Commercial loan refinance when your current loan stops working

Why do people refinance commercial loans?

Commercial loans do not always run quietly to the end. Terms expire. Reviews come up. Lenders change policy or exit a sector. Tenants leave and income dips. Owners decide to expand, restructure or buy out a partner. Any of these can make the loan you have the wrong loan for what comes next.

Typical triggers include:

• The loan term has ended and the lender will not extend or roll it over.
• A review has raised new conditions or a revaluation has changed the numbers.
• The lender has issued a notice about covenants, arrears or a breach.
• The borrower wants to release equity for another purchase or for the business.
• Ownership is changing through a partner buyout, a family arrangement or a new entity.

Who does this suit?

Commercial refinancing suits owners of offices, shops, warehouses, medical premises, mixed-use buildings and other commercial property who want a better structure or who need to move before something becomes a crisis. It also suits investors with a pipeline of deals who want to recycle equity from existing assets.

What are the main refinance pathways?

Pathway	When it fits	Watch for
Like-for-like refinance	Property and borrower are in good shape; you want better terms	Exit costs on the current loan
Restructure	You need different terms, a split, or a change of entity	Duty and legal implications of changes
Equity release	You want funds for another purpose	How the lender views the purpose
Short-term holding loan	The current lender is calling time and a longer-term solution needs more weeks	A clear exit to the next loan
Specialist or private refinance	Credit issues, vacancy or difficulty with mainstream lenders	Cost and the plan for moving back to mainstream terms

Which one fits depends on the facts, and sometimes a combination. A short-term loan, for example, can buy time to stabilise a property and then hand over to a longer-term lender.

What do lenders look at in a refinance?

A refinancing lender is taking over someone else’s risk, so it wants to understand why the current lender is no longer comfortable or why you want to move. They look at the property’s current value and income, the loan history and conduct, the borrower’s financial position, and the purpose of any additional funds.

A clean conduct record is a big plus. If there have been missed payments or breaches, an honest explanation and evidence of recovery are better than silence. Our commercial loans with bad credit page covers that scenario in more depth.

How does Ownright approach commercial refinancing?

Our starting point is to understand what is really going on. Sometimes the borrower wants cheaper or more flexible terms. Sometimes a lender has stopped playing nice. Sometimes the borrower has hit a rough patch and needs a path back. Trevor Scott’s long experience means we have seen all three many times, and we know which lenders handle each situation.

We work with you to line up the new loan before the old one runs out, so there is no scramble at the end. Where timing is tight, we look at whether a short-term loan can hold things steady. And if a lender has already said no, we ask why, because the reason tells us who to approach next. When you are ready, send us your details.

An illustrative example

Illustrative only, no real client. A company owns a small office building. Its loan is approaching the end of its term and the lender has indicated it will not extend, citing a change in its appetite for the area. One tenant is on a short remaining lease. We would explore lenders who are comfortable with the location and the lease profile, prepare a clear case for the property’s income, and plan for a short-term loan if the timeline runs tight. The goal is a settlement that happens before the old loan expires rather than after.

Mistakes to avoid

• Waiting until the final weeks of the term.
• Ignoring discharge costs until the new lender is ready to settle.
• Letting a rushed application go to several lenders at once.
• Presenting vacancy or arrears without a plan.
• Overlooking whether the new structure triggers duty or tax costs.

Documents that help

• Current loan contract and recent statements
• Lease agreements and rent schedules
• Financial statements and tax returns for the borrower
• Valuation or appraisal if recent
• Entity documents and details of any guarantors
• Any lender correspondence, particularly notices

How early should I start?

Earlier than you think. A refinance involves a new lender’s assessment, a valuation, legal work and a discharge from the old lender, and each step takes time. If your loan expires or a review is looming, starting several months ahead gives you room to compare options, fix problems in the file and avoid being forced into a rushed decision. Starting late does not mean it cannot be done, but it narrows the choices and may push you toward short-term finance.

What if the new valuation is lower?

A lower valuation can reduce the amount a new lender will provide. It is one of the most common refinance surprises. We try to manage it by discussing expected values early, giving the valuer the leasing and income information that supports the property and, if needed, planning for extra equity or a different lender with a different view. A lower valuation is a hurdle, not necessarily a dead end.

Can I change lenders and structure at the same time?

Often yes. A refinance is a good moment to reconsider how the property is held and how the debt is arranged. You might separate an investment property from a business loan, move from personal ownership to a trust, or bring several loans together under one facility. Each change has tax, duty and legal consequences, so it is a conversation for your accountant and solicitor. We bring the lender side so that their advice is based on what is actually available.

What are common reasons lenders decline a refinance?

Declines usually trace back to a handful of causes. The property may be in a sector or location the lender no longer favours. Income from the property may have dropped due to a vacancy or a lease expiry. The borrower may have conduct issues on the existing loan or elsewhere. Or the valuation may leave too little equity for the lender’s comfort. Knowing the specific reason matters, because it tells us whether to fix the problem, explain it or take the deal to a different type of lender.

What does the discharge process involve?

When a new lender pays out the old one, the old lender issues a payout figure and a discharge of mortgage is prepared. Final payout amounts can include accrued interest and any break or discharge costs. Settlement is coordinated by the solicitors or conveyancers on both sides, and timing matters because interest continues to accrue until the old loan is repaid. We keep track of the dates so that settlement lines up cleanly with the expiry of the old loan.

Can a refinance include my business debts?

In some cases, yes. If the property has equity, a refinance may bring in other debts such as business loans, equipment finance or a tax debt, simplifying repayments into one facility. Whether that is wise depends on the terms of each debt and how the combined loan would be structured. Our commercial loans with bad credit and ATO debt refinance pages cover related situations.

Where to from here?

If your commercial loan is coming up for expiry or review, or you simply want to see what else is out there, talk to us about your situation. Our guide on how to refinance when your bank says no may also be a helpful read.