Commercial Property Loan Calculator, Calculators
Commercial Property Loan Calculator for Australian property investors. Part of the Calculators hub on Shelby Limited, AI strategy, calculators and expert matching.
Commercial property loans, why the numbers look nothing like a home loan
Commercial property loans typically require a larger deposit, run shorter terms than residential loans, price at higher rates, and are assessed primarily on the strength and length of the lease and the tenant's covenant rather than on the borrower's personal income.
Investors moving from residential to commercial usually arrive with the wrong mental model. A home loan is a 30-year amortising product assessed on your salary. A commercial loan is a shorter-term facility assessed on the income the building produces and the credibility of the tenant producing it.
That shifts what matters. The lease is the asset. A five-year lease with options to a well-established tenant will attract better terms than a stronger building with a two-year lease to a new business, because the lender is underwriting the rent stream. Lease expiry inside the loan term is a genuine credit concern, not a detail.
The structure differs too. Terms are commonly much shorter than residential, which means a refinance or review event arrives while substantial principal remains outstanding, and if the tenant has left by then, that refinance happens at the worst possible moment. Deposit requirements are higher, and many facilities are interest-only with a balloon at term.
The compensating advantages are real: higher yields than residential, outgoings usually recoverable from the tenant, and longer leases that remove the annual re-letting cycle. But the risk is lumpier, one vacancy is 100% vacancy, and commercial re-letting periods are measured in months, not weeks.
Frequently asked questions
How much deposit is needed for commercial property?
Substantially more than residential, commercial lending is written at lower loan-to-value ratios, with the exact level depending on the asset type, lease strength and tenant covenant.
Why are commercial loan terms shorter?
Lenders align the facility to the lease and review cycle rather than to a 30-year horizon, so a refinance or review event typically occurs while principal remains outstanding.
What is a tenant covenant?
The lender's assessment of the tenant's financial strength and reliability. A national or government tenant on a long lease materially improves loan terms compared with a new small business.
Are outgoings recoverable from the tenant?
In most commercial leases, yes, rates, insurance and building outgoings are commonly passed through to the tenant, which is a key reason net commercial yields exceed residential.
What happens if the tenant leaves?
Commercial vacancy periods are typically longer than residential, and with a single tenant the income stops entirely. Lenders price for this risk, and investors should hold a vacancy reserve for it.