Commercial property loans: what changes when the property isn't a home

Commercial property lending looks like home lending from a distance — a loan, a mortgage, a settlement — but almost every setting is different once you get close. Deposits are bigger, terms are shorter, valuations are slower and more expensive, the paperwork options are different, and GST enters the picture at purchase. None of it is difficult once you know the shape of it, but walking in with residential assumptions is how buyers end up short on settlement funds or surprised by a valuation. Here is what actually changes.

Owner-occupier vs investment: two different conversations

Lenders treat commercial property differently depending on who will occupy it.

Owner-occupied commercial property — your business buying its own premises — is often the easier conversation. The lender is really assessing your business: its trading history, profitability and capacity to cover the repayments, with the property as security. For many established businesses, buying premises through the trading entity, a holding entity, or in some cases an SMSF (a specialised path we cover in our [SMSF loan guide](/articles/smsf-loans/smsf-loan-guide)) is a natural step once rent starts to feel like someone else's mortgage.

Commercial investment property — buying to lease to a tenant — shifts the assessment to the property's income. The lender cares about the lease: who the tenant is, how long the term has to run, rent reviews, and what the property would re-let for if the tenant left. A property with a strong tenant on a long lease is fundamentally different security from an identical building sitting vacant, and the pricing and gearing on offer reflect that.

LVRs and deposits: expect to bring more

Commercial lending is more conservative on gearing than residential. In general terms — and policies vary widely by lender, property type and location:

• Standard commercial property (offices, warehouses, retail) commonly attracts maximum LVRs somewhere in the 65 to 80 per cent range, with the sharper pricing at lower gearing
• Specialised property — pubs, childcare centres, service stations, purpose-built premises — is harder to re-sell, so lenders cap LVRs lower again
• There is no LMI in commercial lending in the residential sense; the LVR cap is the cap, so the deposit gap must be covered with cash or other security, such as equity in residential property

Budget beyond the deposit, too: transfer (stamp) duty on commercial purchases, legal and due diligence costs, valuation and lender fees, and potentially GST (more below). Loan terms are commonly around 15 to 25 years, sometimes shorter for specialised assets, and some facilities are subject to periodic reviews rather than running set-and-forget to maturity — ask about review clauses before you sign, not after.

Full-doc vs lease-doc: two ways to prove the loan works

Full-doc commercial lending mirrors what you would expect: financial statements, tax returns and a full serviceability assessment across your business and personal position. It earns the widest lender choice and the best pricing.

Lease-doc is unique to commercial investment lending, and for the right borrower it is a genuinely elegant option: the lender assesses the loan primarily on the property's lease income rather than your full financials. Broadly, if the rent covers the interest by an acceptable margin — lenders express this as an interest cover ratio — the loan can stand on the property's own feet. It suits investors whose financials are complex, whose accountants are mid-year, or who simply prefer not to unpack multiple entities for a property that visibly pays for itself.

The trade-offs are what you would guess: lease-doc generally means lower maximum LVRs, slightly higher pricing, and real scrutiny of the lease itself — tenant quality, remaining term and rent reviews all matter, because the lease is doing the work the financials would normally do. Between full-doc and lease-doc sit alt-doc options using BAS and bank statements, covered in our [low-doc guide](/articles/asset-finance/low-doc-loans).

Valuations: slower, costlier, and they drive the deal

Commercial valuations are a different animal from residential ones. They are ordered from specialist valuers, take longer — often two to four weeks — and cost meaningfully more, with the bill typically yours even if the loan does not proceed. The valuer assesses the property as an income-producing asset: comparable sales, but also the lease terms, tenant strength and market rents.

Two practical consequences. First, build the valuation timeline into your finance clause — a residential-length finance period can be genuinely tight for a commercial deal. Second, understand that the valuation can reshape the loan: lenders lend against the valuation, not the price, and a valuation that treats the passing rent as above market can pull the number down. If the property is tenanted, have the lease documents complete and legible before the valuer is appointed; missing lease detail is a common cause of conservative valuations.

GST on commercial purchases: know the general shape

Unlike residential homes, commercial property transactions are often subject to GST, and the treatment affects how much money you need at settlement. In general terms only:

• A commercial purchase may attract GST on top of the price, and a GST-registered buyer may be able to claim it back — but the timing gap between paying and claiming still has to be funded, and lenders do not automatically finance the GST component
• Some transactions are structured as the sale of a going concern — broadly, a tenanted property sold with its lease in place — which can be GST-free if the strict conditions are met
• The margin scheme and other treatments exist and change the arithmetic again

The rules are technical, the conditions matter, and getting them wrong is expensive. Before you exchange contracts, confirm the GST treatment of your specific transaction with your accountant and solicitor — this is a purchase where the professional fees are cheap insurance.

The application, end to end

A typical commercial purchase runs: pre-assessment of your borrowing position, offer and contract with a finance clause sized for commercial timeframes, formal application with financials (or lease documents for lease-doc), valuation, credit approval, loan documents, then settlement. Allow more time than a residential deal at every stage — six weeks from application to settlement is a reasonable planning figure and complex deals run longer. Structuring — which entity buys, how the loan is guaranteed, how it sits alongside your [business borrowing](/articles/business-loans/business-loan-guide) — is best decided before the contract is signed, because changing the purchasing entity after exchange can have duty consequences.

Talk it through with a broker

Commercial lending has more moving parts and a wider spread between lenders than residential — on gearing, pricing, doc options and review clauses — so lender selection does real work. You can see the range on our [commercial loans page](/loans/commercial-loans), or [get in touch](/contact) and we can pre-assess your position before you make an offer.