Commercial Property Finance Australia: The Complete 2026 Guide

Commercial property remains one of the most compelling asset classes in Australia. From high-yielding industrial warehouses in western Sydney to mixed-use developments in Melbourne's inner suburbs, commercial property finance is the engine that powers acquisitions, refinances, and strategic repositioning across every capital city and major regional centre.

Yet securing a commercial property loan in Australia is fundamentally different from financing residential real estate. The assessment criteria are more complex, the property types more varied, and the lending landscape more fragmented. Banks dominate the long-term end of the market, but their rigid policies, slow timelines, and narrow appetite leave a significant portion of viable commercial transactions unfunded. That gap is where private lenders step in.

This guide covers everything you need to know about commercial property finance in Australia in 2026 — whether you are purchasing your first commercial asset, refinancing an existing facility, or advising clients as a finance broker looking for faster, more flexible funding solutions.

What Is Commercial Property Finance?

Commercial property finance refers to any loan secured against property that is used primarily for business, investment, or commercial purposes rather than as a personal residence. The security property might be an office building, a retail shop, an industrial warehouse, a medical centre, a childcare facility, or a mixed-use building combining retail and residential components.

The defining characteristic of a commercial property loan is that both the purpose of the loan and the nature of the security sit outside the residential lending framework. This distinction matters because commercial property finance operates under different regulatory, valuation, and risk assessment frameworks compared to standard residential lending.

Why Commercial Property Finance Is Different

Several factors make commercial property finance more complex than its residential counterpart:

• Income dependency: A commercial property's value is heavily influenced by its rental income, tenancy profile, and lease terms. A well-tenanted office with a five-year lease to a government tenant is a fundamentally different proposition from an identical office sitting vacant.
• Valuation methodology: Commercial valuations rely on capitalisation rates (cap rates), discounted cash flow analysis, and market comparisons that are more subjective than the comparable-sales approach used for houses and apartments.
• Liquidity risk: Commercial property is generally less liquid than residential property. Selling a warehouse or office can take months, and the buyer pool is smaller. Lenders factor this into their risk assessment.
• Regulatory complexity: Zoning, environmental compliance, heritage overlays, and permitted-use restrictions all affect commercial property in ways that are less common in the residential market.
• Lease structures: The terms, conditions, and tenant quality of existing leases directly impact both property value and lending appetite.

Who Provides Commercial Property Finance?

The Australian commercial property lending market is served by several categories of lender:

• Major banks (CBA, Westpac, NAB, ANZ) offer the lowest rates but have the strictest criteria, longest approval timelines, and most rigid policies around property types and borrower profiles.
• Second-tier banks and credit unions fill some gaps the majors leave, but generally operate within similar policy frameworks.
• Non-bank lenders (institutional non-banks) offer more flexibility than banks but still operate within structured credit policies and can take several weeks to approve.
• Private lenders like Vertex Capital provide the fastest and most flexible commercial property finance, assessing each deal individually based on the security quality and exit strategy rather than rigid borrower-income criteria.

Types of Commercial Property That Can Be Financed

One of the most common questions from borrowers exploring commercial property finance is whether their specific property type qualifies. The answer depends on the lender, but the range of commercial assets that can be financed is broader than many people realise — particularly when working with a private lender.

Office Buildings and Suites

Office property spans everything from single-suite strata offices in suburban business parks to multi-storey CBD buildings. Lenders assess office property based on location, building grade (A-grade, B-grade, etc.), tenancy profiles, lease terms, and the overall supply-demand dynamics of the local office market. Office property with strong government or corporate tenants on long leases attracts the highest LVRs and most competitive rates.

However, the post-pandemic shift toward hybrid working has made some lenders more cautious about secondary office property in locations with high vacancy rates. Private lenders can often take a more pragmatic view, assessing each office asset on its specific merits rather than applying blanket policy restrictions.

Retail Property

Retail property includes high-street shops, neighbourhood shopping strips, standalone retail premises, and strata retail lots within larger complexes. Retail lending has evolved significantly in recent years as e-commerce has reshaped consumer behaviour. Lenders differentiate between "essential" retail (medical, food, services) and "discretionary" retail (fashion, homewares), with the former generally attracting stronger lending appetite.

