Commercial Property Loans in Sydney: What Lenders Look For
Most lenders lend up to about 65–70% of a standard commercial property's value. Some non-banks go up to 80% for eligible borrowers and properties, so a deposit of 20–35% plus costs is common. These are typical lender policies, not a promise of what any lender will offer you.
Sources, as published at 23 October 2026: Lendera; Macquarie commercial broker lending guide; Bluestone; MA Money. Lender policies change often.
This guide is for Sydney business owners buying their own premises and investors buying leased commercial property. It covers deposits and LVR, how servicing is tested, which property factors matter, loan structures, and the costs beyond the deposit. For the wider picture of business lending, start with our commercial finance guide.
How commercial property loans differ from home loans
Commercial property loans usually need a larger deposit, are assessed on business or rental income, and often have shorter terms and periodic reviews. A home loan is priced mainly on your personal income and the home's value. A commercial loan also depends on the property's use, its lease and tenant, and the strength of the business or investor behind it. Most commercial lending is not regulated as consumer credit, so terms, fees and covenants vary more between lenders.
How much deposit do you need?
For a standard commercial property, expect to contribute about 30–35% of the value plus costs at most banks. Specialist and non-bank lenders may lend more against some properties and less against others.
| Property type | Typical maximum LVR | Implied deposit (before costs) |
|---|---|---|
| Standard commercial (office, retail, industrial) | 65–70% | 30–35% |
| Specialist property (e.g. medical, childcare) | 70–75% | 25–30% |
| Vacant land or development sites | 50–60% | 40–50% |
Source: Lendera, Commercial Property Loans Australia, accessed 23 October 2026. Typical ranges only; individual lenders differ.
Lender examples, as published at 23 October 2026: Macquarie's commercial broker guide caps LVR at 70%. Bluestone and MA Money advertise up to 80% LVR for eligible borrowers and properties. Check each lender's current policy before relying on these figures.
Owner-occupied vs investment
An owner-occupied loan is usually serviced from the profit of the business that trades from the property. An investment loan is serviced mainly from the rent paid by tenants. For an owner-occupier, the lender focuses on the business's financials and trading history. For an investor, the lender focuses on the lease, the tenant's quality and how long the income is secured. Some lenders treat the two differently on LVR and pricing. For a purchase of your own premises, see buy business premises finance.
How lenders assess servicing
Lenders test whether income comfortably covers the loan's interest, usually through an interest cover ratio (ICR). Macquarie's commercial broker guide lists ICR requirements of 1.1x to 1.3x.
Interest cover is the property's net income divided by the annual interest cost. Here is a simple, hypothetical illustration of the arithmetic (not a quote or a lender's actual assessment):
- Net rental income after outgoings: $130,000 a year
- Annual interest on the proposed loan, at the lender's assessment rate: $100,000
- Interest cover = $130,000 ÷ $100,000 = 1.3x
If the lender's minimum was 1.3x, this loan would sit right at the limit. A lower loan amount, a higher rent or a lower assessment rate would increase the ratio. Lenders usually test at an assessment rate above the actual rate, and each lender defines "net income" in its own way. Where business income services the loan, lenders look at earnings across the business and all of its debts, not only the property.
Property factors: location, use, lease, tenant
The property itself shapes how much a lender will lend. Location, use, lease length and tenant quality all affect LVR and pricing.
- Location. Established metropolitan locations are generally viewed more favourably than regional or fringe areas.
- Use. Offices, warehouses and shops are standard. Specialist uses such as medical suites, childcare or service stations can attract different policies.
- Lease length and WALE. The weighted average lease expiry (WALE) shows how long rental income is contracted. A short remaining lease can reduce what a lender will offer.
- Tenant quality. A national or government tenant on a long lease is viewed differently from a new small business on a short lease.
- Vacancy. A vacant property has no rental income, so lenders may need the loan serviced from elsewhere.
- Vacant land and development sites. These usually attract the lowest LVRs. See property development finance.
In Greater Sydney, common property types include strata industrial and warehouse units, office suites and medical suites. Each can be assessed differently depending on size, zoning and the strata scheme.
