Remortgaging the business premises you already own

There is usually a clear trigger. The most common is simply cost: a deal taken out a few years ago may no longer be competitive, and moving to a better rate lowers the monthly payment. Others remortgage to release equity, turning value built up in the building into cash the business can use. Some are pushed by timing, with an existing facility maturing or an interest-only period ending.

• Securing a lower rate or better terms than the current loan.
• Releasing equity for growth, refurbishment, equipment or working capital.
• Replacing a facility that is maturing or coming to the end of its term.
• Refinancing a short-term bridge onto a long-term mortgage.
• Consolidating or restructuring existing business borrowing.

Whatever the trigger, the underwriting still rests on your trading. A lender refinancing your premises wants the same reassurance as on a purchase: that the business can comfortably service the new payment.

Equity is the gap between what your premises are worth and what you still owe. If the building has risen in value or you have paid the loan down, that gap may be substantial. A capital-raising remortgage lets you borrow against part of that equity and take the difference as cash into the business.

In practice, the lender revalues the property, agrees a new loan up to their maximum loan to value, uses part of it to clear the existing debt, and releases the balance to you. So if a building is worth more than the outstanding loan, you can refinance to a higher amount and free up the difference, subject to affordability. The money can fund expansion, a fit-out, new equipment or working capital. The building keeps working for the business while also releasing capital, which is why owner-occupiers find equity release useful when they would rather not take on unsecured borrowing.

The bands on a remortgage look much like a purchase. For a strong trading business, expect lenders to consider up to around 70% to 80% loan to value, so the equity you release is limited by that ceiling and by what your profits can service. Indicative rates start from around 6%, and arrangement fees typically run 1% to 2%, again subject to status and valuation.

Two things set the size of the loan: the valuation the lender puts on the premises, and debt service cover, meaning whether trading profit comfortably covers the new payment. Push for the top of the loan to value band and the affordability test bites harder, so there is a balance to strike between the cash you release and a payment the business can carry with room to spare. We help you find that balance and present the case so lenders see the full strength of your trading.

Before moving any loan, check what it costs to leave the one you are on. Many commercial mortgages carry early repayment charges within a fixed or tie-in period, and some fixed-rate products have break costs on top. If those charges are large, they can wipe out the saving from a lower rate, so the sums have to be done properly.

Read your current facility letter for the redemption terms, any notice period and how the charge is calculated. Sometimes it is worth waiting until a tie-in ends before remortgaging; sometimes the benefit of releasing equity or fixing a maturing facility outweighs the charge. We work the numbers with you, comparing the true cost of staying against the cost of moving, so the decision is made on the full picture rather than the headline rate alone.

A very common remortgage is the planned exit from a bridge. Bridging is short-term and priced by the month, so it is meant to be repaid quickly, usually by refinancing onto a long-term mortgage or by a sale. If your business used a bridge to buy premises fast, at auction or before selling an old site, the term mortgage is how you settle it and get back to a normal monthly cost.

The strongest approach is to line the exit up in advance rather than scramble for it when the bridge is nearing its end. Ideally the term mortgage is arranged alongside the bridge from the outset, so the exit is proven before the short-term loan even starts. If you are already on a bridge and need to exit, come to us early: we can assess whether your trading and the property support a term mortgage and get the refinance moving before time runs short. Our page on business premises bridging covers the short-term side.

Remortgaging well is about knowing where the value is and matching your case to the right lender. As a whole-of-market broker we compare what the funders we work with will offer, weigh the new terms against your current deal including any exit charges, and structure the loan around what your business can comfortably service. Whether the goal is a lower rate, released equity or a clean exit from a bridge, we manage the valuation, legal and lender work through to completion.

To get moving, have your current mortgage details, recent accounts and management figures, and a rough idea of the property's value and how much you owe. Send us those and we will give you a realistic view of the rate, the equity you could release and whether it is worth switching now or waiting. We are Lenzie Consulting Ltd, a finance arranger and introducer, not a lender, and nothing here is financial, tax or legal advice.