Location is paramount for retail property. High-foot-traffic strips with established trading history are viewed far more favourably than isolated retail in fringe locations. The quality and remaining term of the tenant's lease is also a critical factor in the lending assessment.

Industrial and Warehouse Property

Industrial property has been the standout performer in Australian commercial real estate over recent years. The growth of e-commerce, logistics, and last-mile delivery has driven sustained demand for warehousing, distribution centres, and light-industrial facilities, particularly in metropolitan areas within 30 kilometres of major CBDs.

Lenders tend to view industrial property favourably because of its strong tenant demand, relatively simple building structures, and versatile use potential. Modern industrial property with clear-span warehouses, adequate truck access, and standard zoning typically attracts the most competitive commercial lending terms.

Mixed-Use Property

Mixed-use properties combine two or more uses — most commonly retail on the ground floor with residential apartments or offices above. These properties present a more complex lending proposition because the lender must assess multiple income streams, different tenancy types, and potentially different valuation methodologies for each component.

Banks can be particularly rigid with mixed-use property, sometimes declining to lend where the commercial component exceeds a certain percentage of the total floor area. Private lenders are generally more comfortable with mixed-use assets, provided the overall security quality and income profile are sound.

Special-Purpose Commercial Property

Special-purpose commercial property includes assets designed for a specific use: childcare centres, medical centres, service stations, hotels and motels, pubs, car washes, self-storage facilities, and aged-care facilities. These properties often generate strong income but present unique risks because their value is tied to the ongoing viability of the specific business operation.

Banks are highly selective with special-purpose property and frequently decline to lend on certain sub-categories entirely. Private lenders can assess special-purpose assets more flexibly, often looking at the underlying land value, the alternative-use potential, and the income profile as part of a holistic assessment.

How Commercial Property Loans Work with Private Lenders

The process of obtaining commercial property finance through a private lender differs significantly from the bank process. The emphasis is on efficiency, deal-level assessment, and speed to settlement — which is precisely why borrowers and brokers turn to private lenders when timing, flexibility, or complexity are factors.

Step 1: Scenario Submission

The process begins with a concise summary of the deal. For commercial property, this typically includes the property address and description, the purchase price or current value, the loan amount required, details of any existing tenancy (tenant name, lease term, rent), the borrower's background, and the proposed exit strategy. Unlike bank applications, there is no lengthy form at this stage — a well-structured email or phone call is often sufficient for an experienced private lender to assess initial viability.

Step 2: Indicative Term Sheet

Based on the scenario summary, the lender provides an indicative term sheet outlining the proposed loan amount, interest rate, loan term, fees, and any key conditions. At Vertex Capital, we aim to issue indicative terms within two hours for straightforward commercial scenarios. This gives borrowers and brokers certainty early in the process, before committing significant time or money to valuations and legal costs.

Step 3: Valuation and Due Diligence

Once indicative terms are accepted, the lender commissions an independent commercial property valuation. Commercial valuations are more complex and time-consuming than residential valuations, typically taking 5 to 10 business days. The valuer will inspect the property, review existing leases, analyse comparable sales and rental evidence, and provide an assessment of current market value and, where relevant, the value as if vacant.

Simultaneously, the lender conducts due diligence on the borrower (identity verification, company and trust searches), the security property (title searches, council checks, environmental searches), and the proposed transaction (contract review, exit strategy verification).

Step 4: Credit Approval and Documentation

With the valuation and due diligence complete, the lender makes a formal credit decision. Private lenders typically have streamlined approval processes — in many cases, the same person assessing the deal has the authority to approve it, eliminating the multi-layered committee process that slows banks down. Loan documents are then prepared by the lender's solicitor.

Step 5: Settlement

The borrower signs the loan documents, the mortgage is registered on the property title, and funds are disbursed. For commercial property transactions through a private lender, the entire process from initial enquiry to settlement typically takes 5 to 21 business days, depending on valuation turnaround and legal complexity. Compare this to the 8 to 16 weeks that is common for bank commercial property approvals.

