Why banks are hesitant about office refinances
Office buildings have become a trickier security for banks in recent years. Post-COVID, many cities have seen higher vacancy rates as companies downsized, went hybrid, or moved to new premises. Banks run stress tests assuming occupancy rates could fall further, and if they see a building that's already less than fully occupied, they get nervous.
Banks also look at the borrower's personal credit history and serviceability — your ability to repay the loan from existing income. If you're refinancing because your current lender won't renew, or because your personal credit isn't perfect, the bank will decline the application before they even look at the building's value. The result is a rejection, even if the property is worth much more than the loan.
How private lenders look at office buildings differently
Private lenders don't follow the same rules as banks. Instead of worrying about rental income and your credit score, they ask three core questions:
- What is the property actually worth? — This is the security. If the building is worth $4 million, that's the primary protection for the lender.
- How much are you borrowing relative to that value? — The loan-to-value (LVR) determines the risk. A 50% LVR is low risk; 75% is higher risk.
- What's your plan to repay? — The exit strategy. Usually this is refinancing to a bank once conditions improve, selling the building, or using cash flow from your business.
Office vacancy doesn't automatically disqualify the deal. Neither does a non-perfect credit history. What matters is whether the numbers work and whether there's a realistic path to repayment. Many specialist lenders don't require traditional proof of income for office refinances, which removes another barrier for business owners who work on irregular income.
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Check Your OptionsWhat a typical deal looks like
Illustrative example — not a real caseImagine an accountant who owns a $4 million office floor in a CBD strata building. The building was fully occupied before the pandemic, but now about 30% of the space is vacant. The bank has offered to renew the existing $2 million loan, but only at a much higher rate and with tougher conditions. The accountant is worried about the rising interest costs and wants to look at other options.
A private lender might offer a new loan of $2.4 million at a fixed rate — enough to pay out the existing loan plus inject some working capital. The property is worth $4 million, so the LVR is 60%. The loan might be set for 18 months, giving the accountant time to let new tenants in or refinance back to a bank at a better rate once the building is more fully occupied.
What lenders want to see
Even though private lenders are more flexible than banks, they still need to understand the deal. Here's what makes a strong application:
- Clear property valuation. A recent valuation or strong evidence of what the building is worth. The more equity you have, the stronger the deal.
- Current occupancy information. Be honest about vacancy. Lenders understand office markets fluctuate. What matters is the property value underneath.
- Tenant details. If the building is tenanted, lenders want to know about lease terms, quality of tenants, and rental rates. This helps them understand the overall picture.
- Exit strategy. How will you repay the private loan? The most common exits are refinancing to a bank, selling the property, or using operating cash flow from your own business.
- Overall debt picture. What other loans exist on the property and what's the total borrowing relative to the building's value.
When this might not work
Private lending is a practical solution for many office refinances, but a deal like this might not stack up if:
- The building's value is unclear or contentious. If there's no reliable way to establish what the property is worth, lenders will struggle to feel confident in the security.
- The LVR is too high. If the total borrowing (existing loans + new loan + costs) pushes beyond 75–80% of property value, you'll find fewer lenders willing to proceed, and terms will be tougher.
- There's no realistic exit strategy. If you can't explain how you'll repay the private loan within the agreed term, lenders won't proceed.
- The building has structural or legal problems that aren't disclosed. Lenders will conduct due diligence and will walk away if they discover undisclosed issues.
Our panel includes specialist private lenders who actively fund office building refinances across all Australian states and territories. Across these lenders:
- Loan sizes from $80K up to $80M — covering everything from small strata units to large mixed-use office buildings
- Interest rates from 4.99% p.a., with most deals settling faster than banks
- LVR up to 70% — some lenders will go higher depending on the deal
- Settlement from as little as 1 week for straightforward deals
- Credit-impaired borrowers accepted, and lo doc options available
- Coverage across all Australian states and territories
The exact lender and terms depend on your specific deal. Describe your situation and our AI will match you with the most suitable lenders.
How to refinance an office building with a private lender
The process is straightforward:
- Step 1: Describe your situation. Tell us about your office building — location, size, current value, how much you owe, occupancy status, and what you're trying to achieve. You don't need to have everything perfectly organized — just the essentials.
- Step 2: Get matched with lenders. Our AI checks your scenario against specialist lenders on our panel and shows you which ones are likely to consider your deal, with plain-English explanations of why.
- Step 3: Move forward. Review the options, pick the one that fits best, and connect directly with the lender. Most private lenders can give you an indication within days, not weeks.