Commercial Property Refinance
Refinancing a commercial property loan can reduce pricing, improve structure, release equity or manage covenant pressure — but it usually involves a new valuation, credit assessment and legal documentation.
Start by estimating the true benefit vs costs (see loan costs & fees) and model DSCR in the Commercial Property Calculator. For lender-fit strategy, speak with a Commercial Mortgage Broker.
General information only — not financial, legal or tax advice. Always confirm assumptions, fees and lender policy for your scenario.
Discuss refinance options & timing
1) Why refinance a commercial property loan?
A commercial refinance is simply replacing an existing facility with a new one — usually to improve pricing, change structure, release equity, or reduce ongoing friction (covenants, review behaviour, documentation burden).
Common refinance drivers include:
- Rate and pricing improvement (margin reduction or better total cost)
- Restructure (term, repayment type, split facilities, remove cross-collateral where possible)
- Equity release (cash-out for business use, renovations, or consolidation — policy dependent)
- Covenant management (reset covenant terms or move to a lender whose review behaviour fits the asset)
- Liquidity planning (improve cash flow or create buffers)
If your key question is serviceability, start with DSCR explained. If your key question is leverage, see commercial property LVR & deposits.
2) What lenders reassess when you refinance
Many borrowers expect refinance to be a “paperwork swap”. In reality, it is often a full credit reassessment, especially if you are changing lender or requesting cash-out.
- New valuation (most cases) — see valuation process
- Asset type and market appetite
- Lease strength and occupancy risk
- DSCR under stressed assumptions — see DSCR explained
- Borrower financials (full-doc) or lease income (lease-doc style)
- Conduct: arrears history and account behaviour
If your loan includes ongoing monitoring, refinance is also where covenant terms can change. For the “after settlement” lens, read covenants & annual reviews.
3) A practical refinance process (step-by-step)
The refinance process is smoother when it is treated like a project. A typical pathway looks like:
- Strategy and lender fit: clarify goals (rate, cash-out, restructure, covenant reset) and shortlist suitable lenders.
- Document pack: collect leases, rent roll, financials, bank statements, current loan statements and A&L position.
- Indicative terms: obtain indicative pricing/structure before ordering valuation where possible.
- Valuation and credit: lender orders valuation and completes formal credit approval.
- Docs and settlement: legal documentation, discharge of existing lender, and settlement coordination.
If you want to run scenarios before you start, use the Commercial Property Calculator. For lender-fit execution, work with a Commercial Mortgage Broker.
4) Cash-out / equity release: the key constraints
Cash-out can be possible, but it is not automatically available just because “equity exists”. Lenders typically constrain cash-out by:
- LVR caps: higher LVRs usually reduce cash-out appetite
- Serviceability: DSCR must still pass under stress
- Purpose of funds: lenders usually want a clear, acceptable purpose
If you’re planning cash-out, it’s worth modelling conservative DSCR headroom and valuation sensitivity first. Use DSCR explained and valuation process together.
5) Common refinance traps (and how to avoid them)
- Starting too late: forces you into extensions or limited lender choice.
- Ignoring fixed break costs: can wipe out the benefit of moving.
- Lease risk not addressed: short WALE or vacancy can trigger rent haircuts at valuation/credit.
- Incomplete documents: slows credit and can lead to conservative assumptions.
- Focusing only on rate: covenants, fees and review behaviour matter to the long-term outcome.
If you want to understand the full cost picture (including valuation, legal, review fees and break costs), read commercial property loan costs & fees.
7) Tools & next steps
Use the Commercial Property Calculator to model repayments and DSCR under stress.
Read covenants & annual reviews so you know what lenders re-test after settlement.
Review a real deal structure in our SMSF commercial property case study.
Want a lender-fit refinance plan (pricing, fees, covenants, valuation risk and timing)? Talk to a commercial property broker.
FAQs
How long does a commercial property refinance take?
Timeframes vary, but a typical refinance can take several weeks because it usually requires a valuation, credit assessment, and new legal documentation. Deals with complex structures, multiple securities, or incomplete documents can take longer. Starting early reduces pressure and improves lender choice.
When should I start the refinance process?
If you’re coming off a fixed rate or have review dates, starting a few months early is often sensible. Early work lets you gather documents, address issues (lease renewals, arrears, DSCR headroom), and avoid being forced into a last-minute extension on unfavourable terms.
Will a refinance require a new valuation?
In most cases, yes. The new lender typically orders an independent valuation to set LVR and risk. Even if you have a recent valuation, lenders may still require their own panel valuation for independence and policy compliance.
Can I refinance and take cash out (equity release)?
Sometimes, subject to valuation, LVR limits and serviceability. Lenders will usually require a clear purpose for funds and may apply tighter policy to cash-out than to a straight refinance. Modelling DSCR and LVR under conservative assumptions is key.
Can I refinance if my DSCR is tight?
Possibly, but lender choice and structure matter. Some lenders are more conservative on NOI or stress rates, and others may require stronger covenants or lower LVR. Improving lease documentation, reducing loan amount, or restructuring the facility can improve the outcome.
Can refinancing help with covenant pressure?
It can. Refinancing may allow you to move to a lender with covenant terms that better match your asset and lease profile, or to restructure the facility. However, if the underlying DSCR or valuation has deteriorated, refinancing may be harder and more expensive.
What documents are needed for a commercial refinance?
Common documents include current loan statements, financials (tax returns or management accounts), BAS, bank statements, rent roll, executed leases, insurance certificates, and details of any changes since the original loan. A clear asset-and-liability position also helps credit assessment.
What costs should I expect when refinancing?
Refinance often includes a new valuation, new legal documentation, lender fees, and discharge fees on the existing loan. If the current loan is fixed, break costs may apply. Estimating all-in costs helps you judge whether the refinance benefit is worthwhile.
Can SMSFs refinance commercial property loans?
Some lenders support SMSF refinances, but policy is more limited than standard commercial lending and documentation can be stricter. If an SMSF refinance is being considered, confirm LRBA policy, lease strength and valuation assumptions early.