Interest-Only vs Principal and Interest

Private commercial property loans are almost always structured on an interest-only basis. Given that these are typically short-term facilities (3 to 24 months), interest-only repayments keep the monthly commitment manageable while the borrower executes their strategy — whether that is securing a long-term tenant, completing renovations, or arranging a bank refinance.

Some private lenders offer the option to capitalise interest (add it to the loan balance rather than requiring monthly payments), which can be useful for borrowers who need maximum cash flow flexibility during the loan term. The trade-off is a higher total cost, since interest accrues on the growing balance.

Commercial Property Finance Rates and Costs

Understanding the full cost structure of a commercial property loan is essential for making informed borrowing decisions. Commercial property finance costs more than residential lending across all lender types, reflecting the additional complexity and risk involved. Below is a breakdown of the key cost components.

Interest Rates

Commercial property loan interest rates in Australia vary significantly depending on the lender type and the risk profile of the transaction:

• Major banks: From approximately 6.5% to 8.5% p.a. for well-qualified borrowers with strong tenanted security in metropolitan locations.
• Non-bank lenders: Typically 7.5% to 10% p.a., offering more flexibility than banks with moderately faster turnaround.
• Private lenders: From 9.5% p.a. for first mortgage commercial security, ranging up to 14% or higher for more complex scenarios involving vacant property, secondary locations, or higher LVRs.

It is important to assess interest costs in context. A private lender charging 11% on a 6-month commercial bridging facility costs the borrower approximately 5.5% of the loan amount in total interest. If that facility enables the borrower to acquire a property at a significant discount or avoid losing a deposit, the cost of finance can be vastly outweighed by the financial benefit of acting quickly.

Establishment Fees

Establishment fees (also called origination or application fees) for commercial property finance typically range from 1% to 2.5% of the loan amount, depending on the lender and the complexity of the deal. These fees compensate the lender for the cost of assessing, approving, and documenting the loan. Most lenders allow establishment fees to be capitalised into the loan balance.

Valuation Fees

Commercial property valuations are more expensive than residential valuations due to the additional analysis required. Expect to pay $2,000 to $5,000 for a standard commercial property valuation, with costs potentially exceeding $7,000 for large, complex, or special-purpose properties. The borrower is responsible for the valuation fee, which is usually payable upfront or at settlement.

Legal Fees

Borrowers pay both their own legal costs and the lender's legal costs. For a straightforward commercial property loan, lender legal fees typically range from $2,000 to $5,000. Transactions involving multiple securities, complex trust or company structures, or cross-collateralisation arrangements may attract higher legal costs.

Exit and Discharge Fees

Some commercial property lenders charge exit fees when the loan is repaid, particularly if the loan is repaid earlier than the agreed term. These fees can range from 0.5% to 2% of the original loan amount. At Vertex Capital, we maintain a transparent fee structure with no hidden exit fees on standard commercial facilities, giving borrowers certainty about their total cost from the outset.

LVR Limits for Commercial Property

The loan-to-value ratio (LVR) is the single most critical metric in commercial property finance. It determines how much a lender will advance against the property's assessed value and represents the lender's primary protection against loss. Understanding LVR limits helps borrowers set realistic expectations and structure their applications accordingly.

Standard Commercial Property LVRs

Across the Australian lending market, commercial property LVRs are consistently lower than residential LVRs. While residential borrowers can sometimes access LVRs up to 80% or even 90% (with mortgage insurance), commercial property lending rarely exceeds 70% LVR, even under the most favourable circumstances.

• Tenanted metro commercial (office, retail, industrial): Up to 65% – 70% LVR
• Vacant commercial property: Typically 50% – 60% LVR
• Regional commercial property: Usually 55% – 65% LVR
• Special-purpose commercial: Case-by-case, often 50% – 60% LVR
• Mixed-use property: 55% – 65% LVR depending on the commercial/residential split

What Influences the LVR a Lender Will Offer?

