The Complete Guide to Commercial Property Loans

Commercial property loans finance a range of asset types: office buildings (CBD and suburban), retail spaces (shop fronts, shopping centres), industrial properties (warehouses, factories), special purpose properties (childcare centres, medical suites, petrol stations, pubs), and mixed-use developments. Each property type has different lending criteria, with standard assets (office, retail, warehouse) attracting better terms than specialised properties.

Full documentation loans: 6.00-8.50% p.a. Low documentation loans: 7.89-9.29% p.a. SMSF commercial property: from 6.24% p.a. Rates vary based on lender, LVR, property type, tenant quality, and borrower strength. The RBA cash rate reduction to 3.60% in 2025 has contributed to easing rate pressure. Premium rates are available for LVR below 60% and strong credit profiles.

Major banks: up to 65% standard, 75% for loans under $1M with strong applications. Non-bank lenders: up to 80% for well-credentialed borrowers. Specialist lenders: up to 82% (limited availability). SMSF loans: 70-80% maximum (30% deposit required). Lower LVR means better rates and more lender options. Investment properties typically have stricter requirements than owner-occupier loans.

Full doc loans require: 2-3 years financial statements, 2 years tax returns, cash flow projections, management accounts, ABN/business registration, property valuation, contract of sale, rental income statements, and building reports. Turnaround: 4-8 weeks. Low doc alternatives accept: 6-12 months BAS, accountant's letter, 6 months bank statements, and self-declared income. Turnaround: 3-6 weeks.

The 5 Cs of credit: Character (credit history, management experience), Capacity (ability to repay, cash flow analysis), Capital (deposit, business assets), Collateral (property and other security), and Conditions (loan purpose, economic outlook). Key factors: property location (CBD/metro preferred), tenant quality and lease terms, property condition, and industry type.

Major banks offer lowest rates (6-8.5% p.a.), established processes, and relationship benefits. However, they have strict criteria, extensive documentation requirements, and longer approval times. Non-bank lenders (16% of commercial real estate debt) offer faster approvals, flexible criteria, and low-doc options, but at higher rates (7-12% p.a.). Private lenders provide fastest access for urgent needs at premium pricing.

Terms range from 5-30 years (typically 15-25 years). Interest-only periods up to 5-7 years available. Standard commercial property requires 20-30% deposit. Variable and fixed rate options available. Line of credit facilities for equity access. Consider principal and interest vs interest-only based on your investment strategy.

Owner-occupier loans may attract slightly better rates and terms as the borrower has operational involvement. Investment loans assess rental income, tenant covenant strength, and market rental levels. Vacant properties can be financed but with adjusted terms. Lenders assess sustainable rental income against loan servicing requirements.