Commercial Remortgage: Release Equity, Reduce Costs, Refinance Your Property
Access competitive rates and unlock equity without switching lenders or lengthy applications
Published on 5 June 2026
A commercial remortgage replaces your existing commercial mortgage with a new facility, either with your current lender or a new one, to secure lower rates, release equity, or restructure your debt. It is one of the most financially impactful decisions a UK business property owner can make.
This guide explains how commercial remortgages work, what drives the rates available to you, how to release equity from your property, and what the process involves from start to completion.
Can You Remortgage a Commercial Property?
Yes, you can remortgage a commercial property. You can switch to a new lender or renegotiate with your existing one to secure a lower interest rate, release equity built up in the asset, or restructure the loan terms to suit your current circumstances.
Most commercial property owners remortgage when a fixed-rate period ends. Without action, the loan reverts to the lender's standard variable rate, which is almost always higher than the rate you were paying and higher than the deals available on the open market. Remortgaging at the right time is one of the simplest ways to reduce a significant recurring business cost.
Why Businesses Remortgage Commercial Property
There is rarely one single reason. The most common triggers are:
Expiring fixed rate. When your introductory rate period ends, your lender will move the loan to its reversion rate. Acting before this happens, or immediately after, almost always results in meaningful savings.
Rate improvement. If market rates have fallen since you took out your original mortgage, refinancing onto a lower rate can save thousands per year. A 0.75% reduction on a £1 million loan saves £7,500 annually in interest.
Equity release. If your property has risen in value since purchase, or you have paid down a significant portion of the original loan, you may have equity available. A commercial remortgage releases that capital without requiring you to sell the property. The funds are commonly used for business expansion, property acquisition, refurbishment, or working capital.
Exiting bridging or development finance. Short-term facilities used to purchase, refurbish, or develop a commercial property need to be refinanced onto a longer-term commercial mortgage once works are complete. This is one of the most frequent reasons for arranging a commercial remortgage. If you used a bridging loan to secure or develop a property, a commercial remortgage is likely your exit strategy.
Debt consolidation. Multiple commercial mortgages across a property portfolio can be consolidated into a single facility, reducing administration and potentially improving overall financing costs.
Changed business or property circumstances. A business that has grown significantly since the original mortgage was taken out may now qualify for better terms. A property that has been let, improved, or revalued may attract more competitive rates.
Pros and Cons of Remortgaging Commercial Property
Understanding both sides helps you assess whether remortgaging makes financial sense for your situation.
Pros:
- Reduces monthly payments if you secure a lower rate
- Releases equity to reinvest without selling the asset
- Moves you off a lender's high reversion rate at the end of a deal period
- Allows you to restructure repayment terms (interest-only, longer term, capital repayment)
- Consolidates multiple loans into a single, simpler facility
- Improved business performance or higher property value may unlock better terms than the original mortgage
Cons:
- Early repayment charges can make moving before your fixed term ends expensive
- Rising interest rates mean a new deal may cost more than the existing one
- Valuation, legal, and arrangement fees add to the total transaction cost
- If property values have fallen, your LTV may have worsened and options may be fewer
- The process takes 6 to 12 weeks and requires the preparation of supporting documentation
Current Commercial Remortgage Rates
Commercial remortgage rates in the UK currently range from approximately 4.5% to 7.5% per annum for standard property. Your actual rate depends on your specific circumstances, as commercial mortgages are priced individually, not published as a standard product.
The main factors that drive your rate are:
Loan-to-value (LTV). This is the single biggest pricing driver. The lower the LTV, the better the rate. Most commercial remortgages are available up to 65-70% LTV. Facilities above 70% are possible but attract a material rate premium.
Tenancy quality. A property let on a long lease to a financially strong commercial tenant on full repairing and insuring (FRI) terms is treated as lower risk. Lenders calculate the rental cover ratio (RCR): the annual rent divided by annual interest cost. Most require a minimum RCR of 125-150%. A vacant or under-rented property limits your borrowing and pushes up the rate.
Borrower and business profile. Lenders assess the financial strength of the borrowing entity, its directors, and any guarantors. A strong trading record, clean credit history, and solid balance sheet all reduce the margin a lender applies.
Property type and location. Standard assets in established locations, offices, warehouses, and retail premises in town centres attract the most competitive pricing. Specialist property types, including pubs, care homes, and petrol stations, require niche lenders and carry higher rates.
Loan size. Larger loans often attract more competitive margins, as the fixed cost of underwriting is spread across a bigger facility.
How Much Can You Borrow on a Commercial Remortgage?
