Top ten tips for remortgaging
02/11/2009
By the Commercial Property & Development team.
In the current climate, many businesses need an injection of capital. For a business owning a freehold or long leasehold, the answer may be to remortgage. These ‘top ten' tips will guide you.
- Speak to the bank - Clarify how much you can borrow against the value of the property. Factor in any other costs including arrangement fees and legal fees.
- Do the maths - look at the books of the business. Consider what it can afford to repay. Check your business plan. Invest the capital.
- Terms of the loan - clarify the amount to repay each month and over what period of time. Make sure you understand all your obligations to the bank and the rights of the bank if you default.
- Consent of the first charge holder - if the holder of the first charge is not the bank with the second charge, then the consent of the first charge holder will be needed.
- Consent of the landlord - not required for a freehold property, but on a leasehold the landlord's consent to the charge will be required.
- Valuation - the bank will need one and you will probably require one to give you an indication of the equity in the property.
- Legal costs - the bank will instruct a lawyer to undertake research into the property. This will involve looking at the 'title' to the property and dealing with any issues.
- Searches - your lawyer will have to undertake research into the property and this will involve searches. Factor in the cost.
- Inter-creditor deed - if there are two different charges to two different banks then an agreement governing the relationship between the two banks will be needed.
- Registration fees - fees will be charged for registering the charge at Companies House and the Land Registry.