How is commercial property assessed differently from residential?
Residential value leans on recent sales nearby. Commercial value depends more on how much income the property can produce and how secure that income is. So lenders look closely at the property and how it is used, not only at your personal position.
What do lenders usually look at?
1. Property type and use
Offices, shops, warehouses, industrial and mixed-use property each carry different demand and risk, and lender appetite differs too. Location, zoning and condition all affect the result.
2. Owner-occupied or investment?
- Owner-occupied: bought for your own business, so the lender focuses on whether your business has steady profit and cash flow.
- Investment: bought to rent out, so the lender focuses on the lease, the tenant and the rental return.
3. Lease and tenant
If there is a tenant, lenders generally consider:
- Remaining lease term: longer is more secure.
- Tenant type and credit: larger, stable tenants are usually viewed more favourably than small or volatile ones.
- Whether the rent is close to market.
A vacant property, or a lease that is about to expire, is assessed more conservatively.
4. Valuation
Lenders normally order a valuation. Commercial valuations are often tied to income rather than a simple comparison with nearby sales.
5. Your own position
- The company’s last two years of financial statements and tax records
- Your personal income, assets and liabilities
- If you offer your home or another property as additional security, that is assessed too
How do LVR and rates compare with residential?
Commercial loan-to-value ratios (LVR) are usually more conservative than residential, meaning a larger deposit, and rates and loan terms often differ. The figures vary by lender, property type and your finances, so we do not quote one here.
What to prepare before you buy
- Decide the purpose first. Owner-occupied or investment changes what the lender focuses on.
- Gather the last two years of company and personal financials.
- Look closely at the lease and tenant if you are buying a tenanted property.
- Work out the full cost. Beyond the deposit there is stamp duty, legal fees, valuation fees and loan costs.
- Confirm the loan is feasible before you sign. This matters most at auction or where the cooling-off period is short.
Want to know how your commercial purchase could be financed?
Read about our commercial loan service or book a free consultation. Tell us the property type, its use and your business position. The assessment is free, with no fee if we cannot succeed. For an overview of loan types first, see how to apply for a commercial loan.
This article is general information only and not personal financial or legal advice. Assessment criteria, LVRs, rates and document requirements vary by lender and property type and change over time; rely on the lender’s latest requirements. Written October 2026.
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