Whether you're expanding your business or building a property portfolio, understanding the differences between commercial and residential lending is crucial for success.

Interest Rates and Fees

Commercial loans typically attract higher interest rates and fees compared to residential loans. This is because commercial properties are generally considered higher risk by lenders.

Loan-to-Value Ratio (LVR)

While residential loans often allow you to borrow up to 90% or even 95% of a property's value (with Lenders Mortgage Insurance), commercial loans usually cap the LVR at 70% to 80%. This means you'll need a larger deposit for a commercial property.

Loan Terms

Residential loans are typically spread over 25 to 30 years. Commercial loans, however, often have shorter terms, typically ranging from 5 to 15 years.

Assessment Criteria

For residential loans, lenders primarily look at your personal income and expenses. For commercial loans, the assessment heavily focuses on the property's potential income (yield) and the strength of the lease agreements.

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