A commercial loan is finance secured against a property used for business — an office, a warehouse, a shopfront, a childcare centre — rather than somewhere anyone lives. The security is different, so almost everything about the loan is different too, and the parts that catch people out are rarely the parts they ask about.
The headline difference: there is no lenders mortgage insurance in commercial lending. In a home loan a small deposit can be insured around. Here the loan-to-value limit is a hard wall. If a lender stops at 70%, you find the other 30% or the deal does not happen.
What you can actually borrow
Commercial lending is priced deal by deal, and the security type moves the number more than anything about you.
- Industrial and warehouse — the strongest security going. Up to 70% to 80%, helped along by national industrial vacancy running at roughly 3.2% to 3.7% through the middle of 2026.
- Office and retail — commonly 65% to 75% for an established, well-located property. Secondary-grade office is being trimmed hardest, with national office vacancy at 16.1% in January 2026, the highest in about three decades.
- Specialised security — childcare, service stations, pubs, medical suites, motels. Expect 50% to 65%, so a deposit of 35% to 50%.
- Vacant commercial land — around 65%, and lenders cap the loan size.
Lease doc lending, where the rent roll carries the assessment instead of your tax returns, generally stops at 65% to 70%. Low doc backed by an accountant’s letter or BAS runs 65% to 80% depending on the lender.
Rates, and why nobody publishes them
Bank commercial rates through the second half of 2026 have sat roughly between 6.5% and 9.5%, with non-bank and specialist lenders running from about 7.5% into the low teens. Owner-occupiers with clean financials sit at the bottom of that range.
Almost no lender publishes a real commercial rate, because each deal is margin-priced against its own risk. One lender’s published example this year moved from 7.69% at a 60% loan-to-value ratio to 8.84% at 80% on the same property — the deposit moved the rate by more than a percentage point. That is the part a borrower going direct cannot see, because they only ever get one lender’s number.
The term trap
This is the single biggest structural difference from a home loan, and it is the one that costs people money.
A bank commercial facility is often a three to five year term, with repayments calculated over 15 to 25 years. At the end of that term the loan does not roll over. It is assessed again from scratch. Many facilities also carry a review every 12 to 36 months where you hand over a profit and loss, a balance sheet and cash flow, and the lender may order a fresh valuation.
If that valuation comes back lower — very possible on secondary office right now — you can breach a loan-to-value covenant without ever missing a payment, and be asked for a margin increase or a lump sum. Some smaller and specialist lenders write 15 to 30 year terms with no annual review at all. Knowing which ones is most of the value a broker adds here.
What a lender asks for
Full doc commercial means two years of business and personal tax returns and financial statements, six months of business bank statements, identification, and the current lease. Add to that an ATO integrated client account printout showing no unpaid tax or an active payment plan — near universal now, and almost never listed on a lender’s website.
The tests are a debt service cover ratio around 1.25 times and, on lease doc, an interest cover ratio of roughly 1.3 to 1.5 times. If the numbers do not clear those, more paperwork will not save it.
The five things that kill commercial deals
- A short lease. Banks want two to five years of weighted average lease expiry remaining, particularly on a single-tenant property. Under twelve months and the deal is declined or the loan-to-value ratio is cut — usually after you have paid for the valuation.
- The valuation basis. On specialised security many lenders apply the loan-to-value ratio to vacant possession value, not the going-concern figure you paid. On a pub or a childcare centre that gap is wide, and it appears at valuation, not at application.
- Your own entity as the tenant. The rent is disregarded, the deal is recast as owner-occupied, and the product and the limits change.
- GST at settlement. Ten per cent applies where the vendor is registered. The going-concern exemption removes it, but only if all five conditions are met and the contract says so in writing. Miss one and you are funding an extra 10% at settlement that no lender will lend you, waiting on a BAS refund — and paying stamp duty on that GST, which you never get back.
- Ordering the valuation too early. A commercial valuation costs $2,000 to $5,000 and more, you pay it up front, and it does not move to another lender. Confirm appetite first.
The costs beyond the deposit
Establishment fees commonly run 0.30% to 1.00% of the loan, and higher at some specialist lenders. Valuations are the figure above rather than the few hundred dollars a house costs. Lender legal fees are yours. Many facilities carry an annual line fee and a review fee. Fixed rate break costs are real money — one lender’s published example put nearly $10,000 on a $500,000 loan broken a year early.
In practice, budget 30% to 35% of the purchase price in cash for a standard full doc deal once GST timing, stamp duty and fees are counted, and considerably more on specialised security.
Questions worth asking before you apply
- What is the facility term, and what happens at the end of it?
- Is there an annual review, and can it trigger a revaluation?
- Will you take a general security agreement over my trading entity, and is that negotiable?
- Is the loan-to-value ratio applied to the purchase price, the valuation, or vacant possession value?
- What is the line fee, and is it charged on the limit or the balance?
That third one is worth the conversation on its own. A general security agreement over the trading business is routinely asked for and is often negotiable — most borrowers never think to push back.
Getting the right lender first time
Because nothing is published, comparing commercial lenders yourself means applying to several and paying for several valuations. A broker who writes these regularly knows which lender takes your asset type, at what limit, on what term, and whether they review annually — before anything is ordered.
Frequently asked questions
1. How much deposit do I need for a commercial property?
Plan on 20% to 30% of the lender’s valuation for standard security, and 35% to 50% for specialised property. Add stamp duty, fees and possibly GST on top, so the cash figure is usually 30% to 35% of the price at minimum.
2. Are commercial loan rates higher than home loan rates?
Yes, and by a meaningful margin. The security is harder to sell, the income supporting it can disappear with a tenant, and there is no mortgage insurance backing the lender.
3. Can I get a commercial loan without tax returns?
Lease doc lending assesses the rent rather than your financials, capped around 65% to 70% and requiring an arm’s-length tenant with at least twelve months left on the lease. Low doc using an accountant’s letter or BAS is the other route.
4. How long does commercial finance take?
Six to eight weeks is realistic from application to settlement, longer on specialised security. The valuation is usually the slowest part.
5. What is a going concern purchase?
A sale of a leased commercial property as an operating business, which can be GST-free. All five conditions have to be satisfied and the contract must state it in writing. Have your accountant confirm it before exchange, not after.
6. Can my self managed super fund buy commercial property?
Yes, and since 10 August 2026 business real property is the only kind of real estate a fund can borrow to buy. Contracts exchanged before that date are outside the change, and existing arrangements continue as they are. Our guide to buying property with an SMSF covers it in full.
Ready to talk to someone about a commercial loan? Tell us what you are buying and how the business is set up, and we will match you with a commercial finance broker who writes these deals every week. Send us the details.
James Haywood
Financial Services Expert
James has worked with property investors since 2017, helping them scale portfolios on market data rather than guesswork — picking suburbs with room to grow, and structuring the loans around a long-term plan instead of the next purchase.
Through his Property Surfer Program, clients get their purchase structure set up before they buy, access to the market data behind the suburb calls, and automated loan repricing every three months so the rate does not quietly drift upward. Asset protection and risk sit inside the structure rather than being handled afterwards.
He works alongside a referral network across financial planning, accounting, conveyancing, family law and building inspections, so clients are not assembling a team of their own from scratch.