Multiple factors interact to determine the specific LVR available for a given commercial property transaction:

• Tenancy status: A fully tenanted property with long-term leases commands higher LVRs than a vacant property. The quality and covenant strength of the tenant also matters — a lease to a government department or ASX-listed company is viewed differently from a lease to a small start-up.
• Location: Properties in major metropolitan areas with established commercial precincts attract higher LVRs than regional or fringe locations where buyer demand is thinner and resale risk is greater.
• Property type: Standard commercial property types (office, retail, industrial) generally receive more favourable LVR treatment than specialised or niche assets.
• Loan term: Short-term loans may attract slightly higher LVRs than longer-term facilities, because the shorter duration reduces the lender's exposure to market fluctuations.
• Additional security: Borrowers who can offer additional security (such as a residential property or another commercial asset) can sometimes achieve a higher effective LVR on the primary commercial property by cross-collateralising the loan.

How to Maximise Your Commercial Property LVR

Borrowers seeking the highest possible LVR on a commercial property loan should focus on presenting the strongest possible security profile. This means providing comprehensive lease documentation, demonstrating the tenant's financial strength, ensuring the property is well-maintained and free of obvious defects, and offering a clear and credible exit strategy. If the property alone does not support the required loan amount at a standard LVR, consider whether additional security could bridge the gap.

Private Lender vs Bank for Commercial Property

The choice between a private lender and a bank for commercial property finance is not a question of which is universally "better" — it depends entirely on the specific circumstances of the transaction. Each channel has distinct strengths, and sophisticated borrowers and brokers use both strategically, often within the same property acquisition.

When a Private Lender Is the Right Choice for Commercial Property

You need to settle fast. If the vendor has stipulated a 21-day or 30-day settlement and bank turnaround times are 8 to 16 weeks, a private lender is often the only realistic option. This is especially common at auction, in mortgagee-in-possession sales, and in off-market transactions where speed creates competitive advantage.

The property is vacant or between tenants. Banks frequently decline commercial property with no current tenancy, regardless of the property's quality, location, or the borrower's plan to lease it. A private lender can assess the property on its underlying value and the borrower's leasing strategy, providing finance that enables the borrower to secure the asset first and find a tenant second.

The borrower's profile does not fit bank criteria. Self-employed income, complex trust structures, foreign tax residency, recent credit events, or unconventional sources of repayment can all cause a bank to decline an otherwise sound commercial property transaction. Private lenders assess the whole picture, not just the elements that fit into a standardised credit scorecard.

The property type is outside bank policy. Banks maintain detailed lists of property types they will and will not lend against. If the commercial property falls outside these lists — a service station, a motel, a childcare centre, or a property with unusual zoning — a private lender may be the only funding option.

The loan is short-term. If the borrower only needs finance for 6 to 12 months (for example, to bridge a purchase while arranging long-term bank finance, or to hold a property during a renovation and re-leasing period), the total cost of a short-term private facility may be comparable to or less than the cumulative fees, break costs, and opportunity cost of establishing a long-term bank facility unnecessarily.

When a Bank Is the Better Choice for Commercial Property

You have time and a clean profile. If there is no urgency, the property is well-tenanted in a metropolitan location, and the borrower has clean credit, strong financials, and straightforward entity structures, a bank will offer the lowest rate for a long-term commercial hold.

You plan to hold for 5+ years. For long-term commercial property holds, the interest rate differential between a bank and a private lender compounds significantly over time. If the intention is to buy, tenant, and hold a commercial property for the long term with no near-term exit, bank finance makes clear economic sense.

Key Factors in Commercial Property Assessment

Whether applying to a bank or a private lender, understanding what drives a lender's assessment of commercial property finance applications helps borrowers present stronger applications and achieve better outcomes. Below are the key factors every commercial property lender evaluates.

Tenancy Profile and Lease Terms

The tenancy is the heartbeat of any commercial property. Lenders will closely examine:

• Who is the tenant? A blue-chip tenant (government agency, listed corporation, national retail chain) with strong financial backing provides greater income certainty than a small business or start-up.
• How long is the remaining lease? A lease with 5+ years remaining provides more security than a lease with 6 months left. As the lease term shortens, the risk of vacancy and income loss increases, and lenders adjust their LVR and pricing accordingly.
• What are the lease terms? Fixed annual rent increases, option periods, tenant obligations for outgoings and maintenance, and make-good provisions all affect the value and attractiveness of the tenancy from a lending perspective.
• Is the rent at market? A lease where the passing rent is significantly above market creates a risk of downward reversion when the lease expires. Conversely, a below-market lease may indicate upside potential but can also suggest the property has limitations that suppress achievable rents.

