Releasing Equity From a Commercial Property

Why banks decline commercial property equity release

Most banks have the ability to release equity from commercial property. The problem is their process and requirements. Here's what typically goes wrong:

• Full financials required. Banks ask for three years of tax returns, profit-and-loss statements, BAS statements, and accountant letters. If your business documents are messy, incomplete, or old, you'll be asked to provide more before they'll proceed.
• Long assessment timelines. A bank refinance or equity release typically takes 4–8 weeks. If you need capital in days or weeks, you'll miss the window.
• Serviceability calculations. Banks test whether the business can afford the repayments using rigid formulas. A business with variable income, quiet quarters, or non-traditional revenue may fail the serviceability test — even if the property easily covers the loan.
• Credit file sensitivity. Any adverse credit — missed loan payments, overdue BAS, county court judgements — blocks the application automatically, regardless of property value or exit strategy.

How private lenders approach commercial property differently

Private lenders start with the property security, not your credit file. For commercial property equity release, they ask:

• What is the property worth? A current valuation confirms the security available. The higher the property value, the more equity you can access.
• How much equity is available? If the property is worth $5 million and you owe $2 million, you have $3 million in equity available at 80% LVR.
• What's the exit strategy? How will you repay this loan? Refinance to a bank once the business improves? Sell another asset? Use business cash flow? A clear plan is what lenders want.

Because they focus on property value, private lenders can offer lo doc options (no full financials required), accept credit-impaired borrowers, and settle quickly. For a commercial property with clear equity, the decision can come down to the deal structure and exit plan — not your financial paperwork.

A typical commercial property equity release

An accountancy firm owns a $5 million office building. They have a bank mortgage of $1.5 million remaining. They want to fund a business acquisition worth $1.5 million. The bank says no — they don't have full business financials dating back three years (the firm recently restructured). The timeline is also tight: they need the funds in four weeks, but the bank process would take 6–8 weeks.

A private lender steps in. They order a valuation and confirm the property is worth $5 million. At 80% LVR, the lender can release up to $4 million in total borrowing. The existing bank mortgage is $1.5 million. The new loan can be structured for $1.5 million at a second charge (sitting behind the bank's first mortgage). The firm can settle within 5–7 business days, giving them the capital they need for the acquisition.

The private lender's rate is 4.80% p.a. (slightly higher than a bank rate, but offset by speed, flexibility, and no serviceability hassle). The term is set for three years, with the expectation that once the acquisition settles and improves cash flow, the firm will refinance back to a bank at a lower rate.

What lenders want to see

Even though private lenders are more flexible, they still need to assess the deal. Here's what strengthens your application:

• Clear property value. A recent valuation (within 6–12 months) or evidence of what the property is worth. This is the foundation of the deal.
• Existing loan details. How much you currently owe, the rate, the remaining term, and the lender name. This helps the private lender understand how much equity is truly available.
• Clear exit strategy. How will you repay this loan? Examples: refinancing to a bank once business improves, selling another asset, using business profits over the loan term. A realistic plan is key.
• Purpose of funds. What are you using the equity for? Acquisition, expansion, equipment, paying business debts, or cash flow? Being clear about the use helps lenders assess the deal.

When this might not work

Commercial property equity release isn't right for every situation. A deal might not stack up if:

• The total borrowing (existing loans + new loan) exceeds 80% LVR on the property. There's not enough security for the lender to feel comfortable.
• There's no realistic exit strategy. If you can't articulate how you'll repay the loan within the agreed term, lenders won't proceed.
• The property is in poor condition or in a declining market. If the valuation comes back lower than expected, the available equity shrinks.
• The property has legal complications: unsettled disputes, pending litigation, environmental issues, or encroachments. These make security difficult and deals complicated.

How to get commercial property equity release

The process is straightforward:

• Step 1: Describe your property and needs. Tell us the property type (office, retail, warehouse, etc.), estimated value, existing loan details, and what you want to do with the equity. You don't need exact numbers.
• Step 2: Get matched with lenders. Our AI compares your property and situation against specialist lenders on our panel. We show you which ones are interested and why they suit your deal.
• Step 3: Move forward. Review the options, pick the lender that fits, and connect directly. You'll typically get an indication within a few days.