How Commercial Property Loans Work in South East Melbourne, The Broker's Guide
Buying commercial property is one of the smartest moves a business owner can make, and one of the least understood when it comes to how lenders actually assess it. Whether you're a sole trader buying your first premises, a company director looking to own the building your business occupies, or an investor adding a commercial asset to your portfolio, the lending rules here are genuinely different from a residential mortgage.
The gap between what you expect and what a lender will offer is wider in commercial lending than almost anywhere else in finance. Deposit requirements are higher, assessment is more complex, and the lender's panel matters more, because far fewer lenders are active in this space than in residential. Getting in front of the right one at the right time changes the outcome materially.
Our team helps business owners and investors across South East Melbourne work through the commercial property loan side of it, comparing across 60+ lenders to find the structure that suits your situation.
Key takeaways
- Commercial loans typically require a 25–35% deposit, higher than residential.
- Lenders assess both the property's income and your business cash flow.
- Owner-occupiers are assessed more favourably than pure investors in most cases.
Are commercial property loans harder to get than home loans?
Yes, commercial property finance is a distinct lending category and the bar is higher on almost every measure. Deposits are larger, interest rates are priced above residential equivalents, and lenders assess the deal on both the property's income and your business's ability to service the debt. The panel of lenders willing to write commercial loans is also narrower, which is why lender access matters more here than in residential lending.
How does commercial property lending actually work?
Commercial lending is assessed differently from a home loan because the lender is taking on two layers of risk: the property itself and the borrower's business. Where a residential lender focuses almost entirely on your personal income and the home's value, a commercial lender also looks at how the property performs as an asset and whether your business can carry the debt over time.
What lenders actually look at:
- › Property income: the rent the property generates, or a valuer's estimate of market rent, assessed at 70–80% of gross to account for vacancy and costs.
- › Debt-service coverage: whether the property's income covers its loan repayments by an acceptable margin, typically reviewed annually.
- › Business financials: two to three years of trading accounts, BAS statements, and often a business plan for a newer entity.
- › Lease quality: the term remaining on any existing lease, the tenant's covenant strength, and whether the lease is arms-length or related-party.
- › Asset class and location: office, retail and industrial assets in established metro corridors like South East Melbourne are assessed more readily than specialist or regional assets.
"What surprises most business owners is that a commercial loan isn't just about what the property is worth. We see applicants come in with strong businesses and solid properties and still get knocked back because the lender's debt-service ratio didn't stack up. The assessment is a two-sided test, and both sides have to pass."
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What do you need to qualify for a commercial property loan?
Qualification requirements are more demanding than residential, and they differ depending on whether you're buying to occupy, buying as an investor, or purchasing through a corporate or trust structure. Getting the documentation right before you approach a lender saves significant time.
What most lenders will want to see:
- › Business financials: two to three years of tax returns and financial statements for the trading entity, plus personal returns for directors or guarantors.
- › BAS statements: typically the last four quarters, demonstrating consistent turnover.
- › Existing lease or rental income: a current lease with a creditworthy tenant strengthens the application materially; a vacancy or short lease remaining is a risk flag.
- › Personal guarantees: most commercial lenders require directors or principals to guarantee the loan personally, regardless of the borrowing entity.
- › Deposit and equity: typically 25–35% of the purchase price for standard commercial assets; specialist or vacant assets usually require more.
What does a commercial property loan cost in South East Melbourne?
The deposit is the first and often largest cost difference from a residential loan. For standard commercial assets — office, retail or industrial — most lenders want 25–35% of the purchase price, meaning a loan-to-value ratio of 65–75%. Strong owner-occupier applications through some specialist lenders can reach 80% LVR, but that is the ceiling, not the norm. For rural, regional or specialist-use assets the LVR steps down further, to around 55–65%.
Rates are priced above residential and are not published here as product rates — they vary by lender, asset class, lease strength and borrower profile, and they move. What matters more than the headline rate is the structure: loan term, whether the facility is interest-only for a period, annual review covenants, and whether your rate is fixed or variable. In South East Melbourne's established commercial corridors around St Kilda Road, Bay Street in Port Melbourne and Moorabbin's industrial area, the asset class and tenant quality tend to support more competitive pricing than regional or specialist assets would.
Ongoing costs specific to commercial lending include annual reviews, valuation fees at each review, and line fees on some facility types. These are not present on a standard residential mortgage and are worth factoring into the holding cost from day one.
The options worth weighing:
- › Owner-occupier commercial loan: 20–25% deposit possible at some lenders · strongest credit profile · business occupancy supports the application · annual review common
- › Investment commercial loan: 25–35% deposit typical · assessed on lease income and tenant quality · WALE and remaining term are scrutinised · fewer lenders active
- › SMSF commercial property loan: 30–40% deposit · business real property only · sole purpose test applies · specialist lender panel, lower LVR ceiling
| Get in touch Need help with a commercial property loan? We're a local team who understand how lenders actually assess your situation, not just your rate. We'll compare your options across 60+ lenders to find the right fit.
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How long does it take to get a commercial loan approved?
