With a new year now under way, a copious number of businesses will be beginning 2013 facing financial struggle, with many even trapped under a mountain of debt. The unsteady economy of 2012 made for a hostile environment and the unstable banking structure has left many business owners dealing with an impossibly difficult commercial mortgage agreement.
Whether it has been as a result of unsuspecting hikes, fees and extra charges or as an aftermath of struggling sales and growth; small and medium businesses are struggling with the burden of commercial mortgage repayments. Despite the unprecedented number of benefits a business mortgage may provide; it is indeed a long term investment that, should there occur a failure in repayments; can pose dangers to the longevity of a business but can anything be done? For businesses struggling under the strain of a commercial mortgage; are there any alternatives available?
For those seeking to consolidate debts, achieve better rates and get the best deal possible; remortgaging is considered the ideal option.
What is Remortgaging?
A remortgage is the process of replacing an existing agreement with a new one; often with an alternative lender. The new mortgage will pay off the existing agreement and leave the borrower with a more suitable arrangement.
The reasons for a remortgage can include:
- Debt consolidation
- Better deal (timescales and repayments)
- Saving money
- Release Equity for expansions and business improvements
If you are struggling to meet your current repayments than why not consider a remortgage and take advantage of the above benefits, to ensure your business is able to achieve success within the coming year.
Before beginning a search for the right mortgage deal, take the time to consider the options and restrictions that you may face. Will there be a redemption fee? How much will a remortgage cost your business? How long will it take to repay the new sum and are the savings greater in the long run?
It is vital to take the time to appropriately and carefully consider the drawbacks that your business could face before taking any further steps.
Remortgaging: The Next Step
If you have determined that your business will benefit greatly from a remortgage than there are a few questions you will need to determine the answer to, in order to take the next step within the process:
- How Much Can Your Business Borrow? This sum will all be dependent upon the financial situation of your business and the lender you chose to deal with. The loan to value ratio of your business and your credit rating will all play a great part in this decision however; lenders will also have their own criteria which will be used to determine just how much your business is in a position to borrow.
- How Much Can Your Business Afford? It can be easy to get carried away; however it is of great importance that you ensure that you have conducted the appropriate calculations and taken interest rates and any potential economic dips into consideration, to ensure that your business does not face any further financial disasters.
- How Long Can Your Business Maintain Repayments? It is all quite easy to opt for a longer repayment plan, in the hope that your business faces minimum repayments but is it wise in the long run and in the face of such uncertain economic times to make such a lengthy agreement?
Remortgaging: Finding the Best Deal
Whatever your reasons for a remortgage it is vital to ensure that when selecting an alternative lending agreement; you take the time to search for the right deal and the right lender.
Considered the ideal lender for many businesses, a broker is deemed the best option, however when searching for the right lender there are a few issues you will need to cover:
- Experience- Many lenders often specialise in both commercial and residential finance options however, for the small and medium business owner it is agreed that a specific commercial mortgage lender is the better choice. Specialising in commercial finance only; a commercial broker will possess access to a range of appropriate lending opportunities and will have greater experience within the field of commercial finance.
- Finance Options- What financial choices are available to your business? The greater the range of commercial finance options; the greater the chance for your business to achieve success.
- Types of remortgages available? Fixed rate, variable and tracker rate mortgages are just a few of the options available to those seeking commercial remortgage; is your chosen lender able to provide such options?
- Fees? Ensure you determine just what charges your business may be exposed to. What are the legal fees involved? Will your business be faced with exist fees, arrangement and broker fees?
Remortgaging: Making the Move
Once you have determined your choice of commercial mortgage lender; your business will now be in a position to begin the remortgage process. In the hands of an experienced commercial lender; you can rest assured that the process will be relatively simple and stress free; with your lender working with you every step of the way.
The remortgage process will often involve:
- Initial Application Process- Whether over the phone or via the internet, an initial application process will need to be completed and an agreement in principle should be received.
- In depth Application- Once a principle agreement has been determined, your lender will ask for a range of paperwork, including bank statements, cash flow details and proof of current mortgage to determine the lending capability of your business.
- Legal Work- Legal work will be required to ensure the process is appropriately completed without risk.
- Agreement- Your lender will determine the appropriate timescales and repayment schedules, keeping the best interests of your business in mind.
For those businesses facing continuing financial strain; why not consider a remortgage and ensure that the coming year is one in which your business, can continue to grow?
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