Commercial remortgage
A commercial remortgage replaces the existing mortgage on a commercial or semi-commercial property with a new facility, either to secure a better rate, release equity, restructure debt, or exit a maturing facility such as a bridging loan. FD Commercial arranges commercial remortgages from £250,000 for owner-occupiers, investors and SPVs across the UK.
What is a commercial remortgage?
A commercial remortgage is the refinancing of a mortgage secured against a commercial property: offices, warehouses, retail units, semi-commercial buildings, professional practices, or any other property used for business or held as a commercial investment. The new facility repays the existing one, and any additional borrowing above the outstanding balance is released to you as capital.
Unlike a residential remortgage, there is no product transfer culture in commercial lending. Lenders do not automatically offer existing borrowers their best terms at the end of a fixed period, and many commercial facilities revert to a variable rate that quietly drifts above what the wider market would price the same risk at. Borrowers who leave a commercial mortgage untouched for years are usually paying for the privilege. Reviewing the debt every time a fixed period ends, or every three to five years on variable facilities, is simply good management of the asset.
When should you remortgage a commercial property?
The most common trigger is a fixed rate ending. Commercial fixed periods typically run three to ten years, and the reversion rate at the end is rarely competitive. The second most common is capital raising: the property has equity, the business or portfolio has a use for it, and a remortgage is cheaper than most forms of unsecured or mezzanine borrowing.
Other triggers we see weekly: a bridging or development facility maturing and needing a term exit, a lender withdrawing from a sector and inviting borrowers to refinance elsewhere, a portfolio being restructured into an SPV or group structure, an interest-only period ending, or a borrower on a legacy variable rate who has never tested the market. If your current lender has been acquired, has closed its commercial book, or has repriced your sector, the case for reviewing the facility is immediate.
Timing matters. A commercial remortgage takes 6 to 12 weeks to complete, so the process should start three to six months before the current deal ends. Leaving it later means either paying the reversion rate while the refinance completes or negotiating from a weak position.
Can you release equity from a commercial property?
Yes. A capital raising remortgage releases equity up to the lender's maximum LTV. If your warehouse is worth £2 million and the outstanding mortgage is £800,000, a remortgage at 70% LTV releases up to £600,000 of capital on top of repaying the existing debt.
Lenders will want to know the purpose. Business investment, purchasing additional property, buying out a partner or shareholder, funding a pension contribution via a SIPP or SSAS arrangement, and consolidating more expensive debt are all standard and well received. What matters is that the purpose is coherent and the enlarged debt still services comfortably. Raising capital against a trading premises to fund the trading business is among the cheapest growth capital available to an established company, and it is routinely overlooked in favour of more expensive unsecured lending.
How do lenders assess a commercial remortgage?
Assessment splits on how the property is used.
Owner-occupier
If your business trades from the property, the lender is underwriting the business. Expect scrutiny of two to three years of accounts, EBITDA, and debt service cover: most lenders want the business's adjusted earnings to cover the proposed mortgage payment by 125% or more. Sector matters. Professional practices such as dental, veterinary, medical and accountancy attract the strongest appetite and the highest LTVs, because their income is stable and lenders can also advance against goodwill. You can read how this assessment works in detail in our guide to how DSCR works on commercial mortgages.
Investment property
If the property is let, the lender is underwriting the income stream. Rental cover of typically 125 to 145% of the mortgage payment, tenant covenant strength, unexpired lease term, and break clauses all drive both the maximum loan and the rate. A single-let unit with eight years unexpired to a national covenant prices very differently from the same building let to a local trader with eighteen months remaining. Where leases are short or units partially vacant, specialist lenders assess the underlying lettability of the property rather than the sitting tenant, at a price for the additional risk.
What are commercial remortgage rates?
Commercial mortgages are priced at a margin over Bank Rate or a fixed equivalent. With Bank Rate held at 3.75% at the last MPC decision, most commercial remortgages currently price between roughly 5.75% and 7.75%, with the strongest owner-occupier covenants below that range and higher-risk assets above it. Indicative ranges:
| Scenario | Typical Margin | Indicative Rate | Max LTV |
|---|---|---|---|
| Owner-occupier, strong trading history | 2.0% to 2.75% over base | 5.75% to 6.5% | 75% |
| Professional practice (dental, vets, medical) | 2.0% to 2.5% over base | 5.75% to 6.25% | Up to 100% with goodwill |
| Investment, strong tenant, 5+ years unexpired | 2.25% to 3.25% over base | 6% to 7% | 70 to 75% |
| Investment, short lease or partial vacancy | 3.25% to 4%+ over base | 7% to 8%+ | 60 to 65% |
All figures are indicative and move with the market. Fixed rates are available across most of these scenarios, typically for three, five or ten years. The hawkish tone of the last MPC vote is a reminder that reversion rates are not a safe place to sit while deciding.
What does a commercial remortgage cost?
Beyond the rate, budget for a lender arrangement fee of 1 to 2% of the loan (usually added to the facility), a commercial valuation fee that scales with property value, and legal costs for both your solicitor and the lender's. If you are leaving a fixed rate early, check the early repayment charge on your existing facility: on some deals the ERC makes it worth waiting for the fixed period to end, on others the rate saving clears the ERC within months. We run that calculation before recommending anything.
