Can I remortgage my commercial loan?

Everybody enjoys saving money so it’s no surprise that business owners in the UK are looking for remortgage deals on their current commercial mortgages. 

But how does remortgaging a commercial loan work and how do you know if you’ll find a lender to approve your application. With a little help, switching deals can be less time consuming and thankfully, less confusing.

What is a commercial remortgage?

A commercial remortgage is a type of loan secured against the value of your commercial property. 

A commercial remortgage can help some mortgage customers get access to the additional funds they need for their business, whether that be to extend their premises, consolidate debts or to invest in a new area of their business.

Commercial loans are often offered at a lower rate than other alternatives such as bridging finance or other types of short-term lending, though that’s not always the case. 

Why would someone remortgage a commercial loan?

• To secure a better deal on monthly mortgage repayments.

• To switch to a different lender with more favourable terms and conditions

• To save money on the mortgage and reinvest the extra funds into another business

• To expand the business

• To make improvements or renovations to the building

What should I consider before remortgaging a business loan?

A remortgage is a huge decision that can affect your personal finances, as well as your business’ finances for a long time. 

Ask a professional for their advice before applying as they could save you a lot of hassle and wasted money in application fees that could ultimately end in a rejection. 

Here are some points to consider before making a decision about remortgaging your current commercial mortgage:

• A remortgage is a form of a secured loan and if you fail to pay your monthly payments your lender could repossess and therefore take ownership of your business property.

• If you were to use your own residential property as security or part security for your remortgage, defaulting on your loan could also result in your home being repossessed. 

• If you remortgage and release money from your property as a lump sum, you could end up paying back more than this sum over the course of repayments because of interest. 

Am I eligible to remortgage my current commercial loan?

Some people are surprised to learn that despite being approved for a mortgage in the past, they are not always eligible for a commercial remortgage with all lenders.

Every lender has a different set of criteria that they use to determine whether or not they can lend to you and under what terms. 

Some lenders restrict their lending capacity to borrowers that they deem as more likely to default on their loan. Essentially, the higher the risk, the higher the chance of the lender rejecting the application. 

Lenders will look at your affordability as well as your credit history to conclude this decision. Recent or more severe forms of bad credit such as bankruptcy can reduce your choice of lenders and could result in high rates of interest too.

The good news is that with the help of a broker finding a commercial remortgage lender that is more likely to accept you, even with bad credit, is a lot easier.

What does a commercial remortgage broker do?

• Search the UK market for lenders who are more likely to accept your remortgage application

• Check your eligibility for a remortgage before you apply to a lender to help you avoid a credit rejection

• Advise you on how to improve your chances of getting approved with lenders who can offer the cheapest rates

• Fill in your remortgage application with you to help you avoid any errors that could cause delays or rejections

• Check the terms and conditions of a remortgage agreement and then highlight and explain them so you are aware of the pros and cons and any terms that could affect your finances later down the line

• Provide confidential and sound advice on how to get the best commercial remortgage deal. 

• Take the time to listen to what you need from your deal and then recommend the most suitable and viable option. If our brokers believe that there’s a better alternative, they’ll tell you.