FAQ – Frequently Asked Questions – Commercial Property Finance

Commercial property finance refers to loans used to purchase, refinance, or develop commercial real estate in Australia. This includes properties such as office buildings, warehouses, retail spaces, industrial facilities, and mixed-use developments. Unlike residential mortgages, commercial loans typically have stricter lending criteria, higher interest rates, and different repayment structures.

A commercial property loan works by allowing businesses, investors, or developers to borrow money to buy or improve commercial real estate. The lender assesses factors such as:

• The value of the property being financed
• The borrower’s financial position and creditworthiness
• The loan-to-value ratio (LVR), which is typically between 65% and 80% in Australia
• The income generated by the property or business using it

Repayments can be structured as principal and interest (P&I) or interest-only (IO), with loan terms ranging from 1 to 30 years, depending on the lender and loan type.

Commercial property loans are available to:

• Business owners looking to buy premises for their operations
• Property investors purchasing commercial real estate to lease out
• Developers funding construction projects
• Self-Managed Super Funds (SMSFs) investing in commercial property

Lenders will assess factors like business revenue, cash flow, credit history, and property value before approving a loan.

There are several types of commercial property loans, including:

• Commercial Mortgages – Used to buy or refinance commercial properties, with LVRs typically between 65%–80%.
• Development Finance – Designed for property developers to fund construction projects, often released in stages based on project milestones.
• Bridging Loans – Short-term loans used to cover funding gaps between property transactions. These typically have higher interest rates.
• SMSF Loans – Self-Managed Super Funds (SMSFs) can purchase commercial properties under strict lending conditions.
• Lease Doc Loans – Suitable for investors with strong rental income, where the loan is assessed primarily on the property’s lease agreement rather than personal income.
• Low Doc & No Doc Loans – Available for self-employed borrowers who may not have full financial documentation but have strong property equity.

The amount you can borrow depends on:

• The loan-to-value ratio (LVR), up to 80% for full-doc loans and 65% for low-doc loans
• Your business or personal financial position
• The type of commercial property being financed
• Your credit history and repayment capacity

Interest rates for commercial property loans in Australia vary depending on:

• The lender and loan type
• Your credit profile and financials
• The property type and loan amount

As of 2025, typical interest rates are:

• Commercial mortgages: 6% – 10% p.a. (varies by lender and risk profile)
• Development finance: 8% – 15% p.a. (depending on project risk)
• Bridging loans: 9% – 15% p.a. (short-term, higher risk)

Rates can be fixed or variable, and some lenders offer negotiable terms for high-value borrowers.

Yes. Most lenders require a minimum deposit of 20%–35% for a commercial property loan. The exact deposit depends on:

• Loan-to-Value Ratio (LVR) – Most lenders offer up to 80% LVR for commercial property purchases, meaning you’ll need at least 20% deposit.
• Business and financial standing – Stronger businesses or investors may qualify for higher LVRs.

Some borrowers may use equity in another property as security instead of a cash deposit.

Yes, but it may be challenging. Specialist lenders and private lenders in Australia offer bad credit commercial loans, but they:

• Require higher deposits (up to 40%)
• Have higher interest rates (up to 15% p.a.)
• May require additional security 

If you have a low credit score, working with a commercial finance broker can help find lenders willing to approve your loan.

• Assess your needs – Determine the amount and type of finance required.
• Prepare documentation – Gather financial statements, business details, and property information.
• Submit enquiry – Work with a broker to determine your eligibility
• Property valuation & approval – The lender conducts a valuation and credit assessment.
• Loan settlement – Once approved, funds are released for property purchase or development.

A Invest Equity broker can streamline this process and negotiate terms for you.

• The timeframe depends on the lender, loan type, and complexity of the application:

  • Full-doc loans: 2–6 weeks
  • Low-doc loans: 2–4 weeks
  • Development finance: 4–8 weeks (depending on approvals)
  • Bridging loans: 1–2 weeks (faster approvals)

  Working with an experienced broker can speed up approvals by ensuring all documentation is correct.

Commercial loans involve various costs, including:

• Application fees: $500 – $3,000
• Valuation fees: $500 – $5,000 (depending on property value)
• Legal fees: $2,000+ (for contract preparation)
• Lender’s Mortgage Insurance (LMI): If LVR exceeds 70%
• Broker fees: Some brokers charge a fee, while others earn a commission from lenders

Always review loan terms to understand all costs involved.

Why should I use a commercial property finance broker?
A broker helps:

• Compare multiple lenders to secure the best deal
• Access specialist lenders for complex loan scenarios
• Negotiate better loan terms on your behalf
• Save time by handling paperwork and approvals

Brokers have industry expertise and relationships with lenders, making it easier to secure tailored finance solutions.

It depends. Some brokers charge a direct fee (e.g., 0.5%–1% of the loan amount), while others receive a commission from lenders instead. A good broker will disclose all costs upfront.