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Yes, you can remortgage a commercial property in the UK. A commercial remortgage allows a business or property owner to replace an existing commercial mortgage with a new finance arrangement, either with the same lender or a different lender.
Businesses may consider remortgaging for several reasons. You may want to secure a different interest rate, change the mortgage term, release equity from the property, raise funds for business investment or move to a lender whose criteria better suit your circumstances.
However, commercial remortgaging is not simply a case of finding a lower rate and switching lenders. Commercial lenders assess the property, its value, the existing borrowing, the business finances, rental income where relevant and the overall affordability of the proposed loan.
The right approach therefore depends on why you want to remortgage, how much you currently owe, what the property is worth and what your business or investment plans look like.
In this guide, we explain how to remortgage a commercial property, what lenders look at, how much you may be able to borrow, the costs involved and when commercial refinancing could be worth considering.

What Is a Commercial Remortgage?

A commercial remortgage is the process of replacing an existing mortgage secured against a commercial property with a new mortgage or refinancing facility.
The new lender, if you are changing lenders, provides finance that is used to repay the existing commercial mortgage. The new loan then becomes the finance secured against the property.
You may also be able to refinance with your existing lender, depending on the lender and the product available.
Commercial remortgages are available for different types of property, including:

• Offices
• Industrial units
• Warehouses
• Retail premises
• Workshops
• Commercial investment properties
• Mixed use properties, subject to lender criteria
• Business premises occupied by the borrowing company
  The exact lending criteria vary between lenders because commercial mortgages are assessed around the property and the individual circumstances of the borrower rather than following one universal set of rules. NatWest, for example, states that commercial mortgages can be used to remortgage an existing loan secured against an existing property and raise finance for a business.

Why Would You Remortgage a Commercial Property?

There is no single reason why a business might choose to remortgage.
The decision usually comes down to the existing mortgage, the property’s current value and what the business wants to achieve with the new finance.

1. Your Existing Mortgage Deal Is Coming to an End

One of the most common reasons to consider commercial remortgaging is the approaching end of a fixed rate or existing mortgage arrangement.
When the current deal is coming to an end, it can be sensible to review the market rather than automatically allowing the existing finance to continue on whatever terms become available.
Starting the review early gives you more time to compare the available options, obtain a valuation and prepare the necessary financial information.

2. You Want to Change Your Interest Rate

Interest rates can have a significant effect on the total cost of commercial borrowing.
If your current mortgage is no longer competitive, a new lender may offer different pricing depending on your circumstances, loan to value, property type and financial position.
However, you should compare the total cost of refinancing rather than looking at the headline interest rate alone.
A lower rate does not automatically mean a cheaper remortgage if you have substantial early repayment charges, arrangement fees, valuation costs or legal expenses.

3. You Want to Release Equity

Commercial property values can change over time.
For example, imagine a company purchased a commercial unit for £500,000 and borrowed £350,000. Several years later, the property could potentially be worth £600,000 while the mortgage balance has reduced.
The business may therefore have more equity in the property than it originally had.
Subject to lender criteria, a remortgage could potentially allow the company to raise additional borrowing against part of that available equity.
This is commonly referred to as commercial equity release or capital raising.
The additional funds could potentially be used for purposes such as:

• Business expansion
• Purchasing equipment
• Refurbishment
• Working capital
• Purchasing another commercial property
• Consolidating certain business debts
  The lender will still need to assess whether the proposed borrowing is affordable and appropriate for the circumstances.

4. You Want to Restructure Your Borrowing

A commercial remortgage can sometimes be used to restructure existing borrowing.
For example, a business may have an existing commercial mortgage alongside other property related finance and may want to review the overall structure.
The new lender will assess the proposed transaction based on its own lending criteria, so consolidation or restructuring is not automatically available.

5. Your Property Has Increased in Value

An increase in property value can change the loan to value position.
Loan to value, or LTV, represents the amount borrowed compared with the value of the property. HMRC’s guidance on commercial property lending also explains that LTV is the proportion of a property’s value that a lender is prepared to lend, and that valuation can depend on factors such as whether the property is occupied or let.
For example:
Property value: £750,000
Existing mortgage: £450,000
Current LTV: 60%
If the property’s value has increased since the original mortgage was taken out, the borrower may have a different LTV position when refinancing.
That does not guarantee a better mortgage rate or additional borrowing, but it can form part of the lender’s assessment.