Location and Market Dynamics

Location drives commercial property values just as it does residential values, but the relevant considerations are different:

• Proximity to transport and infrastructure: Office and retail property in well-connected locations with strong public transport access commands premium values. Industrial property near major road networks, ports, and distribution hubs is highly sought after.
• Local market vacancy rates: High vacancy rates in the surrounding area signal weak demand and increase the risk that a property will be difficult to tenant (or re-tenant) at market rates.
• Future development and infrastructure: Upcoming transport projects, precinct redevelopments, and population growth corridors can enhance a property's long-term prospects but may also bring increased competition from new supply.
• Comparable evidence: Strong recent sales and leasing evidence in the immediate area supports the valuation and gives the lender confidence in the property's marketability.

Zoning and Permitted Use

Commercial property must comply with the applicable local council zoning and planning provisions. The zoning determines what uses are permitted on the site, which directly affects the property's value and the pool of potential tenants and buyers. Lenders will verify that the current use complies with zoning, that there are no outstanding compliance notices, and that the zoning supports the property's highest and best use.

Properties with restrictive zoning, heritage overlays, or environmental constraints may still be financeable through a private lender, but these factors will typically influence the LVR and pricing.

Building Condition and Compliance

The physical condition of the building matters, particularly for older commercial property. Lenders consider the age of the building, the quality of its construction, compliance with current building standards (including fire safety, accessibility, and essential services), the condition of key building systems (HVAC, electrical, plumbing), and the presence of any hazardous materials such as asbestos.

Properties requiring significant capital expenditure to bring them up to a lettable standard may attract lower LVRs. If the borrower's strategy involves renovating and repositioning the property, lenders will want to understand the scope of works, the budget, and the timeline.

Borrower Experience and Track Record

While private lenders are primarily asset-focused, the borrower's experience with commercial property still matters. A borrower who has successfully managed, leased, and traded commercial property gives a lender greater confidence in the exit strategy compared to a first-time commercial buyer. This does not mean first-time buyers cannot access commercial property finance — but they should expect more questions about their plans and may benefit from working with experienced property managers or advisors.

Commercial Property Loan Scenarios and Case Studies

To illustrate how commercial property finance works in practice, the following scenarios represent common situations where borrowers turn to private lenders. While every deal is unique, these examples demonstrate the types of problems private commercial property loans can solve.

Scenario 1: Fast Settlement on an Industrial Acquisition

The situation: An experienced property investor identified an industrial warehouse in Melbourne's south-east being sold by a mortgagee in possession. The property was tenanted on a 3-year lease to a logistics company. The sale required settlement within 21 days, and the investor's existing bank confirmed they could not meet that timeline.

The solution: A private commercial property loan of $1,400,000 at 65% LVR was arranged against the industrial property. Settlement was completed in 12 business days. The investor subsequently refinanced to a bank at a lower rate once the urgency had passed.

Key takeaway: The speed of the private lender enabled the investor to secure a well-tenanted industrial asset at a discount that would not have been available to a buyer requiring standard bank timelines.

Scenario 2: Vacant Office Purchase and Repositioning

The situation: A commercial property syndicator wanted to purchase a vacant three-level office building in a Brisbane suburban precinct. The property had been poorly maintained by the previous owner and had been empty for eight months. Banks declined to lend due to the vacancy and the building's condition.

The solution: A private loan of $1,800,000 at 55% LVR was provided on a 12-month term, giving the syndicator time to complete a $350,000 refurbishment, secure tenants, and stabilise the asset. Once tenanted, the property was refinanced to a non-bank lender at a significantly lower rate.

Key takeaway: Private commercial property finance is ideally suited to value-add strategies where the current state of the property does not meet bank requirements but the post-improvement position is strong.

