One way businesses can boost their cash flow is by refinancing their commercial mortgage- but what does this involve?
This move can have a number of benefits but it is not for everyone, so it needs careful consideration of all the information and the pros and cons before jumping in to it.
How does it work?
At its most basic level, this when an existing loan is paid off and replaced with a new one. The main benefit for refinancing is the potential to secure finance with a more favourable interest rate which then frees up cash for other business use.
However, there can be drawbacks to refinancing and so the long term affects it can have need to be taken into consideration. For example:
Change of lender: moving from one lender to another could result in an early repayment charge. These kinds of costs add up, and ultimately any savings you would make on the lower interest rate could be swallowed up at the beginning.
Timeframe: if your new loan requires you to pay it off over a longer period of time than your original, it’s likely that you’ll end up paying more in the long run.
If you are thinking about making the move, we would suggest getting in contact with an independent broker such as First Financial Solutions who will be able to offer you expert advice on your situation and find you the best deals on the market.
If you would like to discuss refinancing further, please click here to contact us or call 01639 262222 to talk to a member of our team.