A Surprisingly Tolerable Guide to Commercial Property Refinancing
- Josh
- Jul 21, 2025
- 4 min read
Updated: Aug 29, 2025
Introduction: Why Refinance?
Refinancing a commercial property is a bit like switching energy providers—tedious in theory, but potentially lucrative in practice. Whether you're looking to lower your monthly repayments, release equity, or escape the clutches of a variable rate that’s more erratic than a toddler on espresso, refinancing can be a strategic move.
But before you dive in, let’s unpack what refinancing actually involves, why it might be right for you, and how to do it without losing your mind—or your margins.
What Is Commercial Property Refinancing?
In plain English: it’s replacing your existing commercial mortgage with a new one. This could be with your current lender (a bit like renewing your vows) or with a new one (more like a conscious uncoupling).
You might refinance to:
Secure a better interest rate - especially if your current one was agreed during the financial equivalent of a thunderstorm.
Switch from variable to fixed rate - for those who like their repayments like their tea: predictable.
Release equity - for business expansion, renovations, or that long-overdue office ping-pong table.
Consolidate debt - into one manageable monthly payment.
Extend the loan term - to reduce monthly outgoings.
When Is the Right Time to Refinance?
Timing is everything.
Refinance too early, and you might face hefty early repayment charges. Too late, and you could be stuck with a rate that makes your accountant weep.
Here are some signs it might be time:
Your fixed-rate period is ending.
Interest rates have dropped (or are about to rise).
Your property value has increased.
Your business has grown and your financials are stronger.
You’re planning a major investment or expansion.
What’s Changed?
Post-2023, the UK commercial lending market has become more nuanced. Lenders are cautious but competitive, and rates—while not at rock bottom—are stabilising.
Key trends:
Fixed rates are back in vogue, especially for industrial and logistics properties.
Loan-to-value (LTV) ratios remain positive—typically 65–75%.
Green lending is gaining traction, with better terms for energy-efficient buildings.
Lender appetite is strong for owner-occupiers with solid trading history.
Need expert commercial mortgage advice?
How the Process Works (Without the Jargon)
Let’s break it down into digestible steps:
1. Assess Your Current Position
Start by reviewing your existing mortgage:
What’s the outstanding balance?
What’s the current interest rate and term?
Are there early repayment charges?
What’s the current value of your property?
If your property has appreciated or your business has grown, you’re in a stronger position to negotiate.
2. Define Your Objectives
Be clear on what you want to achieve. Lower repayments? Equity release? A longer term? Knowing your goal helps you choose the right product.
3. Get Your Financials in Order
Lenders love paperwork.
You’ll need:
Last 2–3 years of accounts
Management accounts
Business bank statements
Property details (valuation, tenancy schedule if applicable)
Personal and business credit reports
If your accounts are more “creative” than “clear,” now’s the time to tidy up.
4. Shop Around (or Use a Broker)
You could approach lenders directly, but unless you enjoy comparing term sheets for fun, a broker can save you time and money. Yes, they'll charge you money, but it's for a noble cause. They’ll know which lenders are hungry for your type of deal and can often negotiate better terms.
5. Valuation and Legal Work
Your new lender will want a fresh valuation. This is where you discover whether your property is a “prime asset” or “in need of modernisation”.
Legal work includes title checks, searches, and ensuring the property is mortgageable. This can take weeks, so put the kettle on.
6. Completion and Redemption
Once everything’s approved, your new lender pays off the old one, and voilà—you’re refinanced. Hopefully with better terms and fewer grey hairs.
Common Pitfalls (and How Not to Fall in to Them)
Ignoring Early Repayment Charges - These can be eye-watering. Always check your current mortgage terms before jumping ship.
Overestimating Property Value - You know you do that, right? Just because your neighbour’s warehouse sold for £2m doesn’t mean yours will. Be realistic.
Underestimating Fees - Valuation, legal, arrangement, and broker fees can add up. Budget for 2–4% of the loan amount.
Not Stress-Testing Your Business - Lenders will want to know you can handle repayments even if interest rates rise. If your cash flow is tighter than a hipster’s jeans, you may struggle.
Choosing the Wrong Product - A five-year fixed rate might sound safe, but if you plan to sell in two years, it could cost you. Match the product to your plans.
FAQs
Q: Can I refinance if my business had a rough year?
A: Possibly. Lenders look at trends, not just one bad year. Be ready to explain any blips.
Q: How long does the process take?
A: Typically 6–12 weeks. Longer if your solicitor is on holiday or your paperwork is in a shoebox.
Q: Can I refinance a property I rent out?
A: Yes, but that’s a commercial investment mortgage. Different rules, same basic principles.
Final Thoughts: Is It Worth It?
Refinancing commercial property isn’t glamorous. There’s no ribbon-cutting ceremony or Instagrammable moment. But it can be one of the smartest financial decisions you make—especially if you approach it with clarity, strategy, and a decent calculator.
If you’re unsure where to start, speak to a commercial finance specialist. Or, if you’re feeling brave, dust off your accounts, grab a strong coffee, and dive in.
Need expert commercial mortgage advice?
If you’re considering refinancing and want a second opinion—or just someone to translate lender-speak into English—get in touch. We can help you assess your options, compare offers, and avoid the classic pitfalls.
Because refinancing shouldn’t feel like a root canal. It should feel like a well-timed upgrade.
