How Long Does It Take to Refinance a Commercial Property?

Refinancing a commercial property can be an excellent way to secure better mortgage terms, lower your interest rate, or release equity for other business investments. However, one of the most common questions property owners have is: how long does the refinancing process take?

The answer depends on several factors, including the complexity of your application, the lender’s requirements, and the legal checks involved. In this blog, we’ll break down the typical timeline for refinancing a commercial property and explain each stage of the process.

Overview of the Refinancing Timeline

Refinancing a commercial property usually takes between 6 to 12 weeks, but the process can sometimes extend beyond this period if complications arise. Here is a general breakdown of the key stages and how long each step might take:

• Initial Consultation and Preparation (1 to 2 weeks)
• Lender Assessment and Pre-Approval (1 to 3 weeks)
• Property Valuation (2 to 4 weeks)
• Legal Due Diligence (2 to 6 weeks)
• Final Approval and Mortgage Offer (1 to 2 weeks)
• Completion and Registration (1 to 2 weeks)

Let’s dive deeper into each of these stages.

1. Initial Consultation and Preparation (1 to 2 weeks)

The refinancing process starts with a thorough review of your current mortgage situation and your financial goals. During this stage:

• You meet with a commercial conveyancing solicitor to discuss your refinancing needs.
• The solicitor will gather initial documentation, such as title deeds, current mortgage details, and business financial records.
• You will also speak with a mortgage broker (if applicable) to explore different lenders and refinancing options.

Tips to speed up this stage:

• Have your financial documents prepared in advance, including recent business accounts and tax returns.
• Clearly communicate your refinancing goals, whether it’s securing a lower interest rate or releasing equity.

2. Lender Assessment and Pre-Approval (1 to 3 weeks)

Once you’ve decided on a potential lender, the next step is to go through the pre-approval process. This involves:

• Submitting an initial application to the lender, including details of your business’s financial health.
• The lender will conduct a credit check and review your business’s trading history.
• They may also request additional information, such as a breakdown of your rental income (if applicable) or forecasts of your business’s future earnings.

What can delay this stage?

• Missing or incomplete financial documents can slow down the lender’s assessment.
• If your business has a complex structure or a poor credit history, the lender may need more time to evaluate your application.

3. Property Valuation (2 to 4 weeks)

After the lender’s initial assessment, they will require a professional valuation of the commercial property. This is a crucial part of the refinancing process, as the property’s value will affect the loan-to-value (LTV) ratio and the terms of the new mortgage.

The valuation process involves:

• The lender instructing a qualified surveyor to assess the property’s current market value.
• The surveyor visiting the property to inspect its condition, location, and potential rental income (if applicable).
• The surveyor submitting a detailed report to the lender with their valuation findings.
• How to avoid delays:
• Schedule the property valuation as soon as possible, and ensure the surveyor has access to all areas of the property.

Make sure the property is well-maintained, as this can positively influence the valuation.

4. Legal Due Diligence (2 to 6 weeks)

The legal checks involved in refinancing a commercial property are more complex than those for residential properties. During this stage, your commercial conveyancer will conduct due diligence, which typically includes:

• Title checks: Reviewing the property’s title to ensure there are no legal restrictions or encumbrances that could affect the refinancing.
• Lease reviews: If the property is tenanted, the conveyancer will need to review lease agreements to confirm they meet the lender’s requirements.
• Property searches: Carrying out standard property searches, such as local authority searches and environmental checks.

Common issues that can slow this process down:

• Unresolved issues with the property’s title, such as restrictive covenants or disputes.
• Complications arising from existing lease agreements, especially if they are outdated or non-standard.

5. Final Approval and Mortgage Offer (1 to 2 weeks)

Once the valuation and legal due diligence are complete, the lender will make a final decision on your refinancing application. If approved, they will issue a formal mortgage offer, which will outline the terms and conditions of the new loan.

During this stage:

• Your conveyancer will review the mortgage offer to ensure it aligns with your expectations and financial goals.
• You will need to sign the offer and return it to the lender for final processing.

Tips for a quicker approval:

• Carefully review the terms of the mortgage offer before signing, and raise any concerns with your conveyancer immediately.
• Ensure that all outstanding documents requested by the lender are provided promptly.

6. Completion and Registration (1 to 2 weeks)

The final stage of refinancing is completion, where the new mortgage funds are released, and the old mortgage is paid off. Your conveyancer will handle this process, which involves:

• Coordinating with the lender to transfer the mortgage funds.
• Paying off your existing mortgage in full.
• Registering the new mortgage with the Land Registry, updating the property’s title with the new lender’s details.

What can cause delays?

• Delays in fund transfers between the old and new lenders.
• Issues with Land Registry registration, such as discrepancies in the property’s title.

Once these steps are complete, the refinancing process is finalised, and you can enjoy the benefits of your new mortgage terms.

How to Speed Up the Refinancing Process

While the typical timeline for refinancing a commercial property is around 6 to 12 weeks, there are several ways you can help speed up the process:

• Work with a Specialist Conveyancer: Choose a commercial conveyancing solicitor with experience in handling commercial refinancing. Their expertise can help avoid common legal pitfalls and delays.
• Get Organised Early: Prepare all necessary documents well in advance, including financial records, property details, and lease agreements.
• Communicate Regularly: Keep in close contact with your conveyancer and lender throughout the process to promptly address any issues or additional information requests.

Final Thoughts

Refinancing a commercial property can be a valuable move for many business owners, offering a way to reduce monthly payments, access better rates, or release equity. However, the process can be complex and time-consuming, especially without the right support.

By understanding the typical timeline and working with an experienced commercial conveyancer, you can navigate the process smoothly and efficiently. If you’re considering refinancing your commercial property, contact a specialist conveyancing solicitor today to get started and ensure a hassle-free experience.

Need help refinancing your commercial property?

Reach out to our team of expert commercial conveyancers to guide you through every step of the process. Get in touch today for a consultation.