Commercial Property Loans Australia 2026

TL;DR — Commercial Property Loans

• Commercial property finance is secured lending against a commercial real estate asset — office, retail, industrial, mixed-use, or development land — used to purchase, refinance, or construct.
• Rates run roughly 1–2 percentage points above equivalent residential mortgage rates, reflecting higher lender risk and more complex valuations.
• LVRs typically sit between 60% and 70% (versus 80–95% in residential), so you need a meaningful equity contribution or existing equity to release.
• Suits business owners buying their own premises, property investors building a commercial portfolio, and developers financing construction of commercial or mixed-use projects.

Rates at a Glance

Rates and LVRs indicative as of May 2026. RBA cash rate 4.35% (effective 6 May 2026). Commercial property lending is assessed case-by-case; rates and LVRs vary significantly by property type, location, tenant quality, and borrower profile.

What Are Commercial Property Loans?

Commercial property loans are a category of secured business finance where the security is a commercial real estate asset. The category covers a wide range of property types — office buildings, retail strips, warehouses and industrial facilities, mixed-use developments combining commercial and residential space, and raw development sites. Lenders use the property as primary security, meaning the loan is structured around the asset's value, its income-generating capacity, and its liquidity in a forced-sale scenario rather than just the borrower's trading income.

The structural difference between commercial property finance and a standard residential mortgage is significant. Residential lending is largely standardised: the security is a well-understood asset class with deep liquidity, consistent valuation methodology, and borrower protections baked into the National Consumer Credit Protection Act. Commercial property lending sits outside the NCCP framework in most cases (because the loan is for business purposes), which gives lenders far more flexibility — and far more room to price risk case-by-case. You'll encounter lower LVRs, higher rates, shorter fixed-rate periods, and terms that are frequently set to interest-only for the initial period before requiring a principal reduction schedule.

The five main structures in the Australian market are: (1) the owner-occupied commercial mortgage, where a business buys its own operating premises; (2) the commercial investment property loan, where the borrower is acquiring a tenanted commercial asset for income; (3) the commercial construction loan, drawn progressively against construction milestones; (4) the low-doc commercial property loan, structured for self-employed borrowers or entities with limited full financial documentation; and (5) the commercial bridging loan, a short-term interest-charged facility used to bridge between a purchase and a longer-term arrangement or a sale.

The lender landscape spans the four major banks (ANZ, CBA, NAB, Westpac), second-tier and regional banks (Bendigo & Adelaide Bank, Bank of Queensland, Macquarie, Suncorp), non-bank specialist lenders (La Trobe Financial, Pepper Money, Thinktank, Liberty Financial, RedZed), and private credit providers for larger, more complex transactions. Non-bank lenders have taken significant market share in commercial property over the past decade, particularly for transactions that sit outside major-bank credit parameters.

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Commercial vs Residential Property Finance: The Key Differences

Why are commercial LVRs lower than residential? The primary reason is liquidity and value volatility. In a forced-sale or distressed scenario, commercial properties take longer to transact, have a smaller buyer pool, and are more sensitive to macroeconomic conditions — vacancy rates, cap rate expansion, and credit availability all directly affect value. A commercial property worth $4 million in a low-cap-rate environment can be worth meaningfully less when buyers demand a higher yield, independent of any change in the physical asset. Lenders apply a larger equity buffer to protect themselves against that valuation movement.

Commercial property valuations are fundamentally different from residential appraisals. Instead of anchoring primarily to comparable sales, a commercial valuation places significant weight on the property's income-generating capacity — specifically, the market rent, the contracted rent, and the rate at which the market capitalises that income (the cap rate). A property generating $200,000 per annum in rent, capitalised at 6.5%, produces a valuation of approximately $3.08 million. If the cap rate moves to 7.5% — not because the rent changed, but because buyers are demanding a higher yield — the same income stream produces a valuation of approximately $2.67 million: a 13% decline.

Lease quality is one of the most consequential factors in commercial property lending. A property with a long-term lease to a nationally recognised, investment-grade tenant at or above market rent is a fundamentally different credit proposition to a vacant building or one occupied by a startup on a monthly lease. Lenders use WALE (weighted average lease expiry) as the headline metric: a WALE of 5+ years with a strong tenant typically unlocks higher LVRs and keener pricing. A WALE under 2 years, or a lease that expires within the first year of the loan term, will trigger a credit conversation about how the facility will be serviced if the tenancy rolls or the property becomes vacant.

