Commercial Finance
How Commercial Property Loans Work
5 min read- Finance Guide
- Updated 2026
Quick answer
Lenders typically fund up to
60% 75% LVR
Lower than residential - assessed against property & borrower
- Typical loan term Up to 25 years
- Interest only available 1 to 5 years
- Review periods Every 3-5 years
1300 421 044
1300 421 044
Detailed explanation
Commercial property finance is structured differently from residential loans because lenders assess both the borrower and the property’s commercial viability. The loan is secured against the property, and repayments are based on either business income, rental income, or both.
How construction loans are structured
Commercial property loans commonly include:
Loan secured against the property- Deposit or equity contribution
- Principal and interest or interest only option
- Variable or fixed rate options
- Review or refinance period during term
Typical ranges:
- LVR typically 60-75%
- Interest only 1-5 years
- Terms up to 25 years
- Min loans sizes often higher
How Lenders Assess Commercial Deals
Lenders Typically Review:
Borrower income or business financials- Rental income from tenants
- Lease terms and tenant strength
- Property type and location
- Loan to value ratio
- Debt service converage ratio
- Borrower experience where relevant
What affects Borrowing Capacity
Borrowing capacity depends on:
- Deposit size or availabe equility
- property income yeild
- Borrower financial position
- Property type and location
- Tenant quility and lease length
- Property type such as retail, office or industrial
- Lender risk appetite
For Leased Property:
Rental income may be used for loan servicing- Long leases strengthen the application significantly
- Multiple tenants reduce single-tenant risk for the lender
- Vacant property is assessed more conservatively
Typical examples:
- Owner occupied commercial property may rely on business income for servicing
- Investment commercial property may rely on rental income
- Vacant commercial property often requires stronger borrower servicing
- Specialised property types may reduce LVR
Need Help with your Project?
Common problems
Commercial property loans are more sensitive to property risk, tenant risk and borrower income than residential loans.
Low loan to value ratio offered
Commercial lenders often restrict LVR compared to residential loans.
Possible solutions include:
- increase deposit or equity
- use multiple properties as security
- reduce loan amount
- choose lender suited to property type
Tenant or lease concerns
Short leases or weak tenants can reduce borrowing capacity
Possible solutions include:
- provide lease documentation
- demonstrate tenant history
- use stronger servicing from borrower income
- refinance after securing new lease
Property type restrictions
Some lenders avoid certain commercial property types.
Possible solutions include:
- select lender suited to property class
- provide additional security
- increase deposit contribution
- restructure loan across multiple assets
Steps to get Finance
Step
01
Confirm property type, purchase price and deposit
Step
02
Review borrower income or business financials
Step
03
Assess lease details and rental income
Step
04
Submit application with property information
Step
05
Valuation and lender approval completed
Step
06
Settlement occurs and loan commences
Speak With A Commercial Property Loan Specialist
Property development finance can vary significantly depending on the project size, location, approvals, and the developer's experience.
A specialist can review your project and help determine which lenders may be able to fund it.
Speak with a finance specialist about your Property funding project
Submit the short form below and a development finance specialist will review your project and discuss possible funding options.
Contact Form
Your enquiry is confidential
Prefer to speak with someone directly ?
Call us to discuss about your project finance queries
Additional Questions
You may also find these questions helpful
