Restructuring borrowing you already have, to reduce cost, release capital, or fix a structure that no longer fits the practice.
When refinancing is worth looking at
- Your facility was arranged some years ago and the market has moved
- A goodwill loan is running down while the practice has grown, leaving borrowing capacity unused
- You want to release equity to fund a second site, an equipment programme or a partner buy-out
- You are servicing several facilities that could be consolidated more cheaply
- A fixed rate period is ending and you want to review before it reverts
- The original structure was set for a first-time buyer and the practice has outgrown it
The arithmetic that decides it
Three numbers determine whether a refinance is worth doing.
Early repayment charges on the existing facility. On commercial term lending these can be substantial and are the most common reason a sensible-looking refinance does not stack up. Get the redemption figure before anything else.
Arrangement and legal costs on the new facility. Valuation, legals and arrangement fees are real money and need to be recovered from the saving.
The saving itself, calculated over the remaining term rather than as a monthly figure. A lower monthly payment achieved purely by extending the term is not a saving.
We will run that comparison honestly, including telling you when it is not worth moving.
Releasing equity
Where a practice has grown and the borrowing has been paid down, there is often meaningful headroom. Releasing it can fund a second site, a substantial equipment investment, or buying out a partner.
Lenders assess this on current trading rather than on what the practice looked like when the original facility was written, which is usually to your advantage if the practice has performed.
Restructuring goodwill and property
Practices bought some years ago frequently carry a structure set at purchase and never revisited: goodwill on a shorter term running alongside a longer property facility, possibly with different lenders.
Consolidating and reterming can materially change monthly cost, particularly where the goodwill element is close to being repaid. It is worth reviewing every few years rather than only when something prompts it.
Common questions
Will refinancing affect my relationship with my current bank?
Practically, no. Commercial lending is transactional and moving is routine. It is also worth telling your existing lender you are reviewing. They will sometimes improve terms to retain the business, which is a good result either way.
Can I refinance to a different lender mid-term?
Yes, subject to early repayment charges. Those charges are the deciding factor, so establish them first.
Can I refinance equipment as well?
Yes. Equipment owned outright can be refinanced to release capital, either alongside a property refinance or on its own. See dental equipment finance.
Related: dental commercial mortgages and dental practice expansion finance.
All figures are indicative and subject to lender assessment, your circumstances, valuation and prevailing market conditions. Commercial mortgages and unregulated bridging loans are not regulated by the Financial Conduct Authority. Property offered as security may be at risk if you do not keep up repayments.