Commercial remortgages and raising capital on business property
Refinancing an existing commercial mortgage works on the same criteria as a purchase, with one advantage: you have a track record on the property. Here is when it pays, and how capital raising is treated.
When to refinance
- A fixed rate is ending and the lender's follow-on rate is poor.
- Your lender has re-priced at a review date.
- The business has grown and would now qualify with a cheaper lender than the one who said yes three years ago.
- The loan term is too short and the payments are squeezing cash; re-spreading over 20 years can transform the monthly figure.
- The property has risen in value and the LTV is now low enough for better pricing.
The costs of moving
Early repayment charge on the old loan (check the date), arrangement fee, valuation and legal on the new one. On a £300,000 loan, moving might cost £8,000 to £12,000. A one-point rate saving is £3,000 a year, so a move typically pays back in three to four years; it is worth doing if you will hold the property that long, and not worth it for a quarter of a point.
Raising capital
Borrowing more than the existing loan and taking the difference in cash. Lenders want a purpose: expansion, equipment, buying another property, buying out a partner, clearing dearer borrowing, sometimes a dividend or a director's loan repayment. The property must support the higher loan on LTV (often capped at 60% to 70% for capital raising) and the business must service it. Raising money to fund losses is not a purpose a lender will accept.
Second charges
If your current lender is cheap and you do not want to disturb it, a second charge from another lender behind them can raise capital at a higher rate on the extra money only. Common with high street first charges at low margins. The first lender's consent is needed.
The process
As for a purchase, but faster: no seller, no chain, the property is known. Six to eight weeks with a challenger bank; longer if you stay with a high street bank that wants a full re-underwrite. The process.
A note on the numbers. Rates, loan-to-value limits, fees and criteria are typical figures at the time of writing (2026). Commercial lending is priced case by case, so your own terms depend on the property, the business, the tenant and you. This is information, not advice, and not an offer of finance.
Quick answers
Can I switch to interest-only when I refinance?
On investment property, usually. On owner-occupied premises, some lenders will allow an interest-only period; full-term interest-only is uncommon.
My lender wants a new valuation to release me. Is that normal?
The new lender will always want their own valuation; the old one should not need one to redeem. Check your facility letter for any redemption conditions.
Ready to talk to someone who can actually arrange it?
Tell us about the property and the business, and a commercial finance adviser will come back with which lenders fit, what rate to expect and what they'll want to see. No fee for the conversation, no obligation.