Why Should You Use a Broker for Commercial Property

Buying commercial property is a different game to residential lending. The loan structure matters as much as the interest rate, and the lender you choose shapes what you can do with the property for years to come.

What Makes Commercial Property Finance Different from a Home Loan

Commercial property loans are assessed on the income the property generates, not just your personal income. Lenders look at rental yield, lease terms, tenant quality, and the property's ability to service the debt. A warehouse with a long-term tenant on a secure lease will be assessed differently to a retail shopfront with short-term occupancy.

The loan structure reflects that. You might see interest-only terms, progressive drawdown if you're fitting out a space, or a revolving line of credit if you're acquiring multiple properties. Loan terms typically run from one to 30 years, with flexibility around repayment options depending on your cash flow needs.

Consider a buyer looking at an industrial property in Dandenong with a ten-year lease to a logistics company. That tenant profile and lease length gives the lender confidence in the income stream. The buyer structured the loan as interest-only for the first five years to keep repayments low while they built up other business assets. That kind of flexibility is standard in commercial finance, but only if you know which lenders offer it and how to present the deal.

How Commercial LVR and Deposit Requirements Work

Most commercial property loans sit at a maximum of 70% LVR, meaning you'll need at least a 30% deposit plus costs. Some lenders will go to 80% if the property is owner-occupied and you're an established business, but that's the exception.

The valuation process is more involved than residential. Lenders want a registered valuer to assess the property's commercial use, tenant profile, and income potential. If you're buying strata title commercial property, such as a single office suite in a larger building, the valuer will also look at the body corporate financial health and any restrictions on use.

Why Loan Structure Matters More Than the Rate

Commercial interest rates are typically higher than home loan rates, and they're negotiated based on the deal. A variable interest rate gives you flexibility to pay down the loan faster if your business cash flow allows. A fixed interest rate locks in your repayments for a set period, which helps with budgeting but removes features like redraw or extra repayments during the fixed term.

What matters more is how the loan fits your business strategy. If you're expanding and need to buy equipment or fit out the property after settlement, a loan with progressive drawdown lets you draw funds as you need them rather than taking the full amount upfront. If you're acquiring land with plans to develop later, pre-settlement finance or commercial bridging finance can help you secure the site while you arrange longer-term funding.

In our experience, buyers who focus only on the interest rate often end up with a loan that doesn't match their business needs. A slightly higher rate with flexible repayment options and the ability to redraw can save more in the long run than a lower rate with rigid terms.

How a Commercial Finance & Mortgage Broker Accesses Lender Options You Won't Find Yourself

Most buyers approach their own bank first. That's understandable, but it limits your options. Commercial lenders assess risk differently, and some specialise in certain property types or business structures. A broker can access commercial loan options from banks and lenders across Australia, including non-bank lenders who offer more flexible loan terms for buyers who don't fit a standard profile.

If you're buying an office building, warehouse, or retail property as an investment, some lenders will only look at the rental income. Others will want to see your business financials as well. If you're using a self-managed super fund, the lending criteria change again, and you'll need a lender who understands SMSF structures.

A broker also knows which lenders will consider unsecured commercial loans for smaller amounts, and which require a secured commercial loan with registered security over the property. That knowledge shapes the deal from the start, not after you've spent weeks applying to the wrong lender.

What to Expect During the Commercial Property Loan Process

The lender will want financials for your business, usually the last two years of tax returns and recent management accounts. If the property is tenanted, they'll review the lease agreement and want proof of rental income. If it's owner-occupied, they'll assess how the property supports your business operations and whether the loan is affordable based on your projected revenue.

The valuation takes longer than residential. The valuer needs to assess the commercial property valuation based on comparable sales, rental yield, and the property's condition and fit-out. If there are issues with zoning, access, or building compliance, they'll flag those, and the lender may reduce the loan amount or ask for those issues to be resolved before settlement.

Settlement usually happens within 60 to 90 days, but that depends on the contract terms and how quickly the valuation and legal work is completed. If you're using commercial bridging finance to settle quickly and then refinance into a longer-term loan, that process can move faster, but the interest rate will be higher during the bridging period.

When Commercial Refinance Makes Sense

Refinancing a commercial property loan works the same way as refinancing a home loan, but the triggers are different. You might refinance to release equity for another acquisition, to move from interest-only to principal and interest as your business matures, or to switch from a fixed interest rate to a variable rate if your circumstances have changed.

If your business has grown and your financials are stronger, you may qualify for a lower interest rate or higher loan amount. If your tenant has renewed their lease or you've improved the property, the valuation might support a better LVR.

We regularly see this with clients who bought commercial property a few years ago and now want to expand. The equity in the first property becomes the deposit for the second, and a well-structured commercial refinance can unlock that without selling the original asset.

Call one of our team or book an appointment at a time that works for you. We'll help you work out which lenders suit your deal, what loan structure fits your business, and how to present your application so it gets across the line.

Frequently Asked Questions