Can a Limited Company Remortgage a Commercial Property?

Yes, a limited company can potentially remortgage a commercial property.
The process will depend on how the property is owned and used, the company’s financial position, the directors, the property itself and the lender’s criteria.
For example, a trading company may own an office, warehouse or industrial unit that it uses for its own business operations.
The company could potentially refinance the existing mortgage against that property.
A property investment company may also be able to refinance a commercial investment property, with rental income, tenant strength, lease terms and property value potentially forming important parts of the assessment.
This is different from residential buy to let, where specialist limited company buy to let products may be more appropriate.
If you are unsure which type of finance applies to your property, it is worth discussing the circumstances before making an application.

What Do Commercial Mortgage Lenders Look At?

Commercial lenders normally assess more than just your credit history.
The lender may consider the borrower, the property and the proposed repayment structure together.

Business Financials

For an owner occupied commercial property, lenders may want to understand the financial performance of the company using the premises.
Depending on the lender and circumstances, this could include:

• Filed company accounts
• Management accounts
• Business bank statements
• Cash flow information
• Business forecasts
• Existing borrowing
• Tax information
• Details of directors
  A lender may also consider how the business has performed historically and whether the proposed repayments appear sustainable.

Property Value

A commercial valuation can be an important part of the remortgage process.
The lender needs to understand the value and suitability of the property being offered as security.
Commercial property valuation is different from simply looking at the price originally paid for the building.
The lender may consider the property’s location, condition, use, demand, rental income and other market factors.

Loan to Value

LTV is another important consideration.
Different lenders have different maximum LTV levels depending on the property type, borrower and transaction.
For example, Virgin Money currently states that its commercial mortgage product can provide borrowing of up to 70% of the property’s value, subject to its eligibility and lending criteria.
Other lenders may have different limits.
This is why it is important not to assume that one lender’s maximum LTV represents the entire commercial mortgage market.

Rental Income

If the property is an investment rather than owner occupied, rental income can become particularly important.
The lender may examine the existing tenancy, lease length, rent received and the financial strength of the tenant.
A property with strong, sustainable rental income can be assessed differently from a vacant building or a property with significant lease uncertainty.

Credit History

The company’s credit profile and, depending on the structure, the directors’ financial circumstances may also be considered.
A previous credit issue does not necessarily mean that remortgaging is impossible, but it can affect the lender options and terms available.

How Much Can You Borrow When Remortgaging a Commercial Property?

There is no universal commercial remortgage amount because lenders assess each case individually.
The amount available may depend on:

• Property value
• Existing mortgage balance
• LTV
• Business performance
• Rental income
• Property type
• Lease arrangements
• Credit history
• Purpose of additional borrowing
• Overall affordability
  For example, suppose a commercial property is valued at £800,000 and the existing mortgage balance is £400,000.
  The current LTV would be:
  £400,000 ÷ £800,000 = 50% LTV
  If a lender were prepared to lend 70% LTV, the theoretical maximum mortgage would be £560,000.
  That could potentially leave £160,000 of additional borrowing before allowing for fees, existing loan redemption costs and the lender’s assessment of affordability.
  This is only an illustration. The actual amount available will depend on the lender and circumstances.

Can You Remortgage a Commercial Property and Release Equity?

Yes, equity release can form part of a commercial remortgage.
The basic principle is that the new mortgage is large enough to repay the existing borrowing while potentially providing additional funds to the borrower.
For example:
Property value: £1,000,000
Existing mortgage: £500,000
New mortgage: £650,000
Potential additional borrowing: £150,000
The additional £150,000 could potentially be used for an agreed business or investment purpose, subject to lender approval.
However, releasing equity increases the amount of debt secured against the property.
The business should therefore consider whether the additional borrowing will create sufficient value or cash flow to justify the increased repayments.

What Are the Costs of Remortgaging a Commercial Property?

The total cost of a commercial remortgage can include several different charges.
These may include:

Early Repayment Charges

Your existing lender may charge a fee if you repay the mortgage before the agreed date.
This is particularly important if you are currently within a fixed rate period.
For example, HSBC states that early repayment can result in a prepayment fee and that a fixed rate loan may also have a fixed rate break fee.
You should therefore request a redemption statement from your existing lender before deciding whether to refinance.

