Funding owner-occupier and investor purchases of NZ commercial property. The structures (commercial mortgage, P&I or interest-only, bank versus non-bank), indicative LVR bands, and three borrower scenarios.
Last reviewed 5 May 2026
Indicative repayment
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$1,671/week
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
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20 years at 8.25%. Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
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Indicative only. Why we say this
Quick answer
What it is
A commercial property loan is property-secured borrowing used to acquire a warehouse, light-industrial unit, retail premises, professional office, hospitality building, or mixed-use commercial asset. Two paths run through the NZ market: an owner-occupier purchase, where the SME buys the premises it operates from, and an investor purchase, where the property is held as a leased income asset. The two paths have meaningfully different LVR, pricing, and assessment criteria, and the same building can attract different terms depending on which path is being funded.
Owner-occupier deals typically attract LVR of 60% to 65% with the major banks because the underlying trading business sits behind the loan as a going concern. The lender treats the trading cash flow as the primary repayment source and the property as the security backstop. Investor deals typically sit at 50% to 55% LVR because the lender is relying on the lease covenant rather than the trading business. Where the lease is to a major NZ tenant on a long Deed of Lease (Auckland Council, NZ Post, a listed retailer, a hospital, a government department), gearing can move higher and pricing tightens.
The major banks (ANZ, BNZ, ASB, Westpac, Kiwibank) dominate prime commercial-property lending. Non-bank specialists (Avanti Finance, Resimac Asset Finance, Liberty Financial, Pepper Money) take harder applications, including higher LVR, secondary-location property, recently-leased buildings, and borrowers with less trading history. Indicative rate bands sit in the 7% to 11% range, with major banks near the lower end and non-bank specialists near the upper end, subject to the lender's assessment. Pricing also varies materially by region, with Auckland and Wellington central commercial property typically attracting the tightest pricing and outer-region or secondary-town property attracting wider margins.
Typical amount
$300K to $20M+
Term
15 to 25 years
LVR
50% to 65% indicative
Rate band
7% to 11% indicative
Common scenarios
01
A South Auckland builder purchasing a 400 sqm light-industrial unit in Manukau or East Tamaki for around $1.4M. Owner-occupier mortgage at 60% to 65% LVR; the trading company often pays rent into the property-holding entity.
02
A Hamilton-based manufacturer reaching the end of a 6-year lease and offered the building by the landlord. Purchase price commonly $2M to $6M for a 1,200 to 2,500 sqm industrial unit. Owner-occupier mortgage with the trading business as the lease covenant if needed.
03
A Wellington specialty retailer in Cuba Street buying the freehold beneath the shop, often $800K to $2M. Mixed-use commercial typically considered, with residential upper floors valued separately.
04
A Christchurch accountancy or legal practice buying a 200 to 400 sqm office in the CBD or fringe (Riccarton, Addington, Sydenham), typically $900K to $2.5M. Owner-occupier deals price well because the partnership income is straightforward to underwrite.
05
A property investor buying a tenanted industrial unit in Mt Wellington or Penrose with 4 years remaining on a Deed of Lease to a national tenant. Investor LVR at 50% to 55%; lease covenant heavily weighted in the credit decision.
06
An operator purchasing a small block of three to five strata-titled industrial units, occupying one and leasing the rest. Mixed owner-occupier and investor logic applies; the lender commonly gears the occupied portion harder than the leased portion.
07
A regional motel, restaurant freehold, or accommodation block. These deals are commonly assessed as a combined business-and-property package; specialist non-bank lenders feature where the trading business is integral to the security.
Structures
P&I mortgage secured by the building, with the trading business behind it. Typically 60% to 65% LVR at major banks, 15 to 25-year term, fixed or floating.
Mortgage secured by a leased commercial asset where the borrower is not the occupant. LVR commonly 50% to 55%, with lease covenant heavily weighted.
Interest-only period of 1 to 5 years over the front of the loan, then reverts to P&I. Used to manage cash flow during a fit-out or initial trading period.
Avanti, Resimac Asset Finance, Liberty, and Pepper Money take harder applications: higher LVR, secondary-location, shorter trading history, recent leases.
Where the vendor finances part of the purchase price, settled across 1 to 5 years. Less common, but features in owner-operator handovers and family-business sales.
