayments, or create room for growth. Many business owners decide to go this route to make better use of the value tied up in their property or to switch to a mortgage that better suits their plans.
Here are some of the most common reasons:
- To Release Equity – If your property’s value has gone up, refinancing can unlock cash that you can reinvest elsewhere in your business.
- To Secure a Better Deal – Switching to a lower interest rate or longer term can bring your repayments down and improve cash flow.
- To Consolidate Debt – Refinancing allows you to bring together multiple loans into one manageable monthly payment.
- To Support Growth – Whether you’re upgrading your premises, expanding operations, or buying new equipment, refinancing can help fund it.
- To Restructure Investments – Property investors often refinance to reshuffle their portfolios or move between interest-only and repayment options.
Step-by-Step Guide to Getting a Commercial Remortgage
Refinancing commercial property follows a clear process:
1.Property Valuation
Your mortgage lender will want an up-to-date estimate of the property value before agreeing to refinance. This confirms its worth and helps them calculate their willingness to lend. They’ll usually appoint a commercial surveyor to carry this out.
2.Get a Mortgage Agreement in Principle From Your Lender
Once the valuation is in progress or complete, the next step is to get a Decision in Principle (also known as an Agreement in Principle or AIP) from your chosen lender. This outlines how much they’re prepared to lend you, subject to legal checks and underwriting. It’s not a formal offer yet, but it gives you a good foundation to move forward.
3.Instruct a Commercial Property Solicitor or Conveyancer
This is where the legal process starts. A conveyancer with experience in commercial property conveyancing will handle the legal work, liaise with your lender, and make sure that the transaction meets all regulatory and contractual requirements.
4.Legal Due Diligence
Your conveyancer will carry out legal checks on the property, including reviewing the title, existing charges or mortgages, leases (if tenanted), and any restrictions that might affect refinancing. The lender may also require conveyancing searches, particularly if the property is being used in a different way than before.
5.Drafting New Mortgage Deeds
Once everything checks out, your conveyancer will receive the new mortgage documents from your lender. They’ll go through the terms with you and prepare the documents ahead of completion.
6.Completion & Registration
On completion day, your new mortgage funds are released and used to pay off the old lender (if applicable). Your conveyancer will then register the new mortgage with HM Land Registry, and the refinance is officially complete.
How long does the refinancing process take?
Most commercial refinancing deals take 4 to 8 weeks, but the exact timeline depends on the complexity of your situation.
Here’s what can affect the timescale:
- Lender Turnaround Times – Some lenders are quicker than others when it comes to issuing offers and processing legal documents.
- Valuation Delays – If the lender’s surveyor has a backlog or raises concerns in their report, things can slow down.
- Title or Lease Issues – Problems with the legal title, unregistered land, or unclear commercial lease agreements (in the case of tenanted properties) can add extra time.
- Third-Party Consents – If the property is leasehold or under any restrictions, you may need approval from a landlord, management company, or a lender who already holds a mortgage against the property.
- Delays in Redeeming Your Current Mortgage – If you’re switching lenders, your outgoing lender needs to provide a redemption statement, and that isn’t always instant.
Staying organised, responding quickly to solicitor requests, and choosing a conveyancer who specialises in commercial property can help keep things on track.
How much does refinancing commercial property cost?
Refinancing commercial property involves a range of costs beyond the monthly repayments. It’s a good idea to get a full quote at the start of the process to be sure of what legal, financial, and administrative work is covered so you can avoid unexpected costs.
Here’s what you’re likely to pay for:
Legal Fees
Your solicitor will handle all the legal work, including checking the title, working with your lender, and registering the new mortgage. Fees vary depending on the complexity of the deal and the nature of the property.
Valuation Fees
Most lenders will ask for an independent valuation to confirm the property’s current market value. You’ll usually pay this directly, and the amount depends on the size and type of property.
Lender Arrangement Fees
Many lenders apply a setup fee for the new loan. This could be a flat fee or a percentage of the amount you’re borrowing.
Land Registry & Search Fees
The Land Registry and search fees cover the cost of officially registering the new mortgage and any required property searches, especially if the lender needs updated information.
Redemption Charges
If you’re ending an existing mortgage as part of the refinance, your current lender might apply early repayment or admin fees.
What to Think About Before Refinancing Your Commercial Real Estate
Before going ahead with refinancing commercial property, it’s worth taking a moment to look at the bigger picture, as these decisions can have a long-term impact on your finances.