Arrangement Fees

The new lender may charge an arrangement or facility fee.
This can vary depending on the lender, loan size and transaction.

Valuation Fees

A commercial property valuation may be required by the new lender.
The cost depends on the property and valuation requirements.

Legal Fees

Legal work is generally required when refinancing a property because the existing charge needs to be dealt with and the new lender’s security needs to be registered.

Broker Fees

If you use a commercial mortgage broker, there may be a broker fee.
The amount and structure vary between brokers, so make sure you understand the fee before proceeding.
Because costs vary significantly between transactions, comparing the overall cost of the remortgage is more useful than comparing interest rates alone.

How Does the Commercial Remortgage Process Work?

The process normally involves several stages.

Step 1: Review Your Existing Commercial Mortgage

Start by checking:

• Current balance
• Interest rate
• Remaining term
• Fixed rate expiry
• Early repayment charges
• Existing monthly payments
• Any restrictions on additional borrowing
  This gives you a clear picture of your current position.

Step 2: Establish the Current Property Value

You need to understand what the property may currently be worth.
A formal lender instructed valuation may eventually be required.
The property’s current value is important because it affects the LTV calculation.

Step 3: Decide What You Want From the Remortgage

Before approaching lenders, establish the objective.
Are you looking to:

• Reduce borrowing costs?
• Change the repayment term?
• Release equity?
• Raise funds for another property?
• Refinance an existing bridging facility?
• Restructure commercial borrowing?
  A clear objective can make it easier to identify suitable finance.

Step 4: Review Your Business Finances

Prepare the financial information a lender may request.
This can include accounts, bank statements, management information, forecasts and details of existing borrowing.
If the property is an investment, prepare information about rental income, tenants and leases.

Step 5: Compare Suitable Lenders

Commercial mortgage criteria can differ significantly between lenders.
One lender may be comfortable with a particular property type while another may have restrictions.
This is one reason specialist commercial mortgage advice can be useful when the transaction has unusual circumstances.

Step 6: Submit the Application

Once a suitable lender and structure have been identified, the application can be submitted.
The lender will assess the borrower, property and proposed borrowing.

Step 7: Valuation and Underwriting

The lender may arrange a commercial property valuation and conduct detailed underwriting.
They may request further information during this stage.
Responding quickly to lender questions can help prevent unnecessary delays.

Step 8: Legal Work

Solicitors deal with the legal aspects of redeeming the existing mortgage and establishing the new lender’s security.

Step 9: Completion

Once all conditions have been satisfied, the new facility completes.
The existing commercial mortgage is repaid and the new finance becomes the loan secured against the property.

How Long Does a Commercial Remortgage Take?

The exact timescale depends on the lender, property, borrower and complexity of the transaction.
Current specialist commercial mortgage sources commonly put straightforward commercial remortgages in the region of around six to twelve weeks, although more complicated cases can take longer.
A transaction can take longer where there are issues with:

• Property valuation
• Complex ownership structures
• Lease arrangements
• Multiple properties
• Unusual property use
• Planning matters
• Complicated company finances
• Existing lender redemption
• Legal documentation
  If your existing fixed rate is approaching its end, it is sensible to begin planning well before the expiry date rather than waiting until the final few weeks.

Can You Remortgage a Commercial Property to Buy Another Property?

Potentially, yes.
A business may be able to release equity from an existing commercial property and use the funds towards another property purchase, subject to lender approval.
For example, a company may own a commercial unit worth £900,000 with an existing mortgage of £450,000.
If the lender is comfortable with additional borrowing, the company might be able to release some equity to contribute towards the purchase of another commercial property.
The lender will consider the purpose of the funds, affordability and overall exposure.
If you are considering using equity from one property to fund another purchase, the structure should be reviewed carefully before proceeding.
You can also review your options for commercial mortgage finance if the objective is to purchase another commercial property.

Can You Remortgage a Commercial Property With an Existing Tenant?

Potentially.
In fact, rental income can be an important part of the assessment for investment property.
The lender may examine:

• Current rent
• Lease length
• Tenant strength
• Rent payment history
• Remaining lease term
• Break clauses
• Property value
• Investment yield
  A strong tenant and established lease may provide useful evidence of sustainable rental income.
  However, every lender has its own criteria.

Can You Remortgage a Commercial Property With a Poor Credit History?

