Refinancing Commercial Properties

How Does Refinancing Work for Commercial Loans?‍

Refinancing a commercial loan is a straightforward process that can potentially offer significant benefits. When you believe you've found a better deal elsewhere and your fixed-rate term is ending, here's what you need to know:
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1. Submitting an Application
   To initiate the refinancing process, complete a commercial loan application with the new lender. This step allows you to compare different lenders and find the one offering the best terms for your specific situation. Seeking assistance from a mortgage broker can save you time and money by accessing a panel of lenders and guiding you to the most suitable options.
   
   
2. Application Assessment
   Once you submit your application, the new lender may require a revaluation of the commercial property. Additionally, they will submit a discharge form to the Land Titles Office to close the old mortgage account. The new mortgage is then utilized to pay off the existing loan.
   
   
3. Commencement of Repayments
   Within approximately a month of settlement, you will start making repayments on the new commercial loan.
   
   

Benefits of Refinancing Commercial Property Loans

1. Cheaper Interest Rate
   While obtaining a lower interest rate is a common motivation for refinancing, commercial loan rates are typically negotiable based on your application's strength. By presenting a compelling case and providing comprehensive financial information, you can potentially secure a more favorable rate.
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2. Long-Term Savings
   Despite potential upfront costs associated with refinancing, the long-term benefits can be substantial. By saving on interest over the life of the loan, you may ultimately realize significant savings, outweighing the initial expenses.
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3. Cash Out Opportunities
   Refinancing can allow you to access cash for various purposes, such as investment ventures or business needs like equipment purchase or improved cash flow. Most lenders are open to cash-out refinancing for investments or property renovations, as long as it does not involve tax debt.
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4. Rebates and Cashbacks
   In some cases, lenders may offer rebates or cashbacks, particularly for loans over a certain threshold. These incentives can include covering stamp duty expenses, serving as an incentive to retain your business.
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5. Enhanced Lender Relationship
   Refinancing offers an opportunity to establish a better relationship with a new lender who understands your business requirements. A supportive lender can provide swift and hassle-free ongoing financing, aligning with your business needs.
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6. Reduced Administrative Burden
   Certain lenders may offer advantages like fewer annual reviews or revaluations, especially if you own the property as a freehold going concern. This can save you time and effort in managing paperwork and property assessments.
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7. Potential Tax Benefits
   Unlocking equity through refinancing and investing in property or shares may qualify you for tax benefits such as negative gearing and depreciation. It's advisable to consult a tax professional before making financial decisions to understand the potential tax implications.

Why opt for a mortgage broker when considering refinancing?

Opting for a mortgage broker when considering refinancing provides numerous benefits. A broker typically has access to a vast network of over 50 lenders, including major banks and smaller non-bank lenders. While it is a personal choice to approach a bank directly or seek assistance from a mortgage broker, the latter serves as a convenient one-stop-shop, handling all the necessary legwork on your behalf.

At Financebetter, our team of dedicated mortgage brokers tirelessly advocate for our clients, ensuring they secure the most competitive finance options while avoiding excessive costs. We carefully evaluate each client's unique circumstances to ensure they obtain the most suitable commercial finance solution.

With our extensive access to a wide range of loan products from leading lenders across the market, our team can negotiate favorable interest rates and loan terms that align specifically with your needs, rather than being limited to what suits your bank manager. Moreover, our comprehensive service entails managing the entire refinancing process from start to finish, all at no cost to you for our services.

If you are contemplating whether you can obtain a better rate in today's market for your existing loan, there is no need to delay. Let's start a conversation. Market conditions have evolved, and it is likely that your circumstances have changed as well. Through a quick review of your financial profile, our experienced team can determine whether it is time to reassess your loan and ensure you are still in the optimal mortgage solution.