How Commercial Property Loans Work

Step 1: Application and Indicative Terms

The process begins with an application that includes your business financials, details of the target property (or your existing asset for refinance), any lease documentation, and your proposed transaction structure. Most lenders issue an indicative term sheet at this stage — setting out the proposed LVR, rate, term, and conditions — before committing to formal due diligence costs.

Step 2: Valuation and Due Diligence

The lender will instruct an approved panel valuer to prepare a full commercial valuation of the property. A commercial valuation report typically runs 40–100 pages, includes a capitalisation rate analysis, comparable evidence, lease schedule review, and a special purpose value assessment. You will typically pay for this valuation upfront, regardless of whether the loan proceeds.

Step 3: Credit Assessment

With the valuation in hand, the lender's credit team assesses the deal against their lending policy. For owner-occupied properties, they're primarily asking whether your business generates enough income to service the debt. For investment properties, they're weighing rental income (at a discounted rate, typically 80% of contracted rent) against the loan cost. Construction deals require review of the builder, the development approval, the pre-sales position, and the project feasibility.

Step 4: Formal Approval and Conditions

A formal letter of offer is issued setting out approval conditions — which may include lease renewals, pre-sales thresholds, additional security, or confirmation of specific financial covenants. Conditions need to be satisfied before the lender will proceed to unconditional approval.

Step 5: Settlement

Settlement on a commercial property purchase follows the same broad mechanics as residential — fund transfers, title transfer, and registration of the mortgage — but tends to be more involved, particularly with multiple security properties, corporate trustee structures, or FIRB requirements. Commercial settlements often run on 60–90 day timelines rather than the standard 30 days in residential.

Types of Commercial Property You Can Finance

Office — City Fringe, Suburban, and Strata Titles

Office buildings and strata office suites are among the most commonly financed commercial property types. City-fringe and suburban offices tend to attract stronger lender appetite than CBD towers, where vacancy rates have risen post-pandemic and the buyer pool is more limited. Strata office titles are financed as standard commercial property, with lenders typically comfortable up to 65–70% LVR for well-located, tenanted strata.

Retail — Strip Shops, Shopping Centres, Showrooms

Retail property covers everything from a single strip shop in a local high street to an anchored neighbourhood shopping centre. Lender appetite varies significantly: a well-tenanted strip shop on a 5-year lease with a national retailer is a clean transaction; a vacant retail box in a declining high street is not. Showrooms and large-format retail premises are typically assessed as industrial/commercial hybrids.

Industrial — Warehouses, Factories, Logistics

Industrial property has been the standout performer in Australian commercial real estate over the past five years, driven by e-commerce demand for logistics and last-mile distribution space. Lenders are generally comfortable with industrial transactions, and LVRs can approach 70% for well-located metro industrial. Specialised industrial (cold storage, chemical handling) attracts tighter LVRs given the more limited alternative-use value.

Mixed-Use — Residential Above Commercial

Properties that combine residential apartments above ground-floor commercial space are financed differently depending on the purpose and the proportion of use. If the commercial component is the primary purpose of the loan, a commercial mortgage framework applies. If the residential component dominates, a residential mortgage may cover the transaction with a commercial addendum.

Development Sites and Construction

Vacant development sites and commercial construction projects require a different lending approach: typically a construction loan drawn in progressive tranches against certified construction milestones (substructure, superstructure, lock-up, fit-out, completion). Major banks generally require pre-sales coverage of 100% of their debt before they'll provide a construction facility; non-bank lenders may accept lower pre-sales thresholds in exchange for a higher rate and a lower LVR against GDV. Compare construction business loans →

Rural and Agribusiness Commercial Property

Rural commercial properties — farm holdings used for agribusiness operations, rural processing facilities, and regional commercial assets — occupy a specialist segment. Most major banks have dedicated agribusiness divisions. Valuations are more complex and rely heavily on productivity analysis, water entitlements, and commodity price assumptions. LVRs on rural commercial property typically sit below 55–60%. Compare agriculture business loans →

When a Commercial Property Loan Is the Right Choice

Rates and What Affects Them

Rate is a function of the lender's view of risk across several dimensions:

