Commercial Finance
What Interest Rates Apply To Commercial Property Loans?
5 min read- Finance Guide
- Updated 2026
Quick answer
Commercial loan pricing
1+ 5 factors
Rates are usually risk based rather than one standard number
- Owner occupied property Usually sharper pricing
- Commercial investment May price higher
- Lower LVR Usually improves rates
- Stronger borrower May receive better terms
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Commercial property loan interest rates are usually assessed using two main factors
The loan to value ratio and property risk
Lenders usually offer stronger pricing when the loan amount is lower relative to the property value and when the property is considered standard and easier to resell.
PROPERTY-BASED PRICING
The borrower's ability to support the debt
Lenders review income, cash flow, trading history, lease strength and existing debts to decide how aggressively they can price the loan.
BORROWER-BASED PRICINGWhat can influence pricing most
Most commercial lenders adjust pricing according to the overall risk of the deal
-
Lower LVR and standard owner occupied property Usually best priced
-
Commercial investment with solid lease and tenant Mid range pricing
-
Specialised properties or weaker borrower profile Higher pricing risk
For example, a lower LVR loan secured by a standard commercial property with strong borrower financials may be priced more sharply than a higher LVR loan against a specialised asset with limited lease support.
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Fixed and Variable Rate Options
Commercial property loans may be available under different interest rate structures. Lenders often offer:
Variable rate
facilities- Fixed rate
facilities
- Split loan
structures
- Shorter fixed
periods
- Review based pricing
resets
The most suitable structure depends on how much certainty the borrower wants and how the lender is pricing the deal.
Lease Strength and Property Type
If the property will be leased, lenders often consider the quality of the lease when pricing the loan. Important factors include:
Lease
length- Tenant
strength
- How standard
or specialised the property is
Properties with strong tenants and long leases are generally easier to finance and may support stronger pricing.
How Rates May Vary
Commercial property loan pricing can vary widely depending on the transaction.
Typical pricing outcomes may include:
Sharper Pricing
Lower risk deals
Lower LVR, standard property, strong borrower
Mid Range Pricing
Typical commercial deals
Normal investment or owner occupied transactions
Higher Pricing
Higher risk scenarios
Specialised property, higher leverage or weaker profile
Each lender has different pricing policy, minimum margins and appetite for commercial property risk.
Common problems borrowers face
Many borrowers are surprised that commercial property loan rates are not always quoted as one standard price.
Higher Than Expected Pricing
Some borrowers expect residential style pricing, but commercial property lending is usually priced according to risk.
Possible ways to improve pricing include:
-
Reduce the LVR
-
Use stronger
security property
-
Present stronger
borrower financials
Limited Lender Appetite
Different lenders may price the same commercial deal very differently based on risk appetite and policy.
Some lenders are more competitive for standard owner occupied property than specialised or investment assets.
Matching the transaction to the right lender can materially affect pricing.
Weak Lease Support
If the investment property has weak lease terms or weaker tenant quality, the lender may price the loan higher.
A stronger lease structure may help improve lender comfort and pricing.
Applying With The Wrong Structure
The loan term, repayment type, borrower entity and security position can all influence the final rate.
Using lenders experienced in commercial property finance can help structure the deal more effectively.
Steps to get Commercial Property Finance
Step
01
Determine the commercial property type and whether it will be owner occupied or investment.
Step
02
Work out how much deposit or equity will be contributed and what LVR that creates.
Step
03
Prepare financial documents, lease details and borrower information for lender review.
Step
04
Confirm the preferred interest rate structure, such as fixed, variable or a combination.
Step
05
Submit the application to commercial lenders and compare offered pricing and structure.
Step
06
Once approved, final loan documents confirm the interest rate, fees and settlement terms.
Speak with a Commercial Property Finance Specialist
Commercial property loan rates can vary significantly depending on the security property, lease profile, lender appetite and borrower strength.
A specialist can review your scenario and help identify which lenders may offer the most suitable pricing and loan structure.
Speak with a finance specialist about your commercial property finance options.
Submit the short form below and a finance specialist will review your scenario and discuss possible funding options and rate structures.
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