- Client: HNW Middle Eastern Resident
- Property Value: Approximately £4 million
- Loan Amount: Approximately £2 million
- Requirement: Commercial mortgage refinance
Enness was approached by a client with a UK limited company whose existing commercial mortgage had moved onto a Standard Variable Rate of approximately 15%. The property was valued at around £4 million, with approximately £2 million of borrowing outstanding. The significant increase in interest costs had led the clients to consider selling the property at auction, but they wanted to explore whether a more competitive refinancing solution could be secured before taking that step.
The transaction presented a particular challenge because the company’s main shareholder was a high-net-worth individual resident in the Middle East. There are a more limited number of competitively priced commercial mortgage options available for certain international borrowers, so identifying a lender comfortable with both the ownership structure and the client’s residency was important.
Enness reviewed the client’s circumstances and approached lenders that could provide a more suitable refinancing structure. We were able to present the clients with two competitive options: a variable rate of approximately 2% over the Bank of England Base Rate with a 1% product fee, and a three-year fixed rate of approximately 7% with a 2% product fee.
The clients selected their preferred option based on their priorities around cost and certainty of future outgoings. The new financing significantly reduced their monthly interest payments by approximately £11k compared with the existing facility, while the fixed-rate option also provided greater certainty over borrowing costs for the agreed period.
The refinancing allowed the clients to retain ownership of the property rather than being forced to sell at auction simply because of the existing lender’s expensive Standard Variable Rate. This was particularly valuable given the property’s established rental yield and the clients’ desire to continue benefiting from an asset they had owned for several years.
The case demonstrates the importance of reviewing commercial mortgage arrangements when an existing facility moves onto an expensive variable rate. For international property owners and businesses with complex ownership structures, specialist lenders may be able to offer alternative solutions where mainstream commercial mortgage options are more limited.
Enness works with a broad network of lenders to identify refinancing solutions for high-value commercial property and internationally owned assets. If your existing commercial mortgage has become expensive or you are approaching the end of a fixed-rate period, speak to a mortgage specialist to explore your options.
Risk Warning:
Commercial mortgages carry risks. Failure to meet repayment obligations could result in enforcement action against the secured property. Interest rates and property values can change, and borrowers should consider the total cost of refinancing and ensure that the proposed repayment strategy remains sustainable.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, property assessment and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed transaction.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