An existing residential or commercial property is offered as additional security alongside the new commercial property to lift effective LVR. Common with major banks for established borrowers.
Decision matrix
| Feature | Owner-occupier mortgage | Investor mortgage | Non-bank specialist | Cross-collateralised |
|---|---|---|---|---|
| SME buying its trading premises | Best fit | No | Works (harder profile) | Best fit |
| Investor buying tenanted property | No | Best fit | Works | Works |
| Mixed-use (residential above retail) | Best fit | Works | Works | Best fit |
| Higher LVR (over 65%) | Marginal | No | Best fit | Best fit |
| Secondary location or older building | Marginal | Marginal | Best fit | Works |
| Short trading history (under 2 yrs) | Marginal | Marginal | Best fit | Works |
| Borrower already has property security | Best fit | Best fit | Works | Best fit |
| Settling-in period needs IO | Best fit | Best fit | Works | Works |
Worked scenarios
Construction
An East Auckland residential builder operating from a leased workshop in East Tamaki, where the lease is up for renewal. The landlord offers the 380 sqm light-industrial unit at $1.4M. The trading company has 7 years of accounts, 25% deposit available from retained earnings, and supports a major-bank application.
Structure in this scenario: a 65% LVR owner-occupier commercial mortgage at indicative 8.0% p.a., 25-year term, 2-year interest-only window. Loan amount $910,000. During the IO window weekly interest runs around $1,400; thereafter P&I lifts to around $1,620 weekly on these assumptions.
Indicative figures
Manufacturing
A Frankton-based food-manufacturing business in year 6 of a 6-year lease on its 1,800 sqm building. The landlord offers the building at $3.6M. The business has 12 years of trading, audited accounts, and substantial retained earnings. Existing residential property is offered as additional security to lift LVR.
Structure in this scenario: a cross-collateralised owner-occupier mortgage with effective LVR around 70% across the combined security. Loan amount $2.5M at indicative 7.8% p.a., 20-year term, P&I from settlement. Weekly repayment runs around $4,860 on these assumptions.
Indicative figures
Property investment
An Auckland investor buying a 600 sqm tenanted industrial unit in Mt Wellington for $2.1M. The unit is leased to a national logistics operator with 4 years remaining on the Deed of Lease at $165,000/year net rent. The investor is borrowing through a property-investment company.
Structure in this scenario: a 55% LVR investor commercial mortgage at indicative 8.5% p.a., 15-year term, P&I from settlement. Loan amount $1.155M. Weekly repayment runs around $2,620 against weekly net rent of around $3,170 on these assumptions, leaving an indicative weekly servicing margin before rates, insurance, and maintenance.
Indicative figures
Pitfalls
01
Legal fees, registered valuation ($2,500 to $8,000 for commercial), seismic and weathertightness reports, building reports, due-diligence surveys, and LIM searches commonly add 1.5% to 3% on top of the purchase price. Many buyers find these compress the deposit available for the loan itself.
02
NZBS 34% (the threshold for "earthquake-prone") and the wider seismic-rating framework affect lender appetite, insurance availability, and exit liquidity. Buildings under NZBS 67% commonly see narrower lender pools and higher insurance premia. The Earthquake-Prone Building register is a primary source.
03
An IO window of 1 to 2 years over a fit-out or trading-up period is often appropriate; an IO window of 5 years simply pushes the amortisation back without addressing the underlying servicing position. The accountant and the lender are commonly involved in sizing the IO window to the cash-flow plan.
04
Commercial lending rate fixes typically run 1 to 5 years on a 15 to 25-year mortgage. Rolling onto the prevailing rate at expiry is a structural feature, not a bug, and many businesses model multiple rate scenarios across the term. Commercial rates do not always move with residential rates.
05
On an investor purchase, the strength of the tenant and the lease structure (term remaining, ratchet clauses, rent reviews, make-good clauses) drive the credit decision. Lenders commonly discount weak covenants down to lower LVR or decline the deal entirely.
06
Commercial property is typically zero-rated for GST when both parties are GST-registered and the property is sold as a going concern with a tenant. Where the GST treatment is misclassified at agreement stage, the buyer can face an unexpected 15% cash-flow hit. The accountant is the right person to confirm the position before the agreement goes unconditional, particularly where the building is partly tenanted and partly vacant or where a change of intended use is contemplated post-settlement.
