Commercial property finance works on different rules from a home loan, and the differences catch people who assume it is the same process with a bigger number. Deposits are larger, terms are shorter, the lease matters as much as the building, and most commercial lending sits outside the consumer credit protections you are used to.
The five things that differ most
1. You need more deposit
Commercial lending is generally capped at a materially lower LVR than residential. Plan for a substantially larger contribution than you would on a house, and confirm the actual figure for your property type before you commit — it varies by asset class, not just by lender.
2. The term is shorter
Where a home loan runs 25 to 30 years, commercial facilities are commonly written over much shorter terms and then reviewed or refinanced. That review is not a formality: your position, the lease and the valuation all get looked at again. Build the review date into your planning from day one.
3. The lease can matter more than the building
For an investment purchase, the tenant and the lease drive the valuation and the lender’s appetite. A long lease to a strong tenant with sensible terms makes a deal financeable that would otherwise struggle. A short remaining term, a weak covenant or an unusual clause can reduce what a lender will advance, or stop it entirely.
If you are buying premises for your own business to occupy, the assessment shifts to your business’s ability to service the debt.
4. Valuation works differently
Residential valuation leans on comparable sales. Commercial valuation leans heavily on the income the property produces — the rent, capitalised at a yield appropriate to the asset. Two identical buildings with different leases can value very differently, and a valuation that comes in short changes your required deposit rather than just your rate.
5. Different rules apply
Most commercial lending is not regulated by the National Credit Code. The responsible lending obligations that protect consumer borrowers generally do not apply, terms are more negotiable, and you carry more responsibility for understanding what you are signing. Have your solicitor read the facility agreement — not just the contract of sale.
What we can help with
- Owner-occupied premises — buying the building your business operates from
- Commercial investment property — retail, office, industrial
- Commercial refinance — repricing or restructuring an existing facility, often worth doing at the review date
- Equity release against commercial property you already hold
- Short-term and private lending where the timeframe or the situation does not fit a bank — expensive by design, and only sensible with a clear exit
What lenders will want to see
- Business financial statements and tax returns, generally two years
- The lease, or evidence of intended occupancy
- Details of the property: type, zoning, condition, location
- Your existing commitments and other property holdings
- Your experience with this kind of asset, which counts for more than it does in residential
- A credible exit or repayment strategy, particularly for shorter-term facilities
Common questions
How much deposit do I need?
More than residential, and the figure depends on the asset class and the lender. Specialised property — service stations, childcare, hospitality, rural — sits at the more conservative end than standard retail, office or industrial.
Can I buy my business premises through my super fund?
Business real property can often be held in an SMSF and leased to your own business, and lending to an SMSF is possible through a limited recourse borrowing arrangement. Fewer lenders participate, the structure is strict, and it is an area where you need your accountant and a specialist adviser before your broker. We can tell you what is financeable; we cannot advise on whether the structure suits you.
Are commercial rates higher than home loan rates?
Generally yes, reflecting shorter terms, lower LVRs and a different risk profile. Pricing varies much more between deals than residential does, because more of it is negotiated.
How long does it take?
Longer than residential. Commercial valuations take more time, and assessment is more manual. Six to eight weeks is not unusual — factor that into your settlement terms rather than discovering it afterwards.
What if the property is vacant?
Harder, but not impossible. Without rental income the lender assesses your capacity to service the debt from other sources, and will usually want a lower LVR.
Every commercial deal is its own assessment
There is far less that can be said in general about commercial lending than residential, which is exactly why this page does not quote numbers. Bring us the property, the lease and your figures and we will tell you what is realistically financeable and on what terms.
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This page is general information only and does not take your objectives, financial situation or needs into account. It is not credit assistance, a credit quote, financial product advice, or taxation or legal advice. Most commercial lending is not regulated by the National Credit Code and consumer protections generally do not apply — obtain independent legal and accounting advice. Lender policies vary substantially by product and change over time. Nothing here is a guarantee of approval. Easy Loan Finance is a Credit Representative (CRN 568863) of Beagle Finance Pty Ltd, Australian Credit Licence 383640.
