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Commercial Property Loans for Australian Doctors: What You Need to Know.

As a doctor considering your first commercial property investment or looking to expand your practice, you may learn that commercial lending is a whole different ball game to residential mortgages.

You may talk to your colleagues and lending experts, I want to share the truth about commercial property loans that could save you thousands of dollars and prevent costly mistakes.

Why Commercial Property Loans Are Different (And Why It Matters)

When you first start looking into commercial property investment, you may make the same mistake most doctors make – assume it would be similar to getting a home loan. That assumption can cost you a great opportunity.

Commercial lending operates under different rules entirely. Unlike residential loans which fall under strict consumer protection codes NCCP (National Consumer Credit Protect Act 2009), commercial loans are more flexible but require a completely different approach. The banks assess everything differently – from your income to the property’s potential.

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The Two Main Types of Commercial Loans: Lease Doc vs Full Doc

1. Lease Doc Loans: The Fast Track Option

Lease doc loans are for investment properties with existing tenants. Here’s what makes them attractive:

Pros:

  • Minimal documentation required

  • Quick approval process (perfect when you need to move fast)

  • Assessment based primarily on rental income, not your personal finances

  • Interest only payments available

Cons:

  • Requires a substantial deposit (25-35% minimum)

  • Higher interest rates than residential loans

  • You need a signed tenancy agreement before approval

  • Shorter loan terms tied to lease periods

  • The key requirement? Your rental income must cover the interest payments by at least 1.2 times. So if your annual interest is $60,000, you need rental income of at least $72,000.

2. Full Doc Loans: The Traditional Route

Benefits:

  • Lower deposit requirements (sometimes as low as 20%)

  • Better interest rates

  • Longer loan terms (15-25 years typically)

  • More room for negotiation based on your overall financial position

Requirements:

  • Full income documentation

  • Personal asset and liability statements

  • Detailed financial history

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What Banks Really Look for in Commercial Loans

After working with various lenders, I’ve found that banks assess commercial loans based on several key factors:

1. Property Location and Type

Banks categorise locations from 1 (metro, easy to sell) to 4 (regional, harder to flip). A Category C or D location might mean:

  • Higher deposit requirements

  • Additional security needed

  • Potentially higher interest rates

2. Tenant Strength

For lease doc loans especially, your tenant’s creditworthiness is key. Banks prefer:

  • Long term lease agreements (3+3 or 5+5 year terms)

  • Financially stable tenants

  • Properties in areas with low commercial vacancy rates

3. Your Personal Financial Position

Even with lease doc loans, banks still consider your ability to service the loan if things go wrong.

The Lending Landscape: Who’s Lending What

After working with various lenders, I’ve found that banks assess commercial loans based on several key factors:

Big Four Banks

  • Westpac: Great for medical professionals, strong in lease doc space

  • NAB: Strong medical division, competitive rates

  • CBA: Standard commercial offerings with varying appetites

  • ANZ: Standard commercial offerings with varying appetites as well as great for medical professionals, strong in lease doc space

Non-Bank Lenders

These can be lifesavers when you need higher LVR lending:

  • Latrobe Financial: Up to 75% LVR for lease doc

  • Other specialist lenders: Various options for different scenarios

Trade-off: Higher interest rates (often 2%+ above major banks) but more flexible lending criteria.

Private Lenders

Only consider these as a last resort or short term solution:

  • Very high interest rates (8%+ common)

  • Strict terms and potential for harsh penalties

  • Useful for bridging finance or unique situations

The Financing Process: What You Need to Know

Step 1: Get Pre-Approval First

Never sign a contract without finance sorted. Commercial properties don’t sell as quickly as residential, giving you time to arrange proper finance.

Step 2: Work with a Commercial-Experienced Broker

Not all mortgage brokers understand commercial lending. Find one who:

  • Knows which banks prefer which property types

  • Can structure your application optimally

  • Understands the “storytelling” aspect of commercial lending

Step 3: Understand the True Costs

Beyond the deposit, factor in:

  • Valuation fees

  • Legal costs (use a solicitor experienced in commercial property)

  • Establishment fees

  • Ongoing review fees (some lenders conduct annual reviews)

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Common Pitfalls to Avoid

1. Insufficient Deposit Planning

That 35% deposit for lease doc loans often requires creative funding: Equity from your family home

2. Deposit Planning

  • Funds from offset accounts

  • Director’s loans to your company structure

3. Exit Strategies

What happens when the lease expires? Have a plan:

  • Tenant renewal negotiations

  • Converting to full doc if needed

  • Refinancing options

4. Reading the Fine Print

Commercial loan contracts can include:

  • Annual review requirements

  • Recall provisions

  • Specific tenant requirements

Interest Rates 2025

Current rates vary:

  • Big 4 (lease doc): 6-6.5%

  • Non-bank lenders: 8-10%

  • Private lenders: 10%+

Deposit size affects your rate – 35% can get you the best terms.

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My Recommendations for Doctors to Consider

First-Time Commercial Investors:

  1. Full doc if you can afford it

  2. Category 1 or 2 locations

  3. Strong tenant covenants

Portfolio Expansion:

  1. Lease doc for quick acquisitions with good tenants

  2. Keep some personal borrowing capacity for future opportunities

  3. Structure with your accountant first

Practice Buildings:

  1. Owner-occupied commercial loans have better terms

  2. Long-term implications for your practice growth

  3. Changes to your practice structure

In Summary

Commercial property loans are a powerful tool for doctors but require planning and the right advice. The differences from residential lending mean you need to:

  • Know the loan products

  • Work with experts

  • Plan before you buy

  • Have an exit strategy

Don’t be scared – just approach it like you would medicine. With proper planning and the right team, commercial property can be part of your investment portfolio.

Ready to get started with commercial property?

Speak with a commercial broker specialist at Blutin Finance who knows the medical profession. The right property with the right finance could be the foundation of your wealth-building strategy.