Refinancing commercial property should be assessed on the complete cost of leaving the old loan and entering the new one. Reducing the rate is only one element of the transaction.

The structure behind the offer

The comparison begins with a current settlement figure and finishes with net new proceeds. Old and new security commitments require explicit attention.

Rate, fees and the cost over the chosen period

Compare offers using the same borrowing amount, valuation assumption and intended deal period. Show upfront charges and any fees added to the loan. Where terms differ, compare the remaining balance as well as payments, so a lower instalment is not mistaken for a lower total cost.

Comparison item Question to resolve
Existing settlement and exit costs What is the full cost to switch?
New product and valuation fees Are old guarantees and charges released?
Security release and repayment structure How long must the new deal run to offset switching costs?

Ask for the offer assumptions to be explained in writing. A calculator or initial illustration should be kept separate from an underwritten offer and completion conditions.

The decision that deserves the closest review

Request a settlement figure, exit charges and details of existing security. Compare new valuation, arrangement and legal fees, together with repayment structure. Check which guarantees and security interests are released at completion.

Documents and assumptions to organise

Organise borrower identity, income or trading information, existing borrowing and the property documents relevant to the enquiry. Show where the deposit and transaction cash come from. Ask the lender or broker for the precise evidence list and identify outstanding legal or valuation conditions.

Calculate the net result of commercial refinancing

Obtain the existing lender’s settlement information and identify current security, guarantees and transaction conditions. Add the new proposal’s fees, valuation and legal work. This shows the cash required or released by the change, rather than just the difference between two advertised rates.

Compare the payment profile and remaining balance over a consistent period. Ask how old security is discharged and new obligations are documented. Review the operating forecast and property income where relevant so refinancing is assessed alongside the borrower’s continuing ability to meet the commitment.

Keep the UK borrower, property use and transaction assumptions consistent across the broker, lender and legal enquiries.

A hypothetical example

A business receives a lower-rate offer but must pay substantial transaction costs. It calculates the time needed to recover those costs under its expected holding period.

A mistake to avoid

Comparing interest rates while leaving old security-release and transaction costs out of the budget.

Completion, ongoing commitments and the next decision

List the conditions that remain before funds can be released and allow for realistic legal and valuation timing. After completion, record payments, review dates and any limits on changes to the property or borrowing. Keep a plan for the next deal expiry rather than treating the first offer as a permanent arrangement.

Questions before choosing

Does a longer term reduce total borrowing cost?

It can reduce instalments but may increase total interest; compare the full schedule.

Will a lower new rate necessarily release cash?

Compare the settlement amount, accepted advance and transaction costs. The net proceeds can differ from both the loan amount and an anticipated rate saving.

Sources and further reading

Research date: 6 October 2026. Refer to the current linked guidance and written provider or adviser terms when making a decision.