Scenario 3: Mixed-Use Property Refinance Under Time Pressure

The situation: A business owner held a mixed-use property (ground-floor retail with two apartments above) in Sydney's inner west. Their existing lender issued a demand for full repayment due to a covenant breach, giving 30 days to refinance. Three banks declined the refinance due to the mixed-use nature of the property and the borrower's recent credit blemish from the covenant breach.

The solution: A private loan of $920,000 at 60% LVR was settled within 9 business days, repaying the existing lender in full and removing the immediate threat of enforcement action. The borrower then spent the following six months cleaning up their credit position before refinancing to a longer-term facility.

Key takeaway: Private lenders can act as a circuit breaker in urgent refinance situations, providing time and stability for the borrower to resolve underlying issues and arrange more permanent finance.

Scenario 4: Retail Strip Purchase via Bridging Finance

The situation: A self-managed superannuation fund (SMSF) trustee wanted to purchase a small retail strip comprising three tenancies in a regional New South Wales town. The combined purchase price was $1,100,000, with all three shops tenanted. The bank approved the loan in principle but advised that settlement would take 10 to 12 weeks due to the SMSF structure and the need for a limited-recourse borrowing arrangement (LRBA). The vendor was unwilling to wait beyond 28 days.

The solution: A private bridging loan of $660,000 at 60% LVR was arranged through the SMSF's corporate trustee, settling in 14 business days. The bank loan proceeded in parallel and ultimately settled 10 weeks later, repaying the private facility. Total bridging cost to the SMSF was approximately $18,000 in interest and fees.

Key takeaway: Bridging loans allow commercial property buyers to meet vendor timelines while their longer-term finance arrangements proceed at their own pace. The cost of the bridge is justified by securing the acquisition.

How to Structure a Commercial Property Loan Application

A well-structured application significantly increases the speed and likelihood of approval for commercial property finance, particularly with private lenders who assess deals holistically. The following framework outlines the information and documentation that will present your scenario in the strongest possible light.

Lead with the Security

In commercial property finance, the security is the foundation of the lending decision. Your application should front-load the details of the property:

• Full address and legal description
• Property type (office, retail, industrial, mixed-use, etc.)
• Land size and building area
• Current use and zoning
• Age and condition of improvements
• Recent purchase price (if applicable) or current estimated value
• Any recent capital works or planned improvements

Detail the Tenancy

If the property is tenanted, provide a comprehensive summary of the lease arrangements:

• Tenant name and business description
• Lease commencement date and expiry date
• Option periods (if any)
• Current passing rent and any fixed or CPI-linked increases
• Outgoings structure (gross lease vs net lease)
• Rental arrears history (confirm whether the tenant is current)
• Copies of the lease and any lease amendments

Specify the Loan Request

Be precise about what you are seeking:

• Loan amount required
• Purpose of the loan (purchase, refinance, equity release, renovation)
• Desired loan term
• Preferred repayment structure (interest-only monthly, interest capitalised, etc.)
• Settlement date requirement (if time-sensitive)

Present the Exit Strategy

The exit strategy is arguably the most important element for a private lender. It answers the question: "How will this loan be repaid?" Common exit strategies for commercial property finance include:

• Bank refinance: The borrower intends to arrange long-term bank finance once the property is stabilised (tenanted, renovated, or the borrower's financial position improves). Evidence might include a letter of intent from a bank or broker, or a bank pre-approval subject to certain conditions being met.
• Sale of the property: The borrower plans to sell the commercial property during the loan term. Evidence might include an agent's appraisal, a marketing plan, or market evidence supporting the expected sale price.
• Sale of another asset: The borrower has another property under contract or in the sales process, and settlement proceeds will repay the commercial loan.
• Business cash flow or other income: For shorter-term facilities, the borrower may plan to repay from business revenue or other liquid resources.

Provide Borrower Information

While private lenders are asset-focused, basic borrower information is still required:

• Full legal names and identification for all borrowing entities and directors/trustees
• Entity structure (company, trust, individual, SMSF)
• Brief summary of the borrower's commercial property experience
• Details of other property holdings and existing debt
• Brief explanation of any credit blemishes (if applicable)

Exit Strategies for Commercial Property Finance

Every commercial property loan — particularly those from private lenders — requires a clearly defined exit strategy. The exit strategy is not an afterthought; it is a core component of the lending decision. A credible exit gives the lender confidence that the loan will be repaid within the agreed term and reduces the risk for both parties.

