Commercial Mortgage Broker Australia

Why choose Rate Challenge as your commercial mortgage broker

In commercial property, the lender isn’t only pricing the borrower — they’re pricing the property’s income quality and the risk of that income changing. That’s why the same borrower can see wildly different pricing and structure depending on WALE, tenant strength, rent review clauses, vacancy risk, and the lender’s appetite for the asset type. Our job is to package your deal so those factors are presented clearly, stress-tested properly, and matched to lenders who actually like the profile.

We start with cash flow (DSCR), then work backwards into security (LVR) and lease risk. That sounds simple, but most commercial “surprises” happen when one of those three is misunderstood. Example: the borrower assumes a 70% LVR is available because the property is “good,” then a shorter WALE, unusual rent review wording, or a specialised use causes the valuer or credit team to treat the security more conservatively. That can force a larger deposit or additional security late in the process. We work to prevent that.

Next is structure — because structure decides flexibility. We compare stand-alone vs cross-collateralised security, entity choices (company, trust, individual) and loan features that matter in the real world: interest-only windows for fit-out/capex, offset/redraw availability, review cycles, reporting requirements, and how covenants are measured. The goal is a deal that not only settles, but stays comfortable at annual review time.

Finally, we keep lenders honest after settlement. If your tenant profile improves, WALE extends, or your debt reduces faster than expected, we’ll look at repricing or restructure options. Commercial lending is often a “relationship product,” but it shouldn’t be a “set and forget” product — especially when interest rates and bank appetites shift.

What we can help finance

Most Australian commercial lenders have clear preferences. When your deal fits the “preferred box,” outcomes are faster and pricing is sharper. When it’s outside the box, the right lender match and file packaging matters even more.

• Industrial: warehouses, factories, small strata industrial units, logistics and storage.
• Retail: neighbourhood shops, strip retail, service retail (hair/beauty, convenience, small food).
• Office: standard office stock and owner-occupied office premises.
• Medical & allied health: clinics and medical suites (tenant quality usually matters here).
• Hospitality: cafés/restaurants (often higher perceived risk; lease and trading history matter).
• Childcare: strong rent covenants can help, but policy varies by lender.
• Mixed-use: where there’s a clear split and acceptable residential/commercial ratio (policy differs).

Commercial deposit & LVR guide (by asset type)

The deposit you’ll need for commercial property is usually expressed as an LVR (Loan-to-Value Ratio). The headline ranges below are indicative only — real outcomes depend on location, lease quality, property condition, tenant strength, and borrower profile. If you’re not sure where you sit, we’ll map lender options and show the cash flow impact at each LVR.

Want to sanity-check your numbers quickly? Use our Commercial Property Calculator to estimate repayments and cash flow, then we’ll layer DSCR and covenant sensitivity on top. If you’re comparing commercial against a broader portfolio plan, our Mortgage Repayment Calculator is a handy baseline (commercial facilities can have different pricing and fee structures).

DSCR explained (and how lenders really use it)

Debt Service Coverage Ratio (DSCR) is one of the most important measures in commercial property lending. In plain English, DSCR asks: “Does the property (or the borrower’s income) generate enough cash flow to comfortably cover the loan repayments?” Many lenders assess DSCR using a stressed interest rate (higher than the current rate) to allow for rate movements and risk.

DSCR is commonly calculated as net operating income divided by debt service. The “net operating income” piece can be interpreted differently by lenders, depending on how they treat outgoings, vacancy assumptions, management costs, and lease terms. That’s why two lenders can produce two different DSCR outcomes on the same property.

What a “safe” DSCR looks like

DSCR requirements vary by lender, asset and lease profile. A typical band is often around 1.20x–1.50x on stressed rates. Lower may be accepted in strong cases (excellent tenant, longer WALE, mainstream asset), while higher may be required for short WALE, secondary locations, or specialised property.

