Types of Commercial Property Loans Available in Australia: A Mortgage Broker’s Complete Guide
Many types of commercial property loans are available to property developers and investors in Australia who are seeking loans for property construction, renovation projects, or any other profit-generating commercial property venture.
As these loans represent a higher degree of risk for lenders, and usually involve larger sums of money than residential loans, qualifying for one can be more difficult to achieve than a residential property loan.
Due to the levels of risk involved, the various types of such loans available in the Australian market, attract a higher rate of interest than residential property loans.
Additionally, larger deposits, usually 20% -30% percent, are required.
Lastly, with the different types of commercial property loans available in the market, finding a loan that suits your requirements, can be difficult without the assistance of a commercial loan specialist.
A detailed study of your potential proposed development or commercial investment property purchase, commercial experience, collateral offered as security, and financial history can help your mortgage broker to determine the type of loan most appropriate for you.
The different types of commercial property loans available in the Australian market are discussed below.
1) Commercial Property Loans – Property Secured Loans
When it comes to commercially secured loans, borrowers can use commercial property they already own as financial collateral, to secure finances for their next commercial property play.
Commercially secured loans offer a Loan to Value Ratio (LVR) of around 65-80%, depending on the value of your current assets. Some major banks take it a step further and offer LVRs over 80%, but only on loans secured by additional residential security.
2) Commercial Property Loans secured by Residential property
As the name suggests, borrowers can use residential property as collateral to obtain residentially secured commercial property loans.
However, when it comes to residentially secured loans, there are quite a few rules and regulations to be followed, which is why you should consider engaging the services of a mortgage expert if you intend to apply for this type of loan.
With residential security you can get an LVR of as much as 80% from some lenders.
You can also combine commercial and residential properties in a security bundle to acquire a commercial property loan.
Using this type of loan, providing you have an acceptable level of equity in the residential property, you can purchase commercial assets such as resort accommodation properties that lenders don’t like to accept as loan security.
3) SMSF Loans
Self-Managed Superannuation Fund Commercial Loans are no longer widely available from major banks due to the high levels of regulation and compliance applicable.
However, they are widely available from Second Tier lenders. SMSF lending has become a very competitive field with lenders offering LVR up to 80% on commercial properties. Interest rates are generally higher than for residential loans.
The most common use of this type of commercial property loan is for business owners to use their SMSF to purchase a commercial property, which their business will then rent from the SMSF on commercial terms.
4) Low Doc Loans
Low doc commercial property loans can be taken out to purchase shops, factories or offices. A deposit of twenty percent is required. Interest rates are normally 1%-3% higher than residential rates. Application fees generally apply and are a percentage of the total loan amount.
All commercial properties will require a property valuation paid for by the borrower, which for commercial property valuations, the costs are based on the value of the property.
Low Doc loans are extremely popular as the borrowers need very little paperwork to get their loans approved. Additionally, these loans usually offer swift approvals.
5) No Doc Loans
A no-documentation commercial property loan doesn’t require the borrower to provide standard income documentation. Lenders primarily rely on the value and sale-ability of the security of the relevant commercial property.
You can borrow up to 70% of the property value depending on the location, without providing any evidence of your personal income.
You will need to sign a declaration confirming that you are aware of the repayments and are able to afford them on an ongoing basis.
Investment properties are preferred by most lenders, and the types of properties usually funded are commonly in demand properties such as offices, warehouses, factories or retail properties located in capital and regional cities
Generally, self-employed borrowers may only qualify for a no doc commercial loan, and can succeed in obtaining same even with a bad credit history. Rates are higher and reflect the high credit risk.
No Doc loans are a boon for people with non-traditional income or complicated tax returns.
In addition, the no-doc loans approval process is quick, with some having turnaround times of less than 24 hours.
6) Commercial Property Loans – Line of Credit Loans
Line of credit commercial property loans provide you with funding up to a predetermined limit, and you only pay interest on the funds you draw down against that limit.
These lines of credit are based on the equity you hold in the commercial asset you are providing as security for the loan.
Line of Credit Loans are particularly useful if you are remodeling or renovating a current premises owned by your business, or expanding through the construction of additional premises.
Conclusion
There are at least six different types of commercial property loans available to borrowers in Australia.
Commercial Development Loans for large scale commercial development are a separate type of commercial lending and need to be discussed separately with your lender or mortgage broker.
To arrive at a suitable solution to your commercial property funding requirements, you need a thorough understanding of the commercial property loan market, and the loan products available.
Call the experts at Oz Lend (your local mortgage broker) to receive professional advice and assistance in all matters relating to different types of commercial property loans that may work for you.
As one of the established players in the Melbourne mortgage broking industry, with wide experience in all types of lending solutions, we can help you make the right decisions.
Call us on 1300 438 669 to discuss your commercial property loan needs and get the ball rolling.
Property developers and investors across Australia have plenty of commercial loan options when they’re looking to fund construction projects, renovations, or other money-making ventures. But let’s be honest – figuring out which loan suits your needs isn’t exactly straightforward without getting some expert help from a seasoned mortgage broker.
Here’s the thing: commercial loans are riskier for banks and usually involve much bigger amounts than your typical home loan. That means getting approved can be pretty tough. A good mortgage broker who knows the ins and outs of commercial lending can be a game-changer, helping you cut through all the options and land the right deal for your situation.