FD Commercial charges a broker fee of up to 1% of the loan amount, disclosed in our fee schedule at the outset. On most remortgages the margin saved against the reversion rate repays the entire cost of the exercise within the first year.
Remortgaging out of a bridging loan
Refinancing onto a commercial mortgage is the standard exit from commercial bridging, and the discipline is the same whether the bridge funded a purchase, a refurbishment, or an auction acquisition: the term refinance needs to be underway well before the bridge matures. Extension fees and default rates on an expired bridge are punitive, and a borrower refinancing under time pressure has no negotiating position.
Lenders will want the property in lettable or trading condition and the income evidence in place. If you are mid-bridge now, the right time to start the remortgage is today. We arrange the term facility in parallel with the final months of the bridge so the two complete back to back.
The owners of a distribution business had traded from their warehouse for eleven years. The property was valued at £1,850,000 with £610,000 outstanding on a mortgage that had reverted to the lender's variable rate at 8.1%. The business wanted to fit out a second unit and had been quoted for unsecured borrowing at over 11%.
We arranged a remortgage at 70% LTV, a facility of £1,295,000: £610,000 repaid the existing mortgage and £685,000 was released for the fit-out. The new facility was a five-year fix at 6.15% (indicative), assessed on the business's EBITDA at 1.4x debt service cover.
The interest saving on the refinanced balance alone was roughly £12,000 a year, and the released capital funded the expansion without touching the more expensive unsecured market.
Process steps
You tell us the property, the outstanding balance, the current rate and any ERC. We review whether a remortgage beats staying put, including the ERC arithmetic, before anything proceeds.
For owner-occupiers we work from your last two to three years of accounts and management figures. For investment property we work from the tenancy schedule, leases and rent roll.
We match the case to lenders with genuine appetite for your sector, structure and LTV, and negotiate indicative terms. Full access to market matters most on remortgages, where pricing differences between lenders are widest.
The lender instructs a commercial RICS valuation. For investment property this covers both the bricks and the income; for trading premises it may include a trading valuation.
The lender underwrites the accounts or rent roll against the valuation and issues a formal offer. We manage any queries so the file keeps moving.
Solicitors complete the security work, the new facility repays the old one, and any capital raised is released to you. Typical end to end timeline is 6 to 12 weeks.
If your fixed rate ends in the next six months, or you are sitting on a reversion rate, the review costs nothing and usually pays for itself.
Call 03300 100315Frequently asked questions
What is a commercial remortgage?
A commercial remortgage replaces the existing mortgage on a commercial or semi-commercial property with a new facility, either with your current lender or a new one. It is used to secure a better rate, release equity, restructure debt, or exit a maturing or expensive facility such as a bridging loan.
When should you remortgage a commercial property?
The common triggers are a fixed rate ending, a variable rate that has drifted above the market, a need to raise capital, a maturing bridging or development facility, or a lender withdrawing from your sector. Start the process three to six months before any fixed rate or facility ends.
Can you release equity from a commercial property?
Yes. A capital raising remortgage releases equity up to the lender's maximum LTV, typically 70 to 75% for owner-occupiers and 65 to 75% for investment property. Funds can be used for business investment, purchasing additional property, buyouts, or consolidating more expensive debt.
What are commercial remortgage rates?
Commercial remortgage rates are typically priced at a margin of 2 to 4% over Bank Rate depending on the property, the strength of the trading business or tenancy, and LTV. With Bank Rate at 3.75%, most commercial remortgages currently price between roughly 5.75% and 7.75% (indicative).
What LTV can I get on a commercial remortgage?
Owner-occupier remortgages reach 70 to 75% LTV, and higher for strong professional practices where goodwill lending applies. Investment property remortgages typically reach 65 to 75% LTV depending on tenant covenant and unexpired lease term.
How do lenders assess a commercial remortgage?
Owner-occupier applications are assessed on the trading business: EBITDA, debt service cover of typically 125% or more, and sector outlook. Investment applications are assessed on rental cover, tenant covenant strength, and remaining lease length.
How long does a commercial remortgage take?
Typically 6 to 12 weeks end to end. The valuation and legal work drive the timeline. Starting three to six months before your current deal ends avoids sitting on a reversion rate while the new facility completes.
Can I remortgage from a bridging loan to a commercial mortgage?
Yes. Refinancing onto a commercial mortgage is the standard exit from commercial bridging. Lenders will want the property income-producing or the business trading from it, and the remortgage should be underway well before the bridge matures to avoid extension fees or default rates.
What does a commercial remortgage cost?
Expect a lender arrangement fee of 1 to 2% of the loan, a commercial valuation fee, legal costs for both sides, and any early repayment charge on your existing facility. We run the ERC arithmetic before recommending a remortgage at all.
Can I remortgage a commercial property with a short lease or vacant unit?
Yes, but the lender pool narrows and pricing rises. Short unexpired terms, break clauses, or partial vacancy push the case toward specialist lenders who assess the property's underlying lettability rather than just the sitting tenant.
Can I remortgage a commercial property held in a limited company or SPV?
Yes. Most commercial lending is written to limited companies and SPVs. Lenders will usually require personal guarantees from directors and will assess the company structure, including group cross-guarantees where relevant.
Does FD Commercial charge broker fees on a commercial remortgage?
Yes. FD Commercial charges a broker fee of up to 1% of the loan amount. This is disclosed at the outset in our fee schedule.