Strategic Insights for Business Owners 

Introduction 

Refinancing a commercial property loan presents a myriad of opportunities for business owners. This comprehensive guide unravels the intricacies of commercial loan refinance, providing insights into eligibility, considerations, benefits, potential costs, and case studies. 

1. Eligibility for Refinance 

Navigating Criteria and Limits 

• Loan-to-Value Ratio (LVR): Most lenders consider refinance at 60-70% LVR, while a few may entertain it at 80%. 
• High LVR Considerations: Refinancing at a high LVR may impact interest rate competitiveness. 

2. Refinance Options 

Versatility in Rate Structures 

• Variable Rate Refinance: Some lenders allow refinancing every 6 months based on equity, but frequent refinancing affects credit files. 
• Fixed Rate Refinance: Despite break costs and exit fees, refinancing may be financially prudent if savings accrue within 2-3 years. 
• Specialized Refinance Options: Low doc, bad credit, and lease doc commercial loan refinances cater to diverse financial situations. 

3. Transitioning Back to Prime Lenders 

Moving from Specialist to Major Lenders 

• Requirements for Transition: Providing full financials for low doc and settling defaults for bad credit transitions. 
• Risk-Weighted Rates: Interest rates from major lenders may be risk-weighted after transitioning. 

4. The Refinancing Process 

Navigating Simple Procedures 

• Application Process: Submitting a commercial loan application with the new lender. 
• Additional Steps: Property revaluation, discharge form submission, and using the new mortgage to pay off the old loan. 
• Timeline: Commercial loan repayments commence within a month of settlement. 

5. Benefits of Refinancing 

Beyond Interest Rate Savings 

• Cheaper Interest Rate: Negotiable rates based on application strength, often resulting in significant savings. 
• Long-Term Financial Gains: Initial costs offset by potential long-term savings, totaling tens of thousands of dollars. 
• Cash-Out Opportunities: Refinancing for investment, renovations, or business purposes, contributing to personal or business wealth. 
• Rebates and Cashbacks: Case-by-case offers, such as covering stamp duty, may be available for loans exceeding $4-5 million. 
• Enhanced Lender Relationship: Improved understanding of business needs and swift, hassle-free ongoing finance. 
• Reduced Reviews and Revaluations: Some lenders don’t necessitate frequent property valuations, minimizing disruptions. 
• Potential Tax Benefits: Unlocking equity may qualify for negative gearing and depreciation benefits; consult a tax professional. 

6. Evaluating Costs 

Balancing Initial Outlay and Long-Term Gains 

• Upfront Fees: Loan application, break costs, exit fees, discharge fees, valuation fees, and settlement fees. 
• Government Fees: Stamp duty and mortgage registration fees based on property value and state regulations. 
• Ongoing Loan Fees: Account-keeping fees contingent on loan features. 

7. Considerations Before Refinancing 

Holistic Decision-Making 

• Hidden Fees Awareness: Recognition of additional fees by lenders, crucial for informed decision-making. 
• Credit Enquiries: Each refinance adds an enquiry to credit files, impacting overall borrowing power. 
• Business Support: Evaluating if the current lender adequately supports business needs, especially in industries requiring specific services. 
• Interest Rate Trends: Understanding the Bank Bill Swap Rate (BBSY) and assessing future interest rate movements. 
• Loyalty Benefits: Existing lenders may offer competitive deals to retain customers, covering costs like stamp duty. 

Conclusion: Informed Refinancing for Business Growth 

Refinancing a commercial property loan is a multifaceted decision that extends beyond securing a better interest rate. This guide equips business owners with a strategic understanding of eligibility criteria, diverse refinance options, potential benefits, associated costs, and crucial considerations. Informed decisions, supported by professional guidance, pave the way for optimized financial outcomes and sustained business growth.