Why refinancing your commercial loan matters
1 min read
13th December 2023
If you want to maximise your financial position over the long-term, you should regard your commercial loan as a ‘work in progress’ rather than a ‘finished article’. In other words, you should seriously consider refinancing your commercial loan at least every three years – yes, even if you got a really good commercial loan at the time.
The world of commercial finance is ever evolving. Lenders continually adjust rates and loan features, and new players enter the market regularly. Over time, what was once a market-leading loan could transition into an average one. In such cases, it's important to explore refinancing options for a better commercial loan.
Also, your circumstances may have changed since you first obtained your loan! If your business now boasts stronger cash flow and a healthier balance sheet, you may qualify for a wider array of loan options and potentially secure a lower interest rate.
Additional benefits of refinancing
While obtaining a lower interest rate is a compelling reason to refinance, it's not the only one.
Refinancing can also open doors to accessing equity in your commercial property, which can be used to acquire additional assets.
Furthermore, refinancing provides an opportunity to reconsider your loan structure or loan term, tailoring it to your evolving needs.
Points to consider before refinancing
While refinancing can be a powerful financial tool under the right circumstances, it may not be suitable for everyone all the time.
Before proceeding, consult with a Vie Advisor to determine if refinancing aligns with your specific situation. We'll assess:
- Your financial goals
- Your current financial position
- Your loan-to-value ratio
- Your existing finance package
- The alternative loan options available to you
- The cost associated with refinancing