How to improve DSCR (without pretending)

• Reduce the loan size (lower LVR) — fewer repayments increases coverage.
• Improve lease strength — longer lease term, strong tenant covenant, clear review mechanics.
• Reduce vacancy risk — demonstrate demand, comparable lettings, and credible leasing strategy.
• Structure repayments — interest-only periods (where appropriate) can help early years, but lenders will test the step-up.
• Clarify outgoings — make sure lease clauses and net/gross rent are clear so income is assessed correctly.

If you’d like a deeper breakdown, our Commercial Property Finance Guide walks through covenants, DSCR, and how different lenders interpret risk. The goal is not to “game” DSCR — it’s to build a facility that remains safe when rates move or a tenant change occurs.

Lease checklist (what makes a lease “bankable”)

In commercial property, the lease is part of the security. A “bankable lease” doesn’t mean “perfect” — it means the lender can understand the income, rely on its enforceability, and believe it will continue under reasonable conditions. Before you sign contracts, it’s worth checking the following:

• WALE: length to next expiry, and whether options are likely to be exercised.
• Tenant strength: who is the tenant, how stable is the business, and is there a guarantee/bond?
• Rent review mechanics: CPI, fixed %, market review, ratchets — and whether the wording is lender-friendly.
• Outgoings: net vs gross rent, what outgoings the tenant pays, and any unusual clauses.
• Incentives: rent-free periods, fit-out contributions, or unusual incentives that affect net income.
• Make-good: who pays for reinstatement and how that impacts tenant incentives to stay.
• Permitted use: the use class should match lender policy and valuation evidence.
• Assignment/subletting: clarity on tenant replacement and landlord approval process.

If you’re buying owner-occupied premises, the “lease” might effectively be your own operating business. Lenders will look at trading history, profitability and the realism of rent assumptions. We’ll help you frame the file so the lender understands the operating story and security risk.

Covenants & annual reviews (what catches borrowers out)

Commercial loans frequently include covenants and annual reviews. This isn’t “bad” — it’s simply how lenders manage risk. The problem is borrowers sometimes accept facilities without fully understanding what will be tested, what documents are required, and how quickly an issue needs to be addressed if ratios deteriorate.

Common covenant themes

• DSCR covenant: the loan must maintain a minimum coverage ratio.
• LVR covenant: if valuations soften, LVR can rise and trigger action.
• Information undertakings: financial statements, rent rolls, BAS/IAS, accountant letters, or lease updates.
• Material change reporting: tenant changes, vacancy events, or significant capex can require lender disclosure.

We plan for review time upfront by setting a simple reporting calendar and aligning the facility structure to your risk profile. If market conditions shift, the best outcomes come from being proactive: provide updated information, explain the plan, and solve issues early rather than waiting for a review notice.

4 commercial loan types — when to use what

Documents checklist (what lenders usually want)

Strong commercial outcomes usually come down to clarity: clear numbers, clear leases, clear entity structure, and clear purpose. Most delays happen when information arrives late or inconsistent. While document requirements vary by lender, here’s a practical baseline.

Property and lease documents

• Contract of sale (or purchase summary) and proposed settlement date
• Full lease, amendments/variations, rent schedule, and rent roll (if multiple tenants)
• Outgoings schedule and confirmation of net vs gross rent
• Details of incentives or rent-free periods (if any)
• Insurance and building details where relevant

Borrower / entity documents

• Identification and entity structure (company/trust deeds where relevant)
• Financial statements and tax returns (full-doc lenders often prefer 2 years)
• Business financials and BAS/IAS (especially for owner-occupied deals)
• Assets & liabilities position and existing facility statements

Tip: If you need to build a basic cash-flow forecast for lending or planning, the Australian Government’s business.gov.au has a free template and walkthrough: Set up a cash flow statement.