07
Strata-titled commercial units, mixed-use buildings, and multi-tenanted blocks commonly carry body corporate levies, shared-services fees, or building-management costs that the lender treats as fixed expenses against servicing. Many buyers find these costs are 1% to 3% of the building value annually, materially affecting the net cash position. The body corporate accounts for the prior 2 to 3 years are commonly requested as part of due diligence.
Eligibility and lender criteria
NZ commercial-property lenders typically assess four buckets: the borrower (the trading business or investor entity), the security (the property itself), the income (lease covenant for investors, trading cash flow for owner-occupiers), and the structure (LVR, term, IO window, fixing). A registered valuation by a Property Institute of NZ-accredited valuer is a standard requirement, and the lender commissions or accepts the valuation directly. A building report and seismic assessment are also commonly required, particularly for buildings over 30 years old or those that fall under the Earthquake-Prone Building register thresholds.
Owner-occupier applications typically require 2 to 3 years of trading accounts, GST returns, an aged debtors and creditors report, and a 12-month forward cash-flow forecast incorporating the new ownership cost. The major banks commonly look for an interest-cover ratio (ICR) of 1.5x to 2.0x EBITDA against new debt service. Many SMEs find the ICR is the binding constraint rather than LVR, particularly where the trading business is service-based and the building cost is high relative to revenue. Where the borrower is buying the building it currently leases, the ICR test commonly improves because the existing rent expense converts into mortgage interest plus principal repayment, and the principal slice does not count toward the ICR calculation.
Investor applications lean heavily on the Deed of Lease. Lenders commonly look for a remaining term of at least 3 to 5 years, a tenant of acceptable covenant (national or listed tenants are preferred; SME tenants are assessed individually), a recent rent review on or near market, and standard commercial Deed of Lease terms (ADLS or comparable). Lenders typically apply a discount to investor net rent of 10% to 20% to allow for vacancy, rates, insurance, and maintenance when calculating servicing. Where the lease has less than 18 months to run, lender appetite typically drops sharply, and the deal commonly moves to non-bank specialists or shorter-term bridging structures.
Personal guarantees are typically required from the directors or controlling shareholders of the borrowing entity, even where the loan sits in a property-holding company. The PG is enforced where the property security is insufficient to clear the debt on enforcement. The accountant is the right person to confirm the entity structure and the practical implications of the PG against the specific position. Some borrowers split the property and the trading business across separate entities (a property-holding company that leases to a trading company), which is a common NZ structure for asset-protection and succession-planning purposes.
Non-bank specialists (Avanti Finance, Resimac Asset Finance, Liberty Financial, Pepper Money) typically write to the same regulatory framework as the major banks but apply different credit appetite. Higher LVR, shorter trading history, secondary location, and recently-leased property are all areas where non-bank lenders compete. Indicative rates run 8% to 11% on these deals, with some pricing inside that band on stronger profiles, subject to the lender's assessment. Many borrowers find a non-bank settlement followed by a refinance to a major bank at the 2 to 3-year mark is a common path where the trading record is too short for major-bank pricing at first settlement.
Insurance is a non-negotiable requirement on commercial property lending. Material damage, public liability, and (in some cases) business interruption are typical. Earthquake cover is standard in NZ commercial policies; lenders commonly check for full reinstatement values rather than indemnity, and verify the policy is annually renewed. Underinsured commercial property remains a common reason for declined applications or higher pricing, particularly for buildings in seismic zones around Wellington and the upper South Island.
Lenders to know
Best for major-bank owner-occupier deals
Major bank, broad commercial-property product range. Strong on owner-occupier deals where the trading business is well-established.
Indicative rate band:7% to 9% p.a.
Read onBest for larger commercial-property deals
NZ's largest bank. Substantial commercial-property book; competitive on prime owner-occupier and investor applications.
Indicative rate band:7% to 9% p.a.
Read onBest for mid-market owner-occupier
Major bank with a strong SME commercial-property franchise.
Indicative rate band:7% to 9% p.a.
Read onBest for non-bank harder-profile commercial
Non-bank lender writing commercial mortgages where major-bank criteria are not met. Higher LVR and shorter trading history considered.
Indicative rate band:8% to 11% p.a.
Read onBest for NZ-bank commercial mid-market
Registered NZ bank. Commercial mortgages, often well-suited to owner-operator and rural commercial deals.
