Can you switch to a lower interest rate for your practice finance?

The interest rates that are currently being offered for new finance are very competitive, and often significantly cheaper than rates that were on offer 5+ years ago. 

For those with existing finance, there is no reason why you cannot take advantage of these lower rates by switching lenders and this is something that we have been undertaking for a number of clients over the last 6 months.

What are the current rates?

Whilst each client’s rates are likely to be specific to their practice and personal needs, an example of some rates that we have achieved are:

Business Rates

5 year partially amortising loan – 1.42% above base rate (with bank arrangement fee)

5 year partially amortising loan – 1.72% above base rate (with no bank arrangement fee)

10 year term – 1.75% above base rate (with bank arrangement fee)

10 year term – 1.97% above base rate (with no bank arrangement fee)

Property Rates

10 year term – 1.68% above base rate (with bank arrangement fee)

10 year term – 1.87% above base rate (with no bank arrangement fee)

As an example, if someone has borrowing of £500,000 with a rate of 3% above base rate and opted for the 10 year, arrangement fee, rate of 1.97% above base rate they would be saving £5,150 in interest in the first year alone!  Obviously, as the borrowing amount increases, the savings could be even greater. 

It may be that we can also move more finance from the business onto the practice premises to achieve better rates, as those who have had finance for some years will have built equity within the property.

What costs are applicable?

Some banks are now offering a £0 arrangement fee for people switching and for new deals.  Typically, where transferring to another bank, they may require a new bank valuation of the practice (estimated at around £2,500 plus VAT).  There could also be some legal work involved in transferring the practice and security (estimated in the region of £2,500 plus VAT but will vary on specifics). 

It is important that you check whether there are any tie-ins with your current lender, for example those with fixed rates.

Other advantages

If you have a residential property being used to secure the loan, these can often be removed.  Banks are now not often requiring this type of security.  Where the figures may have been tight when you purchased, meaning that the bank required this type of additional security, the equity and experience that you have running the practice are likely going to allow us to find lenders where this is no longer required.

How does it work?

We can usually determine if you can achieve cost savings in as little as 24-48 hours.

We will need the following:

If you think that you could save money by switching or would just like to talk through, then please request a call back on the ‘contact us’ form below or contact Martyn Bradshaw on 01904 670820 or martyn.bradshaw@pfmdental.co.uk.