For commercial refinance

• Current loan statements, payout figures and facility schedule
• Evidence of rental income (lease/rent roll) and current tenancy status
• Reason for refinance (pricing, restructure, release security, capex planning)

If you’re unsure what “good” looks like, start with our Commercial Property Finance Guide. We can also help you map feasibility with the Commercial Property Calculator.

Commercial property in an SMSF (LRBA overview)

Commercial property inside a self-managed super fund (SMSF) can be a powerful strategy in the right circumstances — especially where a business owner wants to own premises in super and pay rent to the fund (subject to compliance and “business real property” rules). But it’s also one of the areas where you want the file to be clean, because SMSF lending is more conservative and documentation-heavy.

In many SMSF property purchases, the borrowing is done under a Limited Recourse Borrowing Arrangement (LRBA). The lender’s recourse is generally limited to the property being acquired (not the whole fund), and the structure typically involves a bare trust arrangement. This is why lenders often apply lower LVRs and stricter checks around liquidity, compliance and fund governance.

What lenders typically focus on for SMSF commercial

• Fund strength: contributions history, member profile, liquidity buffers, and overall strategy.
• Compliance: trust deed suitability, investment strategy alignment, and correct structure implementation (with legal advice).
• Property quality: mainstream asset types generally attract stronger appetite than specialised security.
• Lease: if leased to a related party, terms must be commercial and documented properly.
• Exit and resilience: what happens if the tenant changes, or if contributions reduce?

If this is relevant to you, you’ll want to review: SMSF Commercial Property Case Study, the SMSF Property Investment Guide, and our SMSF Calculator to explore cash flow and contribution considerations.

Important: SMSF property has legal and tax complexity. We can help with the lending side and lender packaging, but you should confirm compliance with your accountant and solicitor before signing contracts or implementing structures.

Real scenario examples (how we approach structuring)

Below are simplified examples to show how we think about structure. These are not quotes or approvals — just real-world patterns that explain why DSCR, LVR and lease quality dominate outcomes.

Example 1: Industrial purchase with a strong lease (rate vs covenant balance)

A borrower buys a mainstream warehouse with a solid tenant and longer WALE. The temptation is to chase the lowest headline rate, but the better decision can be the lender with clearer review mechanics and more sensible covenant settings. We compare pricing and covenant headroom so the borrower isn’t forced into a restructure later if a valuation softens or rates spike.

Example 2: Refinance to release cross-collateralised security (clean separation)

A borrower has their home tied to a commercial facility. The commercial asset performs well, but exiting is hard because valuations and LVRs interact. We model a stand-alone refinance path: strong lease narrative, realistic DSCR at stressed rates, and a lender policy match that allows the residential property to be released without creating a fragile commercial covenant package.

Example 3: SMSF commercial premises (business owner tenancy)

A business owner considers buying premises in an SMSF and leasing to their business. LVR is conservative, so liquidity and buffers matter. We help package the file so the lender can clearly see lease terms, rent reasonableness, fund strength and “what happens if…” scenarios. The aim is a compliant structure, predictable servicing and a review process the borrower can live with.

For a deeper walkthrough, see: Commercial Property Market Australia 2025 and the SMSF Market 2025 page to understand what lenders tend to watch in changing conditions.

Fees, GST and “going concern” (where buyers get caught)

Commercial transactions can involve valuation fees, legal fees, establishment fees, line fees and review fees (varies by lender and structure). GST treatment can also affect cash flow at settlement — especially if the purchase is (or isn’t) treated as a “going concern.” Your accountant and solicitor should confirm GST and contract structure.

• ATO overview: GST-free sale of a going concern
• ASIC overview: ASIC MoneySmart (general finance education)

What a realistic timeline looks like

With a complete file and mainstream security, some deals can reach formal approval in one to two weeks. Complex structures, specialised security, or incomplete leases can extend timelines due to valuation and credit sign-off. We’ll help sequence the file to avoid preventable delays: documents first, valuation early, then credit with a coherent DSCR and lease narrative.