It can be possible, but the choice of lenders may be more limited.
Commercial mortgage applications involving adverse credit are usually assessed according to the nature, age and severity of the credit issue, alongside the wider financial position.
The lender may also consider whether the issue has been resolved and whether the business has maintained its financial commitments since then.
Rather than assuming that a credit problem automatically prevents refinancing, it can be more useful to establish which lenders are comfortable with the circumstances.

Can You Remortgage a Commercial Property After a Bridging Loan?

Yes. Commercial remortgaging can be used as an exit strategy from certain bridging finance arrangements.
For example, a business may have used a bridging loan to acquire a property quickly or fund refurbishment and then plan to refinance onto a longer term commercial mortgage once the property is ready.
The important point is timing.
The refinance should be planned well before the bridge reaches maturity because valuation, underwriting and legal work can take time.
Specialist finance sources identify refinancing onto a commercial mortgage as a common exit route from commercial bridging finance.

What Documents Do You Need for a Commercial Remortgage?

The exact requirements vary, but you may be asked for:

• Company accounts
• Management accounts
• Business bank statements
• Personal details of directors
• Existing mortgage statement
• Redemption statement
• Property details
• Existing valuation information
• Tenancy agreements
• Lease documents
• Rental statements
• Business forecasts
• Details of existing loans
• Information about the purpose of additional borrowing
  Having these documents ready can make the application process more efficient.

Is It Better to Stay With Your Existing Lender or Switch?

There is no universal answer.
Staying with your existing lender may be simpler if the lender can offer suitable terms and your circumstances have not changed significantly.
Moving to a new lender may provide access to different criteria or a different structure.
The important comparison is the overall outcome.
For example:
Option A: Existing lender

• Lower administration
• Potentially simpler process
• Existing relationship
• May have fewer structural changes
  Option B: New lender
• Potentially different pricing
• Different LTV criteria
• Potentially different approach to property type
• Possibility of capital raising
• May involve more legal and valuation work
  The best option depends on the circumstances rather than simply whether one lender has a lower advertised rate.

When Should You Start Looking at a Commercial Remortgage?

A commercial remortgage should generally be considered before your current deal expires.
The exact timing depends on the lender and transaction, but starting several months in advance can give you time to:

1. Review your existing mortgage
2. Check early repayment charges
3. Estimate the property’s current value
4. Prepare financial documents
5. Compare lenders
6. Obtain an agreement in principle where appropriate
7. Arrange valuation
8. Complete legal work
   Waiting until the existing deal expires can leave less time to address unexpected issues.

Is a Commercial Remortgage Worth It?

Whether a commercial remortgage is worthwhile depends on the numbers.
You should compare the potential financial benefit with the total cost of refinancing.
For example, suppose your existing mortgage costs £4,500 per month and a new mortgage could reduce this to £4,000.
The apparent saving is £500 per month.
However, if refinancing costs £15,000, the simple break even calculation would be:
£15,000 ÷ £500 = 30 months
That does not mean the remortgage is automatically unsuitable. You would also need to consider the remaining mortgage term, future rates, capital repayments, tax implications and the strategic value of changing the finance.
The calculation simply demonstrates why the total cost matters.

What Can Make a Commercial Remortgage More Difficult?

Some transactions require more specialist consideration.
These can include:

• Unusual commercial properties
• Vacant properties
• Short leases
• Complicated company structures
• Recent business start ups
• Adverse credit
• High LTV requirements
• Multiple existing loans
• Development or refurbishment requirements
• Mixed use properties
• Significant changes in property value
  This does not automatically mean the transaction cannot proceed.
  It means lender selection and transaction structure become particularly important.

Commercial Remortgage vs Commercial Mortgage

It is useful to understand the difference.
A commercial mortgage is commonly used to finance the purchase of a commercial property.
A commercial remortgage replaces existing finance secured against a property you already own.
For example:
Buying a property:
Company purchases a £600,000 warehouse and takes a commercial mortgage.
Remortgaging:
The company already owns the warehouse and replaces its existing £350,000 commercial mortgage with a new facility.
Equity release:
The company remortgages the warehouse for a higher amount, subject to lender approval, and uses part of the additional borrowing for an approved purpose.
The underlying property does not need to be purchased again.

What About Tax When Remortgaging a Commercial Property?

