Commercial remortgage process: steps, costs and timing
A commercial remortgage means replacing the loan secured on a business property with a new one, either with your current lender or a different one. The process runs in stages: review your existing deal, gather your paperwork, apply, have the property valued, complete the legal work and draw down the funds. Each stage has its own checks, and the whole thing takes longer than most people expect.
We are a local broker serving Hastings, Eastbourne, Hailsham, Bexhill-on-Sea and the rest of East Sussex. This guide is for owner-occupiers, landlords and company directors who hold commercial or semi-commercial property. It is also for self-employed people and subcontractors whose business owns a unit, yard or workshop.
TL;DR
- A commercial remortgage follows seven stages, from reviewing your current terms through to completion and the old loan being repaid.
- Commercial lending sits largely outside the consumer mortgage rules, so lenders set their own criteria and you have fewer statutory protections.
- Lenders look at the business, the lease and the property’s use, not just your personal credit.
- Start well before a fixed rate ends, and check early repayment charges before you commit.
- Whether a switch makes sense depends on your circumstances and lender criteria. Nothing here is a promise of approval or savings.
Table of Contents
- Why commercial remortgages work differently
- The commercial remortgage process, step by step
- How long does it take, and what does it cost?
- Where debt consolidation fits
- Our view
- Talk to a local East Sussex broker
- FAQ
- Sources
Why commercial remortgages work differently
A home mortgage is usually a regulated mortgage contract, which brings the FCA’s consumer protection rules with it. Commercial lending often falls outside that. According to the FCA’s guidance, a loan is typically excluded from the definition of a regulated mortgage contract where less than 40% of the land is used as a dwelling.
In practice, lenders have more flexibility over their criteria, and you have fewer statutory protections than on a residential loan. That makes reading the terms carefully, and having someone independent explain them, more important. If you want a sense of what a lender’s solicitor handles on a commercial loan, a US law firm’s overview of commercial lending work gives a general picture. The rules it works under are Florida’s, not ours, so treat it as background only.
Semi-commercial property, such as a shop with a flat above, sits in between. We cover how those loans are priced and structured in our guide to semi-commercial mortgage costs.
The commercial remortgage process, step by step
1. Review your current deal
Start with the paperwork for your existing loan. Note the rate type, the date any fixed or discounted period ends, the outstanding balance and any early repayment charge (ERC). Our explainer on early repayment charges shows how they are usually worked out. Leaving a deal early can cost real money, so put a figure on it before you go further.
2. Decide what the remortgage is for
Common reasons are:
- a fixed rate or lender’s offer coming to an end
- raising capital for the business, for example to fund a new vehicle, stock or an extension
- moving to a lender that suits the property or your income better
- changing the term, or switching between repayment and interest-only
Your purpose shapes which lenders are suitable, so it is worth being clear before any application.
3. Get your documents together
Lenders assessing a business loan typically want to see evidence of how the business earns and how it is run. Exact requirements vary by lender, but expect to be asked for items like these:
- recent business accounts and tax returns
- bank statements
- the lease or tenancy agreements, if the property is let
- details of the property’s planning use and business rates
- ID and proof of address for the borrowers and directors
A business plan and the strength of any lease agreements can weigh heavily in a lender’s view alongside your credit history.
If you are a CIS subcontractor, note that lenders look at your net profit as shown on your Self Assessment return. Gross payment status means tax is not deducted at source, but you still pay all your tax and National Insurance afterwards. Some lenders may take gross CIS earnings into account for personal affordability, subject to their criteria. That does not raise your actual income and does not guarantee higher borrowing.
4. Choose lenders and apply
Commercial lenders include high street banks, specialist lenders and challenger banks, and their appetite differs by property type and borrower. A broker with whole-of-market access can compare across them. Our page on what a whole of market broker means explains the difference from a tied adviser. MoneyHelper also explains why seeing an adviser early saves time on any mortgage journey, including a remortgage.
The lender will usually issue indicative terms first, then a formal offer subject to valuation and legal checks.
5. Valuation
The lender instructs a valuer, generally working to RICS standards. For commercial security, valuations can take account of the property’s use, and the RICS standards cover valuations for commercial secured lending that depend on whether the property is owner-occupied or investment. Lenders may ask for more than one scenario, such as market value and a value on a different use or sale.