Loan structures: P&I, interest only, terms, reviews and covenants
Commercial property loans can be principal and interest or interest only, fixed or variable, and are often written for shorter terms with periodic reviews.
- Principal and interest vs interest only. Interest-only periods reduce repayments but do not reduce the loan balance.
- Terms. Some lenders offer terms of up to 30 years (for example Bluestone, as published at 23 October 2026). Others write shorter facilities that are reviewed and renewed.
- Bank bill business loans. Some banks price larger facilities as a margin over a benchmark such as BBSY. See BBSY explained.
- Reviews and covenants. Facilities can include annual reviews and covenants such as minimum interest cover or maximum LVR. Breaching one can let the lender reprice or require changes.
Full-doc vs alt-doc commercial loans
Full-doc loans use financial statements and tax returns. Alt-doc loans use alternatives such as BAS, bank statements or an accountant's letter, usually with a lower maximum LVR and a higher cost. Alt-doc can suit self-employed borrowers whose recent financials do not yet reflect current trading. Policies vary widely between lenders.
Using home equity as extra security, and the risk to your home
Offering your home as extra security can reduce the cash deposit needed, but if the loan is not repaid, the lender can look to your home. Securing several properties to one lender (cross-collateralisation) can also make it harder to sell or refinance one property on its own. Before using your home as security, get independent legal and financial advice, and talk to your accountant about the tax consequences. This is general information only and is not personal advice.
Costs beyond the deposit
Budget for stamp duty, valuation, legal fees, lender fees and the GST position on top of the deposit.
- Transfer (stamp) duty. Payable in NSW on most property purchases. Check the current rates and calculator at Revenue NSW.
- Valuation fees. Lenders require a valuation from their own panel valuer, usually at your cost.
- Legal fees. Your own conveyancing and the lender's legal costs.
- Lender fees. Establishment and ongoing facility fees.
- GST. Commercial property purchases may involve GST depending on how the sale is structured. Check with your accountant and the ATO.
Can you use an SMSF to buy commercial property?
An SMSF may be able to borrow to buy commercial property through a limited recourse borrowing arrangement, but strict rules apply. Get advice from a licensed financial adviser and your accountant before proceeding. Glenclair Financial can help with the lending side once you have that advice. See SMSF commercial property loans.
Step by step: from enquiry to settlement
- Initial conversation. We discuss the property, your purpose and your financial position.
- Documents. You provide financials or alt-doc evidence, the contract or property details, and any lease schedule.
- Lender comparison. We compare suitable lenders on LVR, servicing policy, structure and total cost.
- Application. We prepare and submit the application to your chosen lender.
- Valuation and credit assessment. The lender orders a valuation and assesses the file.
- Offer and documents. If approved, the lender issues a letter of offer and loan documents. Review them with your lawyer.
- Settlement. Funds are advanced and the mortgage is registered.
Timeframes depend on the lender, the valuation and how complete your documents are. We will not promise a timeframe, but we will tell you what each lender needs.
Frequently asked questions
How much deposit do I need for a commercial property?
Typically 30–35% of the property's value at major lenders, plus purchase costs such as stamp duty. Some non-bank lenders lend up to 80% LVR for eligible borrowers and properties. The deposit you need depends on the property type, its location and your financial position.
Can I get 80% LVR on commercial property?
Some lenders advertise up to 80% LVR for eligible properties and borrowers, for example Bluestone and MA Money. Many banks cap standard commercial property at 65–70%. Whether 80% is available depends on the property, the borrower and the lender's current policy.
What is interest cover?
Interest cover is the ratio of a property's net income to the interest cost of the loan. Lenders set a minimum. For example, Macquarie's commercial broker lending guide lists interest cover requirements of 1.1x to 1.3x.
Can I buy commercial property through my SMSF?
Possibly, through a limited recourse borrowing arrangement (LRBA). These involve strict superannuation and tax rules, so get advice from a licensed financial adviser and your accountant before you proceed.
How long are commercial property loan terms?
Terms vary by lender. Some offer terms of up to 30 years, such as Bluestone, while others offer shorter terms with periodic reviews of the facility.