Why You Need a Mortgage Broker for Commercial Property Loans
Commercial property loans attract higher interest rates than residential loans due to increased risk levels. Larger deposits (usually 20%-30%) are also required. The variety of loan types available can make selection difficult without specialist assistance.
A detailed assessment by your mortgage broker of your proposed development, commercial experience, security offered, and financial history helps determine the most appropriate loan type for your specific needs.
6 Main Types of Commercial Property Loans in Australia
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Commercial Property-Secured Loans
These types of loans allow borrowers to use existing commercial property as collateral for their next commercial venture.
Core Features:
- Loan-to-Value Ratio (LVR): 65-80% depending on current asset values
- Some major banks offer LVRs over 80% with additional residential security
- Ideal for investors with existing commercial property portfolios
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Residential Property-Secured Commercial Loans
If you intend to apply for this type of loan, then make sure you are considering to partner with a mortgage broker. These loans involve complex rules and regulations that require professional navigation.
Key Benefits:
- Use residential property as collateral for commercial purchases
- LVR up to 80% available from select lenders
- Can combine commercial and residential properties in security bundles
- Enables the purchase of assets like resort accommodation that lenders typically avoid
Mortgage Broker Tip: With acceptable residential equity, you can access commercial opportunities otherwise unavailable through traditional lending.
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SMSF (Self-Managed Superannuation Fund) Loans
Major banks no longer widely offer these due to high regulation and compliance requirements.
Current Market Insights:
- Available through second-tier lenders
- Competitive field with LVRs up to 80% on commercial properties
- Interest rates are generally higher than residential loans
Most common use: Business owners purchasing commercial property that their business rents from their SMSF.
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Low Documentation Loans
Quick processing and minimal paperwork requirements make these popular among self-employed borrowers.
Loan Characteristics:
- Available for shops, factories, and offices
- 20% deposit required
- Interest rates are typically 1%-3% higher than residential rates
- Application fees apply (percentage of loan amount)
- Commercial property valuation required (borrower pays)
- Swift approval processes
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No Documentation Loans
Perfect for borrowers with non-traditional income or complex tax situations.
Key Features:
- No standard income documentation required
- Borrow up to 70% of property value (location dependent)
- Declaration of repayment capacity required
- Preferred properties: offices, warehouses, factories, retail in capital/regional cities
- Quick approval (some under 24 hours)
- Higher rates reflecting increased credit risk
Ideal Candidates: Self-employed borrowers, even those with challenging credit histories.
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Line of Credit Commercial Loans
Line of Credit Loans are particularly useful for:
- Remodelling or renovating existing business premises
- Expanding through additional construction
- Flexible funding for ongoing commercial projects
Benefits:
- Access funds up to a predetermined limit
- Pay interest only on drawn amounts
- Based on equity in security property
- Perfect for phased development projects
How the Right Mortgage Broker Helps with Selection
Choosing the appropriate commercial loan from these six main types requires:
- Market Knowledge: Understanding current lender policies and rates
- Product Expertise: Knowing which loan suits your specific situation
- Relationship Access: Connections with multiple lenders, including second-tier options
- Regulatory Compliance: Ensuring all documentation meets requirements
- Risk Assessment: Evaluating your financial position for optimal outcomes
A skilled mortgage broker can do these for you.
Moreover, large-scale commercial development loans represent a separate lending category requiring specialised discussion with your mortgage broker.
Conclusion
There are at least six different types of commercial property loans available to borrowers in Australia.
To arrive at a suitable solution to your commercial property funding requirements, you need a thorough understanding of the commercial property loan market and the loan products available.
Call the experts at Oz Lend, your local mortgage broker, to receive professional advice and assistance in all matters relating to different types of commercial property loans that may work for you.
As one of the established players in the Melbourne mortgage broking industry, with wide experience in all types of lending solutions, we can help you make the right decisions.
Call us on 1300 438 669 to discuss your commercial property loan needs and get the ball rolling.
FAQ's
If you have a clear purpose for the property and a realistic plan to service the loan, you’re already on the right track. We usually help clients test readiness before they speak to any lender. That early clarity avoids wasted applications and unnecessary stress.
Yes, significantly. Different lenders view companies, trusts, partnerships, and sole traders very differently. At Oz Lend, we structure loans to suit how you operate. We do not force you into a rigid box.
Absolutely, and it’s often smarter to do so. Understanding your borrowing range early gives you confidence when negotiating. It also prevents surprises once contracts are on the table.
Timeframes vary based on complexity, not just lender speed. Well-prepared applications move faster than rushed ones. We focus on reducing back-and-forth to keep momentum strong.
Some are, some aren’t. This depends heavily on how the loan is structured at the start. That’s why future flexibility is always part of our planning.
Yes. Most lenders require a 20–30% deposit, depending on the property type, location, and your financial profile.
Yes. A mortgage broker works with a wide panel of lenders, including second-tier and specialist lenders not available to the public.
Absolutely. Offices, warehouses, and retail properties are generally preferred, while specialised assets may face stricter lending terms.
Yes. Refinancing can help improve cash flow, release equity, or secure better terms, subject to valuation and lender policy.
In many cases, yes. Interest-only periods are often used to manage cash flow, especially during development or early ownership stages.
