Refinancing isn't just a rate decision. It's a structuring decision.

When it's time to refinance, most business owners compare one number: the rate. It's the easiest thing to put side by side, so it becomes the only thing compared. What gets missed is whether the new facility can actually support what the business does next. A refinance sets the structure the business will operate under for years, not months. Most owners only revisit that structure every three to five years, so a bad decision at signing doesn't get corrected quickly. It gets lived with.

Why rate alone is the wrong test

A low rate can come with a structure that costs more later: rigid terms, limited redraw, security tied up across the whole portfolio rather than a single asset, or a lender who won't revisit the deal once circumstances change. For business owners, circumstances change often. A director takes on an investment property. A borrower needs to release equity for a renovation or an expansion. A business needs invoice finance to cover the gap between delivering work and getting paid. None of that is unusual, and a facility priced on rate alone is rarely built to handle it.

“We've had clients pay more in exit fees to unwind a badly structured facility than they saved on the rate over the two years they held it. Nobody runs that comparison at application stage, or consider the long term goals fo the client, because the rate is the only number in front of them. By the time the real cost shows up, the deal is already done.”

— COOPER SERGIS, LENDING PARTNER

Four questions to ask before signing

Can this lender support an equity release in twelve months without a full refinance elsewhere? If not, the rate saving may be spent again the next time the business needs to move.

Does this lender offer business funding or invoice finance? Not all of them do. That's worth confirming before it's urgently needed, not after.

Will the business's structure need re-explaining at every future touchpoint? Some lenders reassess from zero each time. Others carry the context forward and move faster because of it.

Is this facility built for where the business is heading, or just where it sits today? A structure that fits this year's numbers can still be the wrong fit for next year's plans.

The bottom line

None of these questions show upon a rate comparison, and a lender competing on price alone won't raise them. Rate still matters. But at refinance, it should be the opening number in the conversation, not the whole of it, because the structure signed on that day is usually the structure the business is still operating under years later.

This article is intended as general information only and should not be relied upon as financial, credit, tax or legal advice. Every situation is different. Before making any financial or commercial decision, seek independent professional advice that takes your individual circumstances into account.