Bank Refinance

The most common exit strategy for private commercial property finance is refinancing to a bank or non-bank lender at the end of the loan term. This strategy works best when the private loan is being used to bridge a timing gap or to hold the property while certain conditions are met (securing a tenant, completing renovations, resolving a credit issue) that will qualify the borrower for long-term bank finance.

To make a bank refinance exit credible, borrowers should ideally obtain conditional approval or a strong letter of intent from the target bank or broker before drawing on the private facility. This demonstrates that the refinance is achievable, not merely aspirational.

Property Sale

Selling the commercial property during or at the end of the loan term is a straightforward exit strategy, provided the borrower can demonstrate that the expected sale price is realistic based on current market evidence. Lenders will want to see agent appraisals, comparable sales data, and, ideally, a marketing timeline that aligns with the loan term.

The risk with a sale exit is that market conditions can change, or the property may take longer to sell than anticipated. Borrowers relying on a sale exit should ensure the loan term provides adequate headroom for marketing and negotiation — a 6-month sale campaign is reasonable for most commercial property, though some assets may require longer.

Sale of Another Asset

Where the borrower has another property that is under contract for sale, the settlement proceeds from that sale can provide a credible exit. This is a common scenario in bridging finance, where the borrower is buying a new commercial property before completing the sale of an existing one. Evidence of the other sale (such as a signed contract or unconditional exchange) strengthens this exit significantly.

Development Completion and Sale

For commercial properties being acquired for development or significant renovation, the exit may involve completing the works and selling the improved or repositioned asset. This exit requires detailed feasibility analysis, including construction timelines, cost estimates, and projected end values, to demonstrate that the exit is achievable within the loan term.

Lease-Up and Hold

Some borrowers acquire vacant or under-tenanted commercial property with the intention of leasing it up and then holding it as a long-term investment, funded by a bank refinance. The exit strategy in this case is effectively a two-step process: first, achieve target occupancy and lease terms; second, refinance to a bank on the strength of the stabilised income. Lenders will assess whether the leasing assumptions are realistic given the property's location, condition, and the local rental market.

What Makes an Exit Strategy Credible?

A credible exit strategy has three characteristics:

1. It is specific. "I will refinance to a bank" is less convincing than "I have a conditional pre-approval from NAB, subject to the property being tenanted, and my broker has confirmed the scenario fits their policy."
2. It is achievable within the loan term. If the loan term is 12 months and the exit strategy requires 18 months of renovation and leasing, the numbers do not work. The exit must be realistically deliverable within the agreed timeframe.
3. It is supported by evidence. Market valuations, agent appraisals, bank pre-approvals, sale contracts, and feasibility studies all add credibility. The more evidence a borrower can provide, the stronger the application.

Frequently Asked Questions

Ready to Finance Your Commercial Property?

Whether you are acquiring a tenanted industrial warehouse, purchasing a vacant office for repositioning, refinancing an existing commercial facility under time pressure, or advising a client as a broker seeking a reliable private funder, the next step is straightforward: tell us about your deal.

At Vertex Capital, we provide fast, flexible commercial property finance backed by direct funding capability. We assess every commercial scenario on its merits, communicate transparently about costs and timelines, and settle when we say we will.

• Indicative term sheets issued within 2 hours for straightforward commercial scenarios
• Settlement from 5 business days for commercial property
• Commercial rates from 9.5% p.a. for first mortgage security
• LVRs up to 70% for tenanted metropolitan commercial property
• No exit fees on standard commercial facilities
• Direct funder — no reliance on external credit committees or third-party capital

Explore our commercial loans page for more detail on our commercial lending criteria, or use our bridging loan calculator to estimate repayments on a short-term commercial facility. For development finance or second mortgage requirements, we have dedicated solutions for those scenarios as well.

Submit your commercial property scenario today and find out what is possible.