Commercial approvals take longer than residential, and the timeline varies more. A straightforward owner-occupier application with clean financials, a sitting tenant on a long lease, and a standard asset class can move through in three to six weeks. An application involving a complex structure, a shorter lease, a vacant property or a specialist asset class typically takes eight to twelve weeks, and sometimes longer if additional valuation or legal work is required.
The main causes of delay are incomplete documentation at the outset, a valuation that comes in below the contract price, a lender requesting additional information mid-assessment, or legal complications with the lease or title. Getting the documentation package right before you approach any lender is the single most effective way to compress the timeline.
When does buying commercial property not make sense?
Not every business is better off owning its premises. If your business is growing quickly and you expect to need significantly more or less space within three to five years, tying capital into a property that may not suit your future size is a constraint, not an asset. The flexibility of leasing has a real value that a property purchase does not replace.
The deposit requirement also competes directly with business working capital. For a business at an earlier stage of growth, a 25–35% deposit pulled from the operation can slow growth more than the property returns. The arithmetic changes once the business is stable and cash-generative enough to absorb the capital without affecting operations. For most owner-occupiers buying in South East Melbourne, that tipping point is usually the moment the business is both profitable and not dependent on that capital for its next stage of growth.
How to buy commercial property in South East Melbourne, step by step
Step 1: Talk to us
We start by working out whether commercial finance suits your situation — owner-occupier, investment or SMSF — and which lenders on our panel are worth approaching for your asset type and profile.
Step 2: Prepare your financial picture
We help you assemble the documentation package: business financials, BAS, lease documents and personal returns. Getting this right before any lender sees it is what keeps the timeline short.
Step 3: Structure and submit the application
We match the application to the lender best suited to your asset class and borrowing structure, then manage the submission and any requests for additional information through the assessment.
Step 4: Valuation to settlement
Once conditional approval is issued we co-ordinate the commercial valuation, support any lender conditions, and work with your solicitor through to settlement.
"Where an owner-occupier is buying their business premises, we'd usually push hard to explore lenders who'll consider 80% LVR before defaulting to the 65–70% standard. The difference in deposit is often six figures. Not every lender on our panel writes commercial, so knowing which ones do — and which ones are active at higher LVRs — is what makes the search worth doing rather than just walking into your own bank."
Evelyn Clark · Director, Mortgage & Finance Broker · Chat to Evelyn →
What goes wrong when people apply for commercial loans?
Where applications lose ground:
- › Incomplete financials: a lender who receives two years of returns but no BAS, or personal returns without the business accounts, will pause the assessment and request them — adding weeks to the timeline on every application.
- › Short or related-party lease: a property leased back to the owner's own entity at below-market rent, or with less than two years remaining on the term, is a red flag for most lenders and materially narrows the panel willing to consider it.
- › Applying to a lender that doesn't write commercial: many residential lenders have no active commercial book. An application placed with the wrong lender produces a decline that sits on the credit file, which then needs to be explained to the next lender.
- › Underestimating the deposit: buyers who budget for a residential-sized deposit and then discover the lender wants 30–35% of a $1.5m asset face a significant shortfall. Knowing the realistic LVR before you sign a contract avoids the most damaging outcome in commercial lending.
Source: APRA.
Frequently Asked Questions
What deposit do I need for a commercial property loan in South East Melbourne?
Most lenders want 25–35% for a standard commercial asset, meaning an LVR of 65–75%. Strong owner-occupier applications can reach 80% LVR at some specialist lenders, but that requires a clean financial profile and a well-tenanted property.
Can I buy commercial property through my SMSF?
Yes, SMSF lending for business real property remains available and is unaffected by the 2026 residential borrowing ban. The property must meet the sole purpose test and cannot be occupied by a related party on non-commercial terms.
Is an owner-occupier or investment commercial loan easier to get approved?
Owner-occupier applications are assessed more favourably by most lenders because the business occupying the premises reduces the vacancy risk. Investment applications lean more heavily on lease quality and the tenant's financial strength.
How long do commercial property loans run for?
Commercial loan terms are shorter than residential, commonly 15–25 years, and many lenders conduct annual reviews of the facility. Some facilities are structured with interest-only periods and a balloon repayment at the end of the term.
Does negative gearing apply to commercial property after the 2026 changes?
Yes. The negative gearing restriction that commences 1 July 2027 applies to residential property only. Commercial property, shares and other income-producing assets are not affected by the change. Speak to your accountant about your specific position.
Is a mortgage broker or a bank better for a commercial loan?
A mortgage broker, every time. Many residential lenders have no active commercial book, so applying without knowing which lenders actually write commercial loans risks a decline that affects your credit file before the right lender ever sees your application.
Your Next Steps
The right commercial property loan in South East Melbourne depends on your asset class, your business profile and how the lender reads both together. Getting those three things aligned — before you sign a contract — is what determines whether the deal proceeds on your terms or someone else's.
The right lender for a commercial property loan depends on your situation, and that's a conversation worth having. Talk to the EverLend team or call 03 7036 3356, and we'll compare your options across 60+ lenders.
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External Resources
EverLend · South East Melbourne · Ever Lend Pty Ltd (ACN 625 080 515), authorised under Australian Credit Licence 517192 · General information only - this article does not constitute financial advice. Please consider your own circumstances and seek professional advice before making any financial decisions.
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