Commercial Property Refinance

Assessed properly, Australia-wide. For owners of commercial property, typically carrying a loan of $1M or more, who want a straight answer on whether refinancing is worth it, and what else their position could open up.

Owners often only look at their commercial loan when something forces it: a review, an expiry, a bank that says no to the next step. The loan you have was set up for where you were then. This page is about whether it still fits where you are going.

Who this page is for

This page is written for owners of established commercial property in Australia, occupied or tenanted, with a loan against it. Most of the refinances we handle are $1M or more, and the page is written with that in mind, but the assessment is the same at any size. You might be a company, a trust, a partnership or a self-managed super fund. You might be self-employed with income that does not fit a standard payslip assessment, or you might be entirely standard and simply want a second opinion. We work with owners anywhere in Australia.

Buying rather than refinancing? Purchase finance for commercial property, including owner-occupier purchases and SMSF purchases, is covered on our commercial and business finance page. This page is about the loan you already have.

Two close cousins have their own pages. If you are building or developing, that funding is drawn in stages against a project and assessed differently: see construction and development finance. If you are after working capital, a term loan or an acquisition facility for the business itself: see commercial and business finance. Either way, the first call is the same one.

What a refinance can do, and what it cannot

Saving on the rate is one reason to refinance. For many owners it is not the main one. Another common reason is that the current bank’s policy has become the ceiling: it will not lend against the next property, will not release equity for the business, or is assessing you on last year’s numbers when the plan is about the next three. A refinance is how you move to a lender whose appetite fits where you are going.

Done for the right reason it can reset the terms, consolidate a tangle of facilities into one, or release equity for the next step: another property, growth in the business, a merger or acquisition, buying out a partner.

Refinancing has costs: break costs, establishment fees, valuation and legal costs. Some lenders run refinance specials that cover part of them, and we factor that in. Whether it is worth it depends on what you are trying to do next, not only on what it saves. Part of our job is to put both sides in front of you, and to say so when staying put is the better move.

The honest answer either way. If your current setup is already sharp, we will say so. That is how the firm works: integrity and transparency first, and if a refinance does not have legs we say so before anyone spends time or money on it.

Why there is no interest rate on this page

You will see commercial property rates advertised, and some comparison sites publish tables of them. For a facility of the size this page is about they tell you little, because pricing is set for the specific deal: the loan-to-value ratio, how comfortably income covers the interest and repayments (the ICR and DSCR), the quality and length of any lease, the type of property and where it sits, the borrowing structure, and the lender’s current appetite for that kind of risk. Two owners with the same property value can be offered materially different terms. A single advertised number cannot capture that.

What we can tell you is where your file is likely to sit on those factors, which lenders are pricing that profile well at the moment, and what would have to change for your position to improve.

What a lender looks at

Every lender weighs these differently, but the list is consistent.

• Loan-to-value ratio (LVR). The loan against the lender’s valuation, not your estimate and not the last contract price. Commercial LVR limits are lower than residential and vary with property type.
• Interest cover and debt service cover (ICR, DSCR). How many times over the income the lender counts covers the interest and repayments. Some transactions are assessed on the lease alone. Others count your trading business’s surplus and other income the lender accepts, such as positively geared investments. Lenders test this at a rate above the one you would pay.
• The lease. For a tenanted property: who the tenant is, how long is left, whether the rent is at market, and the weighted average lease expiry (WALE) across a multi-tenant asset. A lease expiring inside the loan term is a question the lender will ask before you do.
• The security. Office, retail, industrial, medical, mixed-use, or a specialised asset such as a childcare centre or a pub. Specialised property narrows the lender panel and the LVR.
• Who is borrowing. Company, trust, partnership, SMSF, or an individual. Related-party leases, multiple entities and recent restructures can be workable, but they need to be explained up front, not discovered at credit.
• Conduct. Your repayment history, ATO position, and how the existing facility has been run.

Owner-occupied or investment: which one are you?

You occupy it

The lender assesses serviceability mainly from your trading cash flow, with other accepted income counted as well. Lenders set an occupation threshold for treating a property as owner-occupied, and how partial subletting or mixed use is handled varies between them. Marginal cases are where the assessment is won or lost.

A tenant occupies it

Some lenders assess a tenanted property on the lease alone: the rent roll, lease terms and tenant quality. Others also count your other income where it covers a shortfall. Short WALE, a single tenant, or a related-party lease change the picture and the panel.

If your own business is one of several tenants, or you plan to move in when a lease ends, say so early. It changes which lenders are in play.

Commercial property held in an SMSF

A self-managed super fund that borrowed to buy its commercial property may be able to refinance that loan. Common reasons include better terms, or a restructure of the fund, for example a change in membership after a relationship breakdown. An SMSF refinance cannot release equity as cash: the new loan can only replace the existing borrowing, including accrued interest and the costs of refinancing, and it has to meet the superannuation borrowing rules that apply at the time. The fund’s own legal, tax and financial advisers confirm the structure before anything is lodged. We arrange the loan and work alongside them. This is general information, not financial, legal or tax advice.

Releasing equity

Where the entity is not an SMSF, a refinance can release equity for a business purpose: buying another asset, funding a fit-out, paying out a partner, or replacing more expensive short-term debt. The lender will want to know the purpose, and the new LVR and cover ratios have to work after the release, not before it. Equity release is often where the “should I?” question is sharpest, because the cost of the extra borrowing is easy to see and the return on it is not.

