November 15th, 2014. Ben Lloyd
Is Now A Good Time To Remortgage?
“Money isn’t the most important thing in life, but it’s reasonably close to oxygen on the ‘gotta have it’ scale.” – Zig Ziglar
Commercial mortgage: A loan issued for the purpose of commercial land or buildings.
As someone who’s taken out a commercial mortgage, you know full well how useful a tool it is in raising much needed capital for establishing your business premises. Especially when you think of its numerous benefits such as these:
• You can retain ownership of your business and your business premises (not all investment options provide for this)
• You can realise capital growth over a long period of time
• Tax deductible interest payments
• Lower monthly costs due to typically lower interest rates
• Improved cash flow management due to extended repayment plans
• The option – if the lender agrees – of sub-letting some of your business premises
So the question you’re probably asking yourself is not whether remortgaging your business property is a good idea…but rather, whether now is a good time to do so.
To answer this question, there are 4 things to bear in mind: saving money; interest rates; property value; and the terms of the loan.
#1 Saving money
If your current fixed rate, tracker or discount deal is about to end, it’s worth checking whether you can save money by moving to another provider…before being placed on the standard variable rate of your lender. Taking the time to investigate this could save you a substantial amount of money.
#2 Interest rates
Right now the Bank of England base rate is at an all-time low of 0.5%. But should this rate be on the verge of rising (a highly likely scenario), then remortgaging before this happens would be a savvy move.
#3 Property value
If your property has experienced a significant jump in value, then remortgaging it could be a way of releasing some of the equity tied up in the property.
#4 The terms of the loan
Remortgaging can enable you to obtain more flexible terms, such as making higher payments than your current loan permits.
In addition to these factors, you also need to be aware of a few signals that could indicate that now might not be a good time to remortgage. These include:
• Looking at how the value of your property has changed since you took out the initial loan
• Considering the likelihood of being accepted if you make a remortgage application
• Identifying whether your current loan charges high fees for early repayment
These and other issues are worth discussing by consulting with your trusted commercial mortgage brokers. Speaking to them will give you a specialist’s perspective, enabling you to make an informed decision.
Article By Ben Lloyd
November 15th, 2014
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben