The situation
Commercial mortgages taken 3-5 years ago often sit meaningfully above current market rates. The barrier is switching cost — arrangement, legal, valuation, and often an ERC on the outgoing loan. Modelling honestly is critical.
How we approach it
We model the switching decision transparently: total cost to switch vs annual saving from lower rate. Breakeven under 18 months usually justifies switching; over 36 months usually doesn't.
What that looks like in practice
- Full switching cost modelled (fees, legals, valuation, ERC)
- Annual saving quantified vs breakeven point
- Structural improvements (interest-only, longer term) considered alongside rate
- Sometimes the incumbent will improve terms to retain — we test that too
- Recommendation is honest: sometimes stay, sometimes switch
Typical timeline
- Week 1Current loan, ERC, market alternatives compared.
- Week 2-4Application to preferred lender, valuation.
- Week 4-8Legals, completion.
Common questions
How do I know if switching makes sense?
Breakeven analysis: total switch cost divided by annual saving = years to break even. Under 18 months usually yes; over 36 usually no.
What about ERC?
ERC on the outgoing loan is the biggest single switching cost. Sometimes worth waiting for ERC to reduce; sometimes worth paying to capture bigger rate saving.
Can I improve terms without moving lender?
Sometimes — asking your incumbent lender to improve is worth a call, especially if you've had the loan for years. We test this first.
Model switching vs staying honestly
Send your current loan terms — we'll do the breakeven analysis and give a clear recommendation.