What is a commercial remortgage?
A commercial remortgage is when you replace your existing commercial mortgage with a new one, either with your current lender or a different one. Businesses and investors remortgage for three main reasons: to reduce the cost of borrowing, to release equity from the property, or to exit a facility that is coming to the end of its term. Done at the right time, a remortgage can save significant money or unlock capital for growth.
When should you remortgage a commercial property?
There are several common triggers:
- A fixed rate is ending: before you slip onto a higher variable rate, you can secure a new deal
- Your term is maturing: many commercial facilities, especially investment loans, run for a set period and need refinancing at the end
- Better rates are available: if market rates have fallen or your business has strengthened, you may qualify for keener pricing
- You want to release equity: if the property has risen in value, you can borrow against the increased value
- Your circumstances have improved: stronger accounts or a better tenant can unlock a higher LTV or lower rate
Releasing equity through a remortgage
If your property has appreciated or you have paid down the loan, a remortgage can release equity up to the lender's LTV limit. For example, if you bought a property for 400,000 pounds with a 280,000 pound loan and it is now worth 550,000 pounds, refinancing to 70 percent LTV could support a loan of around 385,000 pounds, releasing capital after clearing the old debt. That capital can fund expansion, further purchases, or business investment. The LTV mechanics are the same as any purchase, covered in our deposit and LTV guide.
Reducing your borrowing costs
If rates have moved in your favour or your risk profile has improved, remortgaging can cut your interest and monthly cost. Even a small reduction in rate on a large balance adds up over the years. Balance this against the fees of refinancing, using our rates and fees guide to compare the total cost of the new deal against staying put.
What does it cost to remortgage?
Refinancing is not free. Typical costs include:
- Arrangement fee on the new loan, commonly 1 to 2 percent
- Valuation fee for the new lender
- Legal fees for the new security and redemption of the old loan
- Early repayment charges on your existing loan, if you are within a tie-in period
- A broker or platform fee
The key question is whether the savings, or the value of the capital released, outweigh these costs. For a modest rate saving on a small loan, the fees may not justify it; for a large balance or meaningful equity release, refinancing often pays for itself quickly.
The remortgage process
The process mirrors a purchase, but without a property transfer. You package your case, match to lenders, obtain terms, complete a valuation, work through the legals to redeem the old loan and register the new one, and draw down. Because there is no chain, a remortgage can sometimes be quicker than a purchase, provided your paperwork is ready. Our full process guide applies here too.
Getting the best remortgage deal
Lenders differ hugely on rate, LTV, and appetite, so the right match can be the difference between a marginal saving and a transformative one. Assesr builds a lender-ready credit paper in around 60 seconds and matches your commercial mortgage remortgage to specialist lenders competing for your business, at a quarter of the typical broker fee. You pay the 0.5% Assesr Fee on drawdown, nothing until your deal completes.
Frequently asked questions
When should I remortgage my commercial property?
Common triggers include a fixed rate ending, a maturing term, wanting to release equity, or better rates becoming available. Refinancing can cut costs or free up capital, provided the savings outweigh the fees.
Can I release equity with a commercial remortgage?
Yes. If your property has risen in value or you have paid down the loan, a remortgage can release equity up to the lender's LTV limit, giving you capital to invest or expand.
Are there fees to remortgage a commercial property?
Yes. Expect arrangement, valuation, and legal fees, and possibly early repayment charges on your existing loan. Weigh these against the savings or the value of the capital released before proceeding.