Indicative rate band:7% to 10% p.a.
Read onReferences
NZ commercial-property lending volumes and indicative rate context.
GST zero-rating for commercial property sold as a going concern.
NZBS seismic-rating framework affecting lender appetite and insurance.
Registered-valuer framework referenced in commercial mortgage applications.
NZ commercial property market context.
FAQ
A commercial property loan is property-secured borrowing used to purchase a warehouse, light-industrial unit, retail premises, professional office, or other commercial real estate. The loan is typically a 15 to 25-year mortgage with the building as security, and the borrower is either the SME occupying the building or an investor holding it for lease income.
Indicative LVR sits at 60% to 65% for owner-occupier purchases with major banks, and 50% to 55% for investor purchases. On a $1,500,000 owner-occupier deal that gives an indicative loan of $900,000 to $975,000, with the balance funded from deposit, equity from another property, or vendor finance.
Indicative rates run 7% to 11% per annum across the NZ market, with major banks pricing prime owner-occupier deals near the lower end and non-bank specialists pricing harder applications near the upper end. Rate fixes typically run 1 to 5 years over a 15 to 25-year mortgage, subject to the lender's assessment.
Commercial mortgage terms commonly run 15 to 25 years, with a P&I amortisation schedule. An interest-only window of 1 to 5 years is sometimes layered over the front to manage cash flow during a fit-out or settling-in period, after which the loan reverts to P&I.
No. Deposits commonly come from a mix of cash, retained earnings in the trading business, equity in another property offered as cross-collateral, or vendor finance from the seller. Cross-collateralised structures are used by established borrowers to lift effective LVR without moving to non-bank pricing.
Interest on a commercial property loan used for business purposes (owner-occupier or investor) is generally deductible against the relevant business or rental income in New Zealand, subject to the accountant's confirmation on the entity structure and the specific use of funds.
Commercial property is typically zero-rated for GST when both buyer and seller are GST-registered and the property is sold as a going concern with a tenant. Where the GST classification is wrong at agreement stage, the buyer can face an unexpected 15% cash-flow hit at settlement. The accountant is the right person to confirm before the agreement goes unconditional.
Interest-cover ratio (ICR) is EBITDA divided by interest expense (or sometimes total debt service). NZ banks commonly look for an ICR of 1.5x to 2.0x against new debt service on owner-occupier deals. Many SMEs find the ICR is the binding constraint on commercial property servicing rather than the LVR.
Buildings classified earthquake-prone under the NZBS 34% threshold face narrower lender pools, higher insurance premia, and tighter remediation conditions. Buildings between NZBS 34% and NZBS 67% are commonly considered case-by-case. The Earthquake-Prone Building register is a primary source for the official rating.
Standard documents include the sale and purchase agreement, registered valuation, building and seismic reports, 2 to 3 years of business accounts and tax returns, GST returns, aged debtors and creditors, a 12-month cash-flow forecast, and personal financial statements for guarantors.
Personal guarantees are typically required from directors or controlling shareholders of the borrowing entity, even where the loan sits in a property-holding company. The PG is enforced where the property security is insufficient to clear the debt on enforcement.
Non-bank specialists like Avanti Finance, Resimac Asset Finance, Liberty Financial, and Pepper Money commonly write at higher LVR than the major banks, particularly on harder profiles (shorter trading history, secondary location, recently-leased property). Indicative rates sit higher than major-bank pricing, in the 8% to 11% band.
Related
Commercial property loan
The structured loan-type page covering owner-occupier and investor mortgages in depth.
Read onExpand or open a second site
The companion reason for businesses adding capacity rather than buying their existing premises.
Read onAvanti Finance
Non-bank specialist for commercial mortgages outside major-bank criteria.
Read onAged care and rest home loans
Property-heavy commercial mortgages are the dominant capital structure in the segment.
Read onMotel and accommodation loans
Going-concern motel acquisitions usually combine business and property finance into a single bank facility.
Read onDisclaimer
A business loan is a commitment that runs for months or years, and repayments come out of the same operating cash flow as everything else. Before committing, it is worth modelling the weekly and monthly cost against the business's working-capital position, which is what this site is built to help with. Borrowing at a level that stays comfortable through a quiet quarter, not just a strong one, is widely regarded as the safer frame.
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