Case snapshot
- Facility
- Commercial refinance
- Property value
- £1,500,000
- Loan-to-value
- 80%
- Rate
- 7.1% fixed for 5 years
- Asset
- Owner-occupied office, London
- Outcome
- Revenue up £40,000 a year from letting spare space
Market Turmoil
At the end of 2021, the BOE decided to start increasing interest rates to try and help curb inflation. This caused lenders to tighten their credit policy and caused valuers to become extremely susceptible to the value of commercial assets.
Since then it has been ever more difficult to refinance commercial lending.
Challenges of refinancing in a rising rate environment
With the challenges mentioned, we have still been able to navigate the market for our clients at P10 Financial Group. In this situation, our client was looking to refinance their commercial office in London. They traded from the premises and it was imperative to them that they could refinance from their current high street lender.
By refinancing their office, they would then be able to add another level of income to their business by renting out part of the building that they were not currently using. Their current bank would not permit them to do this.
P10 were instructed to find a resolution. Our resolution was to refinance with a challenger bank that we have a strong relationship with. We were able to navigate the office being down-valued as well as secure our clients an extremely competitive 5-year fixed rate to allow them to carry out their future plans.
The result for the client:
Value of Assets - £1,500,000
Interest rate – 5-year fixed rate at 7.1%
Total LTV – 80%
Debt Structure – Amortised over 25 years
Refinance allowed the business to increase revenue by £40,000 PA due to the fact they could rent out some of their vacant space with the new lender