Tax treatment depends on the structure of the transaction and the circumstances of the business.
A straightforward remortgage is different from transferring the property into a company or changing ownership.
Costs and tax implications can also depend on whether additional borrowing is being raised and what the funds are used for.
For property transactions involving companies, HMRC guidance explains that SDLT can apply in certain transfers of land or property to and from companies, with specific rules applying to corporate bodies and particular residential transactions.
Before proceeding with a major commercial property refinancing transaction, it is sensible to speak with your accountant or tax adviser about the specific tax position.

Practical Example: Remortgaging an Owner Occupied Commercial Property

Imagine a manufacturing company owns a warehouse worth £750,000.
The company currently owes £450,000 on its commercial mortgage.
The existing mortgage is approaching the end of its fixed rate period.
The company wants to:

• Review its interest rate
• Keep the warehouse
• Reduce its monthly finance cost if possible
• Raise £50,000 for equipment
  The company could investigate a commercial remortgage.
  A lender would assess the warehouse, its value, the company’s financial position and whether the additional borrowing is affordable.
  The new mortgage would need to repay the existing borrowing, while any approved additional borrowing could provide the funds for the equipment.
  This is an example only. Actual lending depends on the lender’s criteria and the circumstances of the business.

Practical Example: Remortgaging a Commercial Investment Property

Now consider an investment company that owns a small office building.
The property is occupied by several tenants and produces rental income.
The existing mortgage has a balance of £600,000, while the property is valued at £1 million.
The company wants to refinance and potentially raise capital towards another investment.
The lender may consider:

• Property value
• Current LTV
• Rental income
• Tenant profile
• Lease terms
• Existing mortgage
• Proposed new borrowing
• Company financial position
  If the application meets the lender’s criteria, refinancing may potentially provide access to additional capital.

Frequently Asked Questions

Can I remortgage a commercial property?

Yes. Commercial properties can potentially be remortgaged by replacing existing commercial finance with a new facility, subject to lender criteria.

Can a limited company remortgage a commercial property?

Yes. A limited company can potentially refinance a commercial property it owns, depending on the property, company finances and lender requirements.

Can I release equity when remortgaging a commercial property?

Potentially. A lender may allow additional borrowing against available equity, subject to LTV, affordability and the intended use of the funds.

How much can I borrow when remortgaging a commercial property?

There is no universal maximum. The amount depends on factors including property value, LTV, business finances, rental income and lender criteria.

Do I need a valuation to remortgage a commercial property?

A lender will commonly require a valuation or other acceptable assessment of the property before completing a commercial remortgage.

Can I remortgage if I have an existing fixed rate?

Potentially, but you need to check whether an early repayment charge or fixed rate break fee applies. These costs can affect whether refinancing now makes financial sense.

How long does a commercial remortgage take?

A straightforward transaction can often take around six to twelve weeks, but the timescale varies depending on the lender, property and complexity of the application.

Can I remortgage a commercial property to raise money for my business?

Potentially. Commercial remortgaging can sometimes be structured to release equity for an approved business purpose, subject to lender assessment.

Can I remortgage an investment property?

Yes, commercial investment properties can potentially be refinanced. Rental income, tenant strength, lease terms and property value may be important parts of the lender’s assessment.

Should I use a commercial mortgage broker?

A broker can help assess your circumstances and identify lenders whose criteria may fit the transaction. This can be particularly useful where the property, company or borrowing requirements are more complex.

Final Thoughts

So, can you remortgage a commercial property? In many cases, yes.
A commercial remortgage can allow a business or property investor to replace existing finance, review the interest rate, restructure borrowing or potentially release equity from the property.
However, the cheapest headline rate is not necessarily the most suitable option. Early repayment charges, arrangement fees, valuation costs, legal fees, LTV, affordability and the structure of the new mortgage all need to be considered.
The earlier you review your options, the more time you have to understand your existing mortgage and prepare for a new application.
If you are considering refinancing a commercial property, The Commercial Mortgage Guy can help you understand the available commercial mortgage options and discuss the requirements for your circumstances.
You can also review our guide on how long a commercial mortgage takes to complete if you are planning your refinancing timeline.
For businesses considering their next commercial property purchase, our commercial property finance options can also be reviewed before deciding how to structure the borrowing.
If you are ready to discuss your circumstances, contact The Commercial Mortgage Guy for commercial mortgage advice and explain what you are looking to achieve.