Interest Rates
Interest rates can vary widely depending on your lender, the property, and the terms you’re applying for. Factors like the loan term, the loan-to-value (LTV) ratio, and how healthy your business finances look all influence what you’re offered.
Using a mortgage broker can help you compare options and negotiate favourable rates and terms, especially if your needs are more complex or time-sensitive. It’s also worth checking whether the rate is fixed or variable, and how that fits with your plans over the life of the commercial mortgage.
Early Repayment Charges
If you’re coming out of an existing commercial mortgage deal early, your current mortgage provider might apply a penalty. These early repayment charges can reduce the benefit of switching, so it’s important to factor them into your overall costs before committing to a new deal.
Released Equity
If your goal is to release equity, be clear on how that cash will be used. Whether it’s for investment, expansion, or managing cash flow, having a clear plan for the released funds matters. Without one, there’s a risk of higher repayments putting pressure on your finances, especially if the money doesn’t generate a return as expected or gets used up faster than planned.
Impact on Long-Term Costs
Commercial property refinancing can feel like a win if it reduces your monthly payments, but it’s important to think about the full financial picture. If you’re switching mortgage lenders, you may end up extending your loan term, which could increase the total amount you repay over time.
That might be fine if you’re looking for breathing space, but make sure the new arrangement fits your long-term plans, not just your short-term cash flow.
Ready to Refinance?
If you’re considering refinancing your commercial property, having the right legal support can make all the difference.
At Triangle Legal Services, we handle the legal side of commercial mortgage refinancing with clarity, speed, and minimal fuss. We’ll work closely with your broker and lender, carry out all required checks, and guide you through every step of the process, so your refinance stays on track from start to finish.
Contact us to speak with a commercial conveyancer who understands exactly what’s involved.
FAQs About Commercial Refinance Loans
Can I use a bridging loan as part of commercial property refinancing?
A bridging loan can be used as a short-term solution while you’re arranging longer-term commercial property finance. This is common when timing is tight, or if you’re waiting for a refinance deal to complete but need funds quickly. Once the refinance is finalised, the bridging loan is typically repaid in full.
It’s important to get legal advice before using bridging finance, as the terms and costs can differ from standard commercial mortgages.
Do I need to use the same lender to refinance my commercial mortgage?
You can refinance with a completely different lender if they’re offering more competitive mortgage terms. A broker can help compare lenders, and your solicitor will handle the legal switch.
What happens to my original mortgage during refinancing?
Refinancing involves replacing your existing mortgage with a new one, often to access better rates, a longer-term loan, or more flexible terms.
As part of the refinancing application, your solicitor will arrange for the original mortgage to be repaid in full on completion day, using the funds from the new lender. This is a standard part of the commercial property finance process and makes sure the title is updated to reflect the new loan.
Once the previous loan is cleared, you’ll continue repayments under the new agreement until you repay the loan in full or refinance again.
Can I refinance if the property is owned by a limited company?
Commercial property refinancing is a common option for property owners who hold assets through a limited company. The process is similar to refinancing as an individual, but lenders may ask for additional financial documents, like company accounts and director guarantees.
Many commercial property owners use refinancing to release equity or restructure borrowing on their commercial premises. A broker can help you explore suitable refinancing options based on your company’s structure and goals.
Will refinancing affect my credit file & eligibility for other commercial loans?
When you apply for refinance, the lender will carry out a credit check, which will appear on your credit file. This is standard and unlikely to cause issues on its own, but multiple applications in a short period can have an impact. If you’re planning to apply for other commercial loans soon, it’s worth considering how a refinance might affect your overall credit profile and borrowing capacity.
Is refinancing possible if my commercial mortgage is interest-only?
You can refinance an interest-only mortgage or switch to a repayment option, depending on what suits your cash flow and future plans.
What does equity in my commercial property mean, and how does it affect refinancing?
Equity in the property refers to the difference between the value of the property and the amount still owed on the mortgage. Over time, as the loan is repaid or the property’s value increases, more equity is built up in the property. For a borrower looking to refinance, this equity can be released and used for business investment, cash flow, or other financial goals.
Lenders will consider how much equity you have when assessing your refinancing application. The more equity you hold, the stronger your position, and the easier it may be to find the best refinancing deal for your needs.