Most commercial lenders will lend up to 65-70% LTV on a remortgage. Some specialist lenders go to 75% for standard property with strong tenants or borrower profiles.
For a property worth £800,000 with an existing mortgage of £300,000, the available equity at 70% LTV is £260,000 (70% of £800,000 = £560,000, minus £300,000 already owed). You could refinance to release up to £260,000 in additional capital, subject to income and serviceability criteria.
For investment properties, the loan is also constrained by the rental cover ratio. If the rent does not cover 125-150% of the proposed interest cost, the lender may reduce the available loan amount even if the LTV appears acceptable.
For owner-occupied premises, the constraint is your business's ability to service the debt, assessed via EBITDA or net profit relative to the proposed repayments.
FundingSearch works with specialist commercial mortgage brokers who have access to the widest range of lenders in the market. Submit your requirements through the platform and a broker will confirm the maximum loan available for your property within 24 hours.
Types of Commercial Property That Can Be Remortgaged
Specialist lenders are active across most commercial property types, including:
- Owner-occupied offices and business premises
- Industrial units, warehouses, and logistics property
- Retail premises, high street shops, and shopping parades
- Pubs, restaurants, and licensed leisure properties
- Mixed-use buildings combining commercial and residential elements
- HMOs and residential investment portfolios (via specialist or semi-commercial lenders)
- Hotels, guest houses, and serviced accommodation
- Agricultural buildings and land with commercial use
Mainstream commercial lenders focus on standard assets, offices, industrial, and retail, in prime or established locations. Specialist property types, including licensed leisure, healthcare, and petrol stations, require access to a smaller pool of specialist lenders. A broker familiar with the full market is particularly important for these cases.
The Commercial Remortgage Process, Step by Step
A commercial remortgage typically takes 6 to 12 weeks from initial instruction to completion. Complex cases, portfolios, or properties with title complications can take longer.
Step 1: Broker review and break-even analysis. A specialist commercial mortgage broker reviews your current mortgage, models the terms available from the market, and presents a clear cost-benefit analysis. This includes total transaction costs versus projected annual savings and the break-even point. If the numbers do not stack up, a good broker will tell you so before you proceed.
Step 2: Lender selection. The broker approaches suitable lenders and obtains indicative terms in principle. For a clean remortgage with good documentation prepared in advance, this stage can move quickly, often within days.
Step 3: Formal application. You confirm you want to proceed, and the formal application is submitted with supporting documentation. The lender instructs an independent RICS valuation of the property.
Step 4: Valuation. A qualified surveyor inspects the property and produces a formal report, including an open market value and, for tenanted property, an assessment of rental income and lease quality. The valuation determines the maximum loan available.
Step 5: Credit decision and mortgage offer. The lender's credit team reviews the application, valuation, and financial information. If approved, a formal mortgage offer is issued.
Step 6: Legal completion. Solicitors act for both parties. The existing charge is redeemed, the new mortgage is registered at Companies House and the Land Registry, and funds are released.
Costs to Factor In Before You Proceed
A commercial remortgage has upfront and transaction costs that must be weighed against the financial benefit:
Early repayment charge (ERC). If you are still within a fixed or discounted rate period, your existing lender will charge an ERC, typically between 1% and 5% of the outstanding balance. On a £500,000 mortgage, a 2% ERC is £10,000. This is often the largest single cost and must be factored into the break-even calculation.
Arrangement fee. The new lender charges a product fee, typically 1-2% of the facility amount.
Valuation fee. Varies by property size, type, and complexity. Budget a minimum of £500 for a straightforward single asset; larger or more complex properties will cost more.
Legal fees. Solicitors act for both borrower and lender. Total legal costs for a standard commercial remortgage typically range from £1,500 to £4,000.
Broker fee. Specialist commercial mortgage brokers typically charge a completion fee of 0.5-1% of the loan amount.
Most of these costs can be added to the loan rather than paid upfront, but this increases the outstanding balance. Always run the full cost model before proceeding.
Owner-Occupied vs Investment Commercial Remortgages
The approach to underwriting differs depending on whether the property is owner-occupied or held as an investment.
Owner-occupied remortgages are underwritten on the financial performance of the business using the premises. Lenders look at trading history, EBITDA, management accounts, and bank statements. The longer the business has traded and the stronger its financials, the better the terms available.
Investment remortgages are underwritten primarily on the rental income the property generates. Lenders assess the lease length, tenant covenant strength, and whether the rent covers the interest cost at the required ratio. Vacant property or short leases significantly limit the available loan.
