Commercial lending is manually assessed. There is no scorecard that produces an answer, which means the quality of the application materially changes the outcome.
Commercial lending is manually assessed. What lenders actually price on, how appetite differs by asset class, and why deposits are larger and terms shorter.
The practical differences are substantial. Deposits are larger, terms are shorter, and the loan is usually reviewed periodically rather than left alone for thirty years.
This guide covers what lenders price on, how loan-to-value ratios differ by asset type, when lease doc lending is the right route, and what to prepare before you approach anyone.
Six differences change how you should plan the purchase.
| Feature | Residential | Commercial |
|---|---|---|
| Assessment | Largely automated against a scorecard | Manual credit assessment |
| Typical deposit | From 5 per cent with insurance | Commonly 30 per cent or more |
| Loan term | Up to 30 years | Commonly 10 to 15 years |
| Review | None once settled | Periodic review is common |
| Mortgage insurance | Available above 80 per cent | Not available |
| Time to approval | Days to weeks | Weeks, sometimes longer |
The absence of mortgage insurance is the reason deposits are larger. In residential lending an insurer absorbs the risk above eighty per cent. No equivalent exists commercially, so the lender carries it all and prices the loan-to-value ratio accordingly.
The periodic review is the one borrowers forget. A commercial facility may be reviewed on a cycle, and a deterioration in the tenancy or the financials can change the terms at review even when payments have never been missed.
Commercial pricing is set by the risk in the individual deal, which is why two borrowers buying similar buildings receive different offers.
Owner occupied purchases, where your own business will trade from the premises, are often viewed more favourably than investment purchases, because the lender can assess the business directly rather than relying on a tenant it has no relationship with.
Transfer duty applies on commercial purchases and is a substantial cash item, with no first home buyer style concession available. Revenue NSW publishes the method at how to calculate transfer duty.
The commercial lvr by asset class pattern below reflects how readily each asset could be re-let or re-sold. Individual lenders vary, and a strong tenant can move a result upward.
| Asset type | Lender appetite | What drives the outcome |
|---|---|---|
| Industrial and warehouse | Strongest | Broad tenant demand, simple buildings, easy to re-let |
| Standard office | Good | Depends heavily on location and tenancy profile |
| Retail, strip | Moderate | Exposure to the tenant’s trading performance |
| Retail, large format | Variable | Driven by the covenant strength of the tenant |
| Mixed use | Variable | Assessed on the dominant use |
| Specialised, such as childcare or medical | Narrower | Fewer alternative uses if the operator leaves |
| Vacant premises | Narrowest | No income to assess |
Rather than fixating on a published maximum, assume the deposit will be larger than you expect and confirm the position for your specific property and tenant before you make an offer.
Lease doc lending assesses the loan primarily on the rental income from the property rather than on your personal or business financials.
It exists for a specific situation. An investor holding a well-tenanted commercial property, whose own financials are complex or not yet lodged, where the rent comfortably covers the repayment.
Lease doc lending australia wide is a genuine product rather than a workaround, but full documentation is cheaper whenever it is available. Treat it as the answer to a timing or complexity problem, not as a way to avoid providing financials.
Related reading sits in how commercial interest rates are calculated and secured compared with unsecured business lending.
Illustrative only, to show the shape of a commercial purchase rather than to quote terms. Actual requirements vary by lender, asset and tenant.
| Line | Amount or position |
|---|---|
| Purchase price | $1,400,000 |
| Asset type | Industrial unit, western Sydney |
| Tenancy | Established tenant, multi-year lease with options |
| Deposit at 70 per cent lending | $420,000 |
| Loan | $980,000 |
| Transfer duty | Substantial, no concession available |
| Legal, due diligence, valuation | Higher than residential |
| Loan term | Commonly 10 to 15 years |
| Review | Periodic, with updated financials required |
The cash requirement is the planning issue. Deposit plus duty plus costs on a purchase of this size is a considerably larger number than most first-time commercial buyers expect, and the shorter term means the principal repayment is heavier than an equivalent residential loan.
Buyers coming from residential are always surprised twice. Once by the deposit, and again by the repayment, because fifteen years of principal on a commercial loan is a very different monthly figure to thirty.
Paritosh Wadhwani, Director and Principal Broker, APW Finance
Commonly thirty per cent or more of the purchase price, and sometimes considerably more depending on the asset type and tenancy. The reason is that lenders mortgage insurance is not available commercially, so the lender carries the full risk above its lending threshold. Add transfer duty, legal fees and due diligence costs on top of the deposit.
Because the security is less liquid and the income depends on a tenant rather than on an owner’s salary. Ten to fifteen years is common, and the facility is often subject to periodic review rather than being left untouched for the full term. The shorter term means a materially higher principal component in each repayment.
A commercial loan assessed primarily on the rental income the property produces rather than on your personal or business financials. It suits investors holding well-tenanted property whose own financials are complex or not yet lodged. Loan-to-value ratios are lower and pricing carries a loading, so full documentation lending is cheaper whenever it is available.
Substantially. The strength of the tenant, the remaining lease term, the review structure and whether options exist all feed into the assessment. A national tenant on a long lease supports a materially better outcome than a short lease to a small single operator, and vacant premises are the hardest position of all because there is no income to assess.
Yes, and usually more favourably. In an owner occupied purchase the lender can assess your business directly, including its trading history and financials, rather than relying on a tenant it has no relationship with. It will want full business financials, but the overall position is often stronger than an equivalent investment purchase.
Longer than residential, because the assessment is done manually by a credit officer rather than by a scorecard. Several weeks is normal, and complex transactions take longer. The main way to shorten it is to provide a complete application at the outset, including financials, the lease schedule and the entity structure, so the assessor is not waiting on information.
Commercial lending rewards preparation because a person reads the file. A complete application with clear financials and a well-documented tenancy gets a better answer than the same deal presented badly.
Budget for a larger deposit than residential, a shorter term, and duty with no concession.
Read more about commercial property finance or business lending. You can also read how chattel mortgages work or how approval timeframes compare.
Ask us to review your commercial purchase.
Paritosh Wadhwani | Director and Principal Broker, APW Finance
Member of the Finance Brokers Association of Australia (FBAA). Arranging residential, commercial and specialist lending for Sydney clients across a panel of more than 50 lenders.
APW Finance Pty Ltd, 304/20a Lexington Drive, Bella Vista NSW 2153. Email: info@apwfinance.com. Phone: +61 447 959 546.
ACN 620 646 479 | ABN 79 620 646 479
This guide is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial or credit advice. Lending criteria, interest rates, duty thresholds and government schemes change, and every application is subject to lender approval. Consider whether this information suits your circumstances and seek independent advice before acting. Figures quoted are current at the date below and should be confirmed before you rely on them. Last reviewed: October 2026.
APW Finance Pty Ltd delivers expert lending solutions with personalised service, empowering clients across residential, commercial, and business sectors.