• LVR — the most powerful single rate driver. Borrowing at 50% LVR will attract substantially sharper pricing than 70% LVR with the same borrower profile.
• Property type and location — metro industrial and suburban office attract better pricing than specialised, rural, or secondary-market properties.
• Lease quality (WALE) — a long WALE with a strong tenant covenant reduces lender risk and supports lower pricing. Short WALE or a single tenant approaching lease expiry is a negative credit factor.
• Owner-occupied vs investment — owner-occupiers typically secure modestly better pricing because vacancy risk is within the borrower's control.
• Loan size — larger loans attract more competitive pricing as the absolute margin compensates for fixed origination costs.
• Lender type — major banks have lower cost of funds for transactions that fit cleanly; non-bank lenders price at a premium for broader criteria and faster turnaround.
• Borrower profile and financials — strong trading history, low leverage, and demonstrable serviceability without relying entirely on rental income all support better pricing.

What to Compare When Choosing

• LVR limit — on a $3M purchase, 70% vs 60% LVR is a $300,000 difference in required equity.
• Interest-only options — IO terms are often limited to 3–5 years in commercial; confirm the IO rate and the P&I revert position.
• Valuation methodology — panel valuers can reach different cap rate conclusions, directly affecting the LVR the lender will apply.
• Prepayment and refinance costs — fixed-rate commercial loans typically carry break costs; variable loans may carry deferred establishment or exit fees.
• Lender appetite for your property type — knowing which lenders actively want your asset class beats blindly chasing the lowest advertised rate.
• Covenant requirements — ICR tests, LVR covenants, and cash sweep provisions can trigger margin increases or recalls if breached.
• Construction drawdown structure (if applicable) — number of drawdowns, certification requirements, and lender inspection timelines.

Be cautious with cross-collateralisation

Some lenders — particularly major banks — will offer improved LVRs or sharper pricing on a commercial property loan if you provide additional security in the form of residential property. Cross-collateralisation gives the lender a stronger overall position, but it also puts your home at risk if the commercial loan defaults, and it makes future refinancing significantly more complex — any new lender taking the commercial loan must first unpick the cross-collateralised structure. Don't agree unless the pricing improvement genuinely justifies it.

Potential Drawbacks

• Lower LVR means a larger deposit. At 65% LVR on a $2M property you need $700,000+ in equity — before stamp duty, legal, valuation, and broker fees.
• Slower approval than other business loans. 4–8 weeks is typical through a major bank. Auction or tight settlement timelines need careful planning.
• Property-type concentration risk. If your business and your investment portfolio are exposed to the same property sector, you carry double exposure to that sector's downturns.
• Valuation volatility. Cap rate movements alone can produce double-digit swings in valuation independent of rental income — and may breach LVR covenants.
• Cross-collateralisation traps. Bundling residential security to improve commercial pricing creates refinancing complexity and broader downside exposure.

Eligibility Snapshot

To be eligible for a commercial property loan in Australia, you'll typically need an active ABN (most lenders require at least 2 years of registration), a minimum of 2 years of business financial statements for major bank assessment (some non-bank and low-doc lenders will consider 1 year or alternative income evidence), a formal property valuation completed by a lender-approved valuer, an LVR within the lender's guidelines for that property type, lease documentation if the property is tenanted or the loan is investment-purpose, and personal guarantees from all directors. Requirements vary by lender, property class, and loan size — see our business loans hub for a broader overview.

Consider alternatives if:

• You're financing fitout, equipment, or assets within the property — use asset finance, not a commercial mortgage
• You're building rather than buying — a construction business loan is purpose-built for staged drawdowns
• Your financials aren't fully documented — a low-doc business loan may be a faster path
• You have multiple commercial facilities you'd like to consolidate into one — business debt consolidation can simplify the picture

Instead, compare: Asset finance, construction business loans, low-doc business loans, or business debt consolidation.

How LoanGorilla Compares Commercial Property Loans

LoanGorilla connects you with 40+ Australian lenders who actively write commercial property loans — major banks, regional banks, and non-bank specialists. Rather than applying to a single lender and accepting whatever terms are offered, you see indicative rates, LVRs, and product features across the market simultaneously. The comparison is free and does not affect your credit score. For complex transactions, our broker network can assess which lenders are most likely to approve your specific property type, transaction size, and borrower profile — before a credit application is lodged.

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