You can switch between owner-occupied and investment status at remortgage, for example if you have vacated premises and let them to a commercial tenant, or vice versa. Most lenders accommodate this without material impact on rate or terms.
How FundingSearch Helps
FundingSearch connects UK businesses directly with specialist commercial mortgage brokers who have access to the full lender market, including lenders not available directly to borrowers.
Rather than approaching a single bank and accepting whatever terms are offered, you get a structured comparison of the market, presented with clear numbers so you can make an informed decision. Our platform is built for commercial borrowers and the brokers and lenders who serve them.
There is no obligation. Submit your requirements and a specialist will be in touch to discuss your options.
Commercial Remortgage FAQ's
Yes, you can remortgage a commercial property at any time, though most owners do so when a fixed rate period ends. Remortgaging allows you to secure a new rate with your existing lender or switch to a new one, release equity, or adjust your loan structure. Without a remortgage, the loan reverts to the lender's standard variable rate, which is typically higher than both the previous deal and rates available on the open market.
Yes, you can release equity from a commercial property by remortgaging to a higher loan amount than you currently owe. For example, if your property is worth £700,000 and you owe £280,000, you have a current LTV of 40%. At 70% LTV, you could release up to £210,000 in equity. The released capital can be used for business expansion, property acquisition, refurbishment, or working capital. Lenders will require that the increased loan is serviceable based on rental income or business trading performance.
Most commercial lenders will lend up to 65-70% LTV on a remortgage. Some specialist lenders go to 75% for standard property types with strong tenants and borrower profiles. Above 70% LTV, rates are higher and criteria are stricter. The maximum available loan is also constrained by your rental cover ratio (for investment property) or business trading performance (for owner-occupied property), not just the LTV.
Commercial remortgage rates in the UK currently range from approximately 4.5% to 7.5% per annum for standard property. Rates are priced individually based on your LTV, property type, tenancy quality, and borrower profile. There is no published standard rate. The most competitive rates are available to borrowers with low LTV, strong tenants on long leases, and clean credit history.
Commercial refinancing replaces your existing mortgage with a new facility. You instruct a specialist broker, who approaches lenders and obtains terms in principle. Once you agree to proceed, a formal application is submitted, the new lender commissions a RICS valuation, and the credit team makes a lending decision. On completion, the existing mortgage is redeemed, and the new one is registered at Companies House and the Land Registry. The process typically takes 6 to 12 weeks.
Yes, but you need to account for the early repayment charge (ERC) on your existing mortgage. ERCs typically range from 1% to 5% of the outstanding balance and are often the largest single cost of switching early. A specialist broker will model the break-even point: if the annual saving from the new rate exceeds the ERC and other costs within your planned holding period, moving early may still be worthwhile. If your ERC is large and your fixed term has several years remaining, it is usually better to wait.
No. Both tenanted investment properties and owner-occupied business premises can be remortgaged. The underwriting method differs: tenanted properties are assessed on rental income and lease quality, while owner-occupied properties are assessed on business financial performance. Vacant properties can be remortgaged in some cases, but the lender pool is smaller and rates are higher, as vacant property carries greater risk.
A commercial remortgage replaces your existing first charge mortgage with a new facility. A second charge loan sits behind the existing mortgage and does not disturb it. A second charge allows you to release equity without triggering an early repayment charge on the first mortgage, which can be cost-effective if your ERC is significant. However, second charge rates are typically higher than first charge rates, and the combined LTV across both loans will be capped by the second charge lender's criteria. The right choice depends on the size of your ERC and how much equity you want to release.
Yes. Commercial property held in a Small Self-Administered Scheme (SSAS) or Self-Invested Personal Pension (SIPP) can be remortgaged. A number of specialist lenders actively offer pension property mortgages. HMRC limits borrowing within a pension fund to a maximum of 50% of the net fund value. The scheme administrator must be involved throughout the process, and the legal structure involves additional steps compared to a standard corporate remortgage.
A commercial remortgage application typically requires: two to three years of business accounts or management accounts, recent bank statements (three to six months), a copy of your existing mortgage statement, details of any commercial leases in place, proof of identity and address for all directors and major shareholders, and a schedule of any other borrowing. For tenanted property, copies of current leases will also be required. Preparing these in advance significantly speeds up the process.
Yes. Most commercial lenders carry out credit checks on directors and principal shareholders of the borrowing entity, even when the loan is in the name of a limited company. Adverse credit, county court judgments (CCJs), or insolvency events in the last three to six years will reduce the lender pool. Specialist and challenger lenders are often willing to consider these cases on their individual merits, particularly where the adverse event is older or explained by exceptional circumstances.