Before valuation, check that your lease terms are clear and formally documented, and that your planning use class and business rates match how the property is actually used. Mismatches can cause delays. You can check rateable value details with the Valuation Office Agency.
6. Legal work
Solicitors act for you and for the lender. They request a redemption figure from your current lender, check title, deal with any other charges registered against the property, and prepare the new legal charge. This stage is often where timelines stretch, particularly with leases or more than one owner.
7. Completion
The new lender releases funds, the old loan is repaid, and the new charge replaces the old one. Any extra capital you are releasing is paid to you or your company. Keep your completion statement and the new repayment schedule.
How long does it take, and what does it cost?
We have not found a published, authoritative timescale for commercial remortgages, and it varies by lender, property and how quickly documents and valuations come back. As a practical rule, begin the conversation many months before a fixed rate ends, rather than weeks. Residential guides often quote four to eight weeks as a rough idea, but commercial cases involve valuations and legal checks that can add time. Treat that as a floor, not a forecast.
Costs typically include:
- the new lender’s arrangement or product fee
- a valuation fee
- legal fees for both sides
- any ERC on the existing loan
- an advice or broker fee, where one applies
Ask for a written breakdown of every fee, the total cost over the full term and any ERC, so you can compare options like for like. For current market figures, see our broker-checked guide to commercial mortgage rates and costs.
Where debt consolidation fits
Some owners consider releasing capital to clear other borrowing. This can reduce monthly outgoings by stretching the term, but it often increases the total cost of credit over the life of the loan, and debts secured against a property put that property at risk if payments are missed. Alternatives include a second charge loan, overpaying unsecured debt, or negotiating with creditors. Our piece on consolidating card debt into a mortgage shows the trade-offs in detail.
Our view
Most problems we see with commercial remortgages are not about rates. They come from starting late, an unclear lease, a mismatch between how a property is used and how it is recorded, or income that has not been presented clearly. That last one matters most for self-employed clients, CIS subcontractors and company directors, whose income can look complicated on paper.
Our approach is to explain costs and risks plainly, prepare the application properly, and stay with you from first enquiry to completion and later reviews. We would rather tell you a switch does not make sense than push one through.
— Paul McMath CeMAP CeRER
Talk to a local East Sussex broker
We arrange bridging and commercial finance, second charge loans and remortgages for clients across Hastings, Eastbourne, Hailsham and Bexhill-on-Sea. You can see more on our commercial finance and secured lending page, or if the property is also your home, our remortgage services. Self-employed? Our guide to mortgage types for UK subcontractors is a good starting point. Our advice is tailored, and any outcome depends on your circumstances and lender criteria.
FAQ
Is a commercial remortgage regulated like a home mortgage?
Usually not. The FCA guidance excludes loans from being regulated mortgage contracts where less than 40% of the land is used as a dwelling. That means fewer consumer protections, so read the terms carefully.
When should I start the process?
Start well before any fixed rate or offer ends, ideally many months ahead. Valuations and legal work can take time, and checking early repayment charges first avoids expensive surprises.
Can a self-employed CIS subcontractor get a commercial remortgage?
It can be possible, but lenders assess affordability from your net profit as shown on your Self Assessment return, not simply gross turnover. Good records of expenses help. Whether a lender will lend depends on its criteria and your circumstances.
Do I need a broker?
You are not obliged to use one. An independent broker can compare lenders and prepare your case, which can save time when income or property use is not straightforward. Always ask for a written breakdown of fees.
Sources
- FCA Handbook, PERG 4: regulated mortgage contracts
- RICS: valuations for commercial secured lending
- GOV.UK: CIS gross payment status
- MoneyHelper: should you use a mortgage adviser?
- MoneyHelper: buy-to-let mortgages explained
- Bristol City Council: Business Start Up and Development Toolkit
Recommended
This article provides general information and is not a personal mortgage recommendation. Mortgage availability and eligibility depend on your circumstances and lender criteria. Rates and criteria can change. We will explain any applicable fees before you commit. Think carefully before securing other debts against your home. Consolidating debts over a longer term may reduce your monthly payments but increase the total amount you repay. Your home may be repossessed if you do not keep up repayments
