Quick answer (summary)

Yes — many businesses can refinance a commercial mortgage to reduce monthly repayments, release equity, or both. The result depends on the new loan’s interest rate, term, your property’s current valuation and the lender’s lending criteria. Refinancing can lower monthly costs by securing a lower rate, extending the repayment term or changing the repayment type. It can release cash if the property value has increased or if the lender accepts a higher loan‑to‑value (LTV) than your existing mortgage.

If you want tailored options, complete a quick enquiry for a free eligibility check and receive fast quotes from lenders and brokers matched to your needs: Get Quote Now — Free Eligibility Check.

Note: the enquiry form is only to match your business with lenders/brokers — it is not a loan application.

What is refinancing a commercial mortgage?

Refinancing — also called remortgaging — replaces your current commercial mortgage with a new loan secured on the same property. Businesses refinance for a few common reasons:

• To obtain a lower interest rate and reduce interest cost
• To extend the loan term and lower monthly repayments
• To switch lender for better service or loan features
• To release equity (borrow additional funds against the property)
• To consolidate or restructure business debt

How refinancing works — the mechanics

1. Pre‑qualification: lenders or brokers review your accounts, tenancy/lease details and credit history.
2. Valuation: an updated valuation (mortgage valuation or RICS survey) determines the property value and allowable LTV.
3. Offer & terms: lender issues an offer setting the rate, term, covenants and fees.
4. Repayment of existing mortgage: on completion the new lender repays the old mortgage (you may pay an early repayment charge).
5. Completion: legal conveyancing registers the new charge; any released funds are paid out at completion.

If you want a short list of lenders who commonly fund commercial refinance, see our commercial finance page or start your enquiry: Commercial finance.

How refinancing can reduce repayments

Refinancing can reduce your regular outgoings in three primary ways:

1. Lower interest rate

Switching to a lower margin over the benchmark rate (e.g., SONIA) reduces interest charged and monthly instalments. Lenders may offer better pricing to competitively priced accounts or lower-risk properties.

2. Extended loan term

Extending the repayment period spreads capital and interest over more months, lowering the monthly payment amount. Bear in mind this can increase total interest paid over the life of the loan.

3. Different repayment type

Moving to interest-only (where available) temporarily lowers monthly payments because you’re only paying interest, not capital — but capital remains outstanding and must be repaid later.

Illustrative example

Example (illustrative only): a £1,000,000 loan at 5.5% over 15 years will have a higher monthly payment than refinancing to 4.25% over 20 years. The monthly cashflow improves, but lifetime interest increases. Always run an “all‑in” comparison including fees and early repayment charges.

How refinancing can release equity from commercial property

“Releasing equity” means increasing your loan balance relative to the property value and taking the surplus cash out at completion. Key factors:

• Current valuation: if the market value has risen since purchase you may access a higher LTV.
• LTV limits: many commercial lenders lend between c.60%–75% LTV depending on asset type and tenant strength.
• Purpose: funds can be used for refurbishment, expansion, working capital, acquisitions or to pay down higher‑cost debt.

Steps to release equity

1. Arrange a valuation (mortgage valuation or RICS survey).
2. Gather accounts, tenancy agreements and management information.
3. Apply to lenders or via a broker who will set LTV, fees and interest.
4. Complete legal work and receive net proceeds after fees and any redemption of the previous mortgage.

Want to explore equity release options? Start your enquiry: Free Eligibility Check.

Who can usually refinance — lender criteria

Commercial lenders typically assess:

• Property type (office, retail, industrial, mixed-use) and condition
• Lease terms and tenant covenant strength (for investment properties)
• Business financials — turnover, profit, cashflow and historic accounts
• Directors’ credit histories and company track record
• Existing charges on title, planning or lease restrictions

Common reasons applications are declined

• Poor business cashflow or weak historic accounts
• Very short unexpired lease terms
• Adverse credit or unresolved defaults
• Property in disrepair or with planning issues

Costs, risks and things to check before refinancing

Typical costs to budget for:

• Early repayment charges (ERCs) to your current lender
• Arrangement/booking fees for the new loan
• Valuation and RICS survey fees
• Solicitors’/legal fees and Land Registry costs
• Broker fees (if applicable) and any exit costs

Key risks

• Extending the term reduces monthly payments but usually increases total interest paid
• Interest-only reduces monthly cost now but raises future capital repayment obligations
• New lender covenants may be stricter and could restrict future business actions
• Market values can move — a fall in value could reduce future refinance options

Always compare the “all‑in” cost: fees + early redemption + interest over a realistic period. If unsure, discuss options with a broker matched to commercial property refinance.

Alternatives to refinancing

• Second charge loan: take a second secured loan while keeping your existing mortgage in place.
• Bridging loan: short-term funding to release cash quickly, often more expensive.
• Top-up from existing lender: may be quicker but could carry higher pricing.
• Asset finance or invoice finance: alternatives for working capital when property security is less suitable.

Typical timeline for commercial refinance

Timings vary by complexity and lender, but a typical schedule is:

• Initial enquiry & pre-qualification: 1–3 days
• Valuation and lender application: 1–3 weeks
• Offer & legal process: 2–6 weeks
• Completion: usually 1–2 weeks after exchange

Overall: commonly 4–10 weeks from first enquiry to funds/release, depending on surveys, legal searches and redemption timing.

Ready to see options? Receive matched quotes and a free eligibility check: Get Quote Now.

How UK Business Loans helps

UK Business Loans doesn’t lend. We introduce businesses to trusted brokers and lenders who can advise on commercial refinance and other finance solutions for loans of approximately £10,000 and up.

What we do:

• Two‑minute enquiry to capture core details
• Match you with lenders/brokers suited to your property type and sector
• Deliver no‑obligation quotes and eligibility checks so you can compare options

Our service is free to use and your enquiry will not affect your credit score. If you want tailored options, complete a short form now: Free Eligibility Check.

For more on refinance-specific products see our guide to commercial finance and related services such as asset finance.

We are an introducer — we do not lend or provide regulated financial advice. Enquiries are only used to match you with lenders or brokers.

FAQs

Will refinancing always reduce my monthly repayments?

Not always. A lower rate or longer term usually reduces payments, but fees and early repayment charges can offset savings. Compare the all‑in cost before deciding.

Can I refinance with adverse credit?

Specialist lenders do consider applicants with imperfect credit, but terms may be more expensive. A broker can find suitable options that match your credit profile.

How much equity can I release?

Depends on valuation and lender LTV policy. Many lenders offer c.60%–75% LTV for standard commercial assets; specialist assets may differ. Use a valuation to estimate available equity.

Will enquiring affect my credit score?

Submitting an initial enquiry through UK Business Loans won’t affect credit. Lenders may run checks only if you proceed with an application.

Final checklist before you refinance

• Compare the all‑in cost (fees + early redemption + interest) — not just the headline rate.
• Check early repayment charges and whether you can time completion to avoid them.
• Confirm the net funds you’ll receive after fees and outstanding loan redemption.
• Review lender covenants and flexibility for future needs.
• Consider alternatives (second charge, bridging, asset finance) if refinance isn’t the best fit.

To explore matched options quickly and receive no‑obligation quotes, complete a short form now: Start Your Enquiry — Free Eligibility Check.

For more detailed reading on remortgaging and practical guidance, see our specialist page on refinance loans.

Important: UK Business Loans is an introducer — we do not lend or provide regulated financial advice. The information here is guidance only and not personalised advice.