Where a refinance conversation usually leads

Most owners come to us about one loan. The assessment looks at the whole position, and that is often where the more useful options show up. A refinance can be the door into:

• Buying the next property, using equity in the one you hold, whether as an owner-occupier, an investor or through an SMSF. See commercial and business finance.
• Consolidating several facilities across property, equipment and working capital into a structure that is easier to run and review.
• Funding growth: a fit-out, plant and equipment, or working capital, secured on the property or alongside it. See fit-out finance and plant and equipment finance.
• Development on land you already hold, which is a different facility again. See construction and development finance.
• Private or short-term funding where timing matters more than price, and the path back to a mainstream lender afterwards.

None of that is pushed on anyone. It is raised when the numbers say it is worth raising, and it is why the first call is worth having even if the loan itself turns out to be fine.

When owners actually look at this

• The annual review. Whether your facility is reviewed each year, and how closely, depends on the lender, the loan amount, the LVR and the terms you signed. Where a review applies it can end in repricing, added conditions, a request for more security, or a reduction in the limit. Going into a review prepared gives you more time to respond to its outcome.
• Loan expiry. The term you were offered depends on the asset type and the lender, and at expiry the choice is refinance, repay, or roll over on the lender’s terms. Starting that conversation a few months out keeps all three options open.
• A valuation that comes in under. A lower valuation pushes the LVR up and can put a facility outside the lender’s policy overnight. It is a common way a refinance stalls, and one of the things we plan for.
• Repricing you did not ask for. If your margin has drifted up over several reviews, that is a reason to test the market, not a reason to assume switching wins.
• Private or short-term funding that has done its job. Private lenders solve timing problems at a price. Once the property is stabilised, moving to a mainstream lender is often the aim.

How we assess it

• A 15-minute call or video call. Book a time that suits you. You tell us about the property, the loan, the entity and what you are trying to achieve. We tell you, on that call, whether a refinance is worth investigating or whether your current setup already looks right.
• The file. If it is worth going further, we ask for the documents listed below. Nothing is lodged anywhere at this stage.
• The assessment. We work out where your file sits on LVR, cover and security, which lenders fit, and what the switch would cost, including break costs on the existing facility. You get our assessment and the options, and if the honest answer is stay put, that is what we tell you.
• Your decision. If you proceed, we prepare and manage the application through to settlement. The call and the pre-assessment cost nothing. On complex files, once the pre-assessment is done, we may charge a commitment fee for the additional work. As with your accountant or lawyer, it pays for expertise and work, not for an approval, a rate or any other outcome. The amount, what it covers and when it is payable are set out in writing in our Credit Quote before you apply for finance and before any fee is charged. If a loan settles, the lender may pay us a commission, which is disclosed to you before you apply.

What to have ready

You do not need all of this for the first call. You will need it for a proper assessment.

• Current loan statements and the facility agreement, including the expiry date and any review conditions
• The most recent valuation, if one exists, and the rates notice
• Leases, or the occupancy arrangement if your own business is the tenant
• Full documentation: two years of financial statements and tax returns for the borrowing entity and the guarantors, plus interim management accounts and BAS
• Alternative documentation if your financials are not ready or not yet lodged: a self-declaration supported by bank statements, BAS or an accountant’s declaration, or for a tenanted property the lease agreement
• For some refinances of a secured commercial or business loan, a clean repayment history and a self-declaration are all the lender asks for
• The entity structure: company, trust deed, SMSF deed and bare trust where relevant
• Any ATO arrangement, existing guarantees, and other facilities secured on the property
• What you want the refinance to achieve, and by when

Our guide, Commercial property refinancing: what to prepare before a lender review, walks through each item and why the lender asks for it.

Why choose Providence Finance Hub

Providence Finance Hub is a member of the Mortgage and Finance Association of Australia and the Commercial Asset Finance Brokers Association of Australia, member 296331. Providence Finance Hub was built for self-employed owners and complex investors, the borrowers a standard calculator gets wrong. Our founder spent 18 years inside Australian banks, including a credit manager role assessing funding proposals from the lender’s side, and has spent the two-plus years since as a finance broker. We know how a commercial property file is read and how to present yours so it is read properly. We work closely with your accountant, financial adviser and solicitor where needed, so the refinance fits the rest of your affairs rather than cutting across them.

We have access to more than 50 Australian standard lenders and to more than 120 private and international lenders for transactions outside mainstream appetite.

We provide credit assistance. We do not provide tax, legal, investment or financial product advice, and nothing on this page is a recommendation about your superannuation or your business structure. Talk to your accountant or adviser on those questions, and we will work with them.

Frequently asked questions

Does it cost anything to find out?

The initial call and the pre-assessment are at no cost to you. On complex files, once the pre-assessment is done, we may charge a commitment fee for the additional work. As with your accountant or lawyer, it pays for expertise and work, not for an approval, a rate or any other outcome. The amount, what it covers and when it is payable are set out in writing in our Credit Quote before you apply for finance and before any fee is charged. If a loan settles, the lender may pay us a commission, disclosed to you before you apply.

My current lender says they will match. Should I just take that?

Sometimes yes. A repricing with no break costs and no new valuation can be the best outcome. It is worth knowing what the market offer actually is before you accept it, because that is what the match is measured against.

What if the valuation comes in lower than I expect?

We plan for it. Where the LVR would be tight, we look at the lenders whose valuers and policies suit the property type before ordering anything, and we tell you what a shortfall would do to the options.

Can I refinance a loan that is in arrears or under a lender’s watch?

Possibly, but the panel narrows and the pricing reflects it. Tell us on the first call. It changes the plan, not whether we take the call.

How long does it take?

It depends on the lender, the security and how complete the file is. On complete files we have seen formal approval inside a week and settlement inside three weeks from lodgement, and we have seen valuations, lease reviews and lender credit queues take much longer. Start the conversation a few months before expiry where you can.

Fifteen minutes tells you whether it is worth looking at

Book a call or video call at a time that suits you. National coverage. The call and pre-assessment cost nothing.