Refinancing Commercial Property: When and How

Refinancing a commercial property means taking out a new loan to repay the existing one secured against the same asset. Businesses do it for five main reasons: to move onto a cheaper rate, to release equity that has built up in the property, to exit a bridging loan onto a longer-term commercial mortgage, to replace a facility that is maturing or being withdrawn, or to raise capital for growth against an asset they already own. The new lender advances funds, the old debt is cleared on completion, and you carry on with the new facility on its terms.

We are a broker, not a lender, so to be clear about how this actually works. We do not lend, set rates, or approve anything. What we do is read your case, tell you honestly which lenders are open to your property type, your business, and your reason for refinancing, and place you with the one most likely to say yes at a sensible price. The lender values the property, underwrites the affordability, and decides the rate and terms. Any number you see before that point, from us or anyone else, is indicative only.

Timing matters more than most owners expect. If you are exiting a bridge, start the refinance well before the bridge term ends, ideally three months out, because a term commercial mortgage takes weeks to value, underwrite, and complete, and a rushed exit weakens your negotiating position. If you are coming off a fixed rate, begin talking to lenders roughly three to six months before it expires so you are not forced onto a lender's standard variable rate in the gap. Expiring facilities and lender withdrawals are common triggers too; when a lender exits a sector or a book gets sold, borrowers who plan the refinance early tend to get better outcomes than those who wait for a demand letter.

The valuation is usually the pivot point of the whole deal. A commercial refinance is priced off the property's value and, for tenanted assets, its rental income, so the surveyor's figure and the strength of the lease drive both how much you can borrow and the loan to value the lender will offer. Owner-occupied premises are assessed differently again, with the trading business's affordability doing the heavy lifting. If the valuation comes in lower than hoped, the equity you can release shrinks and the deal may need restructuring. It is worth being realistic about value before instructing, because a soft valuation is one of the most common reasons a refinance stalls.

Early repayment charges on your existing loan can make or break the maths. Many commercial mortgages and most bridges carry an ERC or exit fee, and some fixed-rate term loans have charges that taper over the fixed period. Before you refinance to save on rate, work out the ERC on the loan you are leaving, plus new arrangement and valuation fees and legal costs, and compare that against the saving over the period you actually intend to hold the property. Sometimes waiting a few months until an ERC drops or expires turns a marginal move into a clearly worthwhile one. We will flag this early so you are not surprised at the exit.

Indicative pricing gives you a sense of the landscape, but it is not a quote. Longer-term commercial investment mortgages often sit somewhere around 2% to 4% over a reference rate depending on the asset, the loan to value, and the covenant, with loan to value commonly up to around 65% to 75% for investment property and sometimes higher for strong owner-occupied trading businesses. These are illustrative ranges to frame expectations, not offers; the actual rate, term, and LTV come from the lender once it has seen the valuation, your accounts, and the full case. Anyone quoting you a firm rate before that has happened is guessing.

The process itself is fairly predictable once it starts. We agree the objective and gather the documents (recent accounts or SA302s, the existing loan details, lease information for tenanted property, and business or personal financials), then place the case and get a decision in principle. The lender instructs a valuation, underwrites, and issues a formal offer, solicitors handle the legal work and the redemption of the old loan, and completion clears the existing debt and draws the new facility. Straightforward cases can move in a few weeks; anything with complex ownership, planning issues, or a difficult valuation takes longer. Our job is to keep it moving and to be honest with you at each step about what is realistic.