Commercial Finance
Can You Use Equity To Buy Commercial Property?
5 min read- Finance Guide
- Updated 2026
Quick answer
Typical equity contribution
20% 40%
Often used in place of some or all of the cash deposit
- Residential equity Often acceptable
- Commercial equity Often acceptable
- Additional security May reduce cash needed
- Serviceability Still matters
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Using equity for commercial property is usually assessed using two main factors
How much usable equity exists
The lender will look at the value of the existing property and the debt already secured against it to work out how much equity may be available to use.
SECURITY-BASED LIMIT
The borrower's ability to service the total debt
Even when sufficient equity exists, the lender still assesses income, cash flow, trading history and existing liabilities to confirm the total lending remains affordable.
SERVICEABILITY LIMITHow equity may be used by property type
Lenders may allow equity from other property to support the commercial purchase instead of using the entire deposit in cash
-
Residential owner occupied or investment property Often usable as security
-
Existing commercial property with available equity Often usable as security
-
Specialised or highly leveraged existing properties May be more limited
For example, if a borrower has enough usable equity in another property, that equity may be used to cover the deposit and costs for a new commercial purchase, reducing the need for cash up front.
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Where the Equity Can Come From
Lenders may allow equity to come from a range of property types. They commonly review:
Owner occupied
residential property- Residential
investment property
- Existing commercial
property
- Available equity after
existing debt is allowed for
- Total exposure across
all secured properties
A borrower with strong usable equity may be able to reduce or even eliminate the need for a large cash deposit.
How Lenders View Equity Support
When equity is used, lenders usually consider several supporting factors. Important factors include:
The quality of
the supporting property- How much debt
already exists against it
- Whether the
total loan structure still fits policy
Stronger security and cleaner overall structure usually make it easier to use equity effectively.
How Equity Is Commonly Used
Equity can support commercial property purchases in several different ways.
Typical structures include:
Deposit Replacement
Equity instead of cash
Usable equity covers some or all of the required deposit
Additional Security
Stronger overall structure
Another property supports the commercial purchase
Combined Lending
Multiple properties
Existing and new property work together within the total loan structure
Each lender has different rules on how much usable equity can be relied on and how the security must be structured.
Common problems borrowers face
Many borrowers assume that having property equity automatically guarantees approval, but lenders still assess the full structure carefully.
Not Enough Usable Equity
A property may have value, but after existing debt and lender limits are applied, the available usable equity may be less than expected.
Possible solutions include:
-
Use equity from
another property
-
Reduce the
purchase price or loan size
-
Add cash or
additional security
Weak Serviceability
Even with strong equity, lenders still need to see that the borrower can repay the total debt being taken on.
Some borrowers have enough security but not enough income support.
Lenders assess both security and repayment capacity.
Cross Security Complexity
Using multiple properties can create a more complex lending structure and may reduce flexibility later.
Borrowers should understand how all secured properties are linked.
Applying With The Wrong Lender
Different lenders have very different rules for how equity can be used and how the security must be structured.
Using lenders experienced in equity backed commercial property finance can improve approval chances.
Steps to get Commercial Property Finance
Step
01
Determine the value of the commercial property you want to purchase.
Step
02
Calculate how much usable equity exists in your current property or properties.
Step
03
Prepare financial documents, loan statements and property details for lender assessment.
Step
04
Confirm how the lender will structure the security and whether additional equity or cash is still required.
Step
05
Submit the application to commercial lenders that support equity backed structures.
Step
06
Once approved, the loan settles using the agreed property security and equity structure.
Speak with a Commercial Property Finance Specialist
Using equity to buy commercial property can vary significantly depending on the security properties, lender policy and the borrower's financial position.
A specialist can review your scenario and help determine which lenders may be able to support an equity backed commercial property purchase.
Speak with a finance specialist about your commercial property purchase.
Submit the short form below and a commercial property finance specialist will review your scenario and discuss possible funding options.
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