Someone might want to refinance their property for several reasons, such as a refinance with the same lender or a different one.
The existing loan might end, a cashflow injection may be required, or more favourable terms might have been found with a different lender.
Unless it is a refinance at the end of the loan term, the borrower will need to check whether they can repay the loan early and whether there are any charges or penalties.
If you plan to refinance your property, you must understand what you must provide to your solicitor and the lender to avoid unnecessary delays.
Our Banking and Commercial Property Solicitors explain how you can prepare for the refinancing of your commercial property.
Lender due diligence and borrower identification
The lender will carry out due diligence on the borrowing entity, which will include ID checks on the borrower.
If the borrower is a limited company, they will request ID from the directors and beneficial owners and request financial statements as evidence of the borrower's financial strength.
Be prepared to spend some time dealing with lengthy forms that lenders often ask borrowers to fill out.
Required Documentation for the Property
You will need to ensure that all documents relating to the property are available and up to date.
This includes providing an up-to-date EPC, asbestos survey reports (for properties built before 2000), fire risk assessments, and gas and electrical certificates to your solicitor, who will then pass them on to the lender or the lender's solicitor.
The lender will also require the building insurance policy for the property, ensuring their interest is noted on the policy.
Consider consulting with your insurance broker early on to avoid delays.
Tenancy and Regulatory Documents
Copies of any tenancies must be provided to the lender, along with any ancillary documents relating to that tenancy, such as rent deposit deeds or licenses to alter.
The lender will also need to see any relevant planning permissions and building regulation certificates for the construction, property use, and later works completed.
Title Issues and Indemnity Insurance
If there are any title issues with the property, such as restrictive covenants mentioned in missing documents, the lender will likely require indemnity insurance to be put in place.
Your solicitor can obtain a quote for this if one is not already in place.
Signature and legal advice requirements
Most lenders still require wet ink signatures on the security documents and do not permit electronic signing platforms.
Some lenders go further and require signatures in the presence of a solicitor.
In many cases, your solicitor must provide a certificate confirming they have advised you on the terms of the security documents. Sometimes, this advice must be given in person.
Personal Guarantees for Limited Companies
If the borrower is a limited company, lenders often require personal guarantees from the company's directors.
In such cases, the directors must obtain independent legal advice on the guarantees, typically required in person.
Therefore, the borrower and/or directors must be available to sign documents and receive face-to-face advice during the refinancing process.
Contact Our Banking and Commercial Property Solicitors
Refinancing your commercial property can be a complex process that requires thorough preparation and expert guidance.
At Myerson Solicitors, our experienced team is here to help you navigate every step; contact our Banking and Commercial Property Solicitors on:
01619414000
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Charlotte Hook
Senior Associate
Charlotte is a senior associate in the Real Estate team at Myerson. She trained at Myerson and qualified in September 2017. Charlotte has been recognised in the Legal 500 several times as a “Rising Star” and a “Leading Associate”.
Charlotte specialises in sales and purchases, landlord and tenant work and secured lending matters. She has acted for both sellers and purchasers on various types of properties including offices, retail units, industrial units and land for development. Charlotte has expertise in negotiating conditional contracts, option agreements and overage provisions.
About Charlotte Hook