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19 July 2016 | Commercial Finance

Commercial refinance - easier than you think

If I asked you what rate and term your residential mortgage was, I am convinced that you could answer this within 3 seconds! However, when it comes to your commercial mortgage, or business finance, I will give you an hour to find the commercial mortgage facility letter which was probably filed away under “phew - we made it!”

Most people will switch their residential mortgage as soon as the renewal is due or the initial term has expired. Switching to the best possible deal, this is made far easier as it is very much an off the shelf, one size fits all product.

Commercial mortgages are not a standardised product so understanding what a good deal ‘looks’ like is very specialist exercise, something that our experienced Consultants at Christie Finance provide guidance on 365 days a year.

There is, of course, the underlying fear of banks not lending and an often ingrained better the “devil you know” attitude.

It may have been a traumatic experience the first time around going through the process of securing the commercial mortgage you required.

With all these negatives, why would you entertain the thought of switching or reviewing your commercial mortgage?

We are still in a record low interest rate environment, which seems to be continuing into the distance. Commentators and experts have been saying that rates will begin to rise within the next 12 months ever since 2011!

Cost of funds to borrow are also remaining low which means margins have further decreased over the past 12 to 18 months.

Banks ARE back in the market to lend money, with more competition driving lower rates and terms that are more competitive.

So, the reality is that there couldn’t be a better time to review your commercial mortgage arrangements, either as a straight refinance or maybe it could be to raise capital and further expand the business, or complete that overdue refurbishment that could take the business to the next level.

Since the government launched the “Current Account Switch Services” in September 2013 after the findings of from the Independent Commission on Banking, the process of switching banking arrangements is also now much simpler and pain free.

Christie Finance has recently been involved in a refinance transaction that enabled the current owners to restructure their current debt position, whilst releasing enough further capital to provide a complete refurbishment of their hotel. This new lease of life to the hotel has increased turnover and profitability, but consequently has also dramatically revitalised the owners drive and desire to improve the success of the business.

If you are an established business owner then there is generally not too much to do, aside from producing your most recent accounts as well as some relatively light supporting information.

Where you are requesting additional funds to expand, development, refurbish or maybe diversify, then there would be an element of business planning required. For some pointers on Business Plans you could read our blog What makes a good business plan?

Christie Finance can quickly review your current arrangements to see if there is an opportunity to agree better terms or obtain the further advance you wish for.

We have 35 years experience supporting borrowers to do just that.

If you would like to discuss what options could be available for you and your business then call Jimmy Johns at Christie Finance on 0117 946 8517 or email jimmy.johns@christiefinance.com