Commercial property finance
Refinancing commercial property when your fixed rate or term ends.
The cash rate has gone from 3.60% at the start of 2026 to 4.60% after the RBA's fourth rise of the year on 29 September. A commercial loan that last priced in January now sits on a benchmark about one percentage point higher, with 3-month bank bills at 4.73% on 24 September against 3.75% on 2 January. Start the refinance conversation well before expiry, because your current bank will reassess the loan at today's rates.
When should you start refinancing a commercial loan?
Earlier than the expiry date suggests, because the valuation, the credit approval and the legal discharge run one after another, and a borrower who starts at the last moment negotiates from the lender's timetable. I'd begin the conversation about six months before the term or fixed rate ends. As a guide, a straightforward commercial refinance takes around six to eight weeks from application to settlement, and longer if the valuation or the lease raises questions.
The market a borrower meets has moved since the loan was written. The cash rate was 3.60% on 2 January 2026 and is 4.60% after the RBA's rise on 29 September. The 3-month bank bill rate that BBSW is set from went from 3.75% to 4.73% between 2 January and 24 September, so a facility that last priced in January now sits on a benchmark 98 basis points higher, or about $19,600 a year in interest on $2 million. I cover the mechanics in the BBSW piece.
- Well before expiry
Read the facility agreement for the expiry date, the review terms and any fixed-rate break clause. Ask your lender what it will offer at expiry.
- Closer to expiry
Get the renewal terms in writing and test the market in parallel. Order a valuation view on the property.
- At review
The lender reassesses income, cover, valuation and covenants at today's rates. Compare what it offers with what the market offers.
- Decision
Renew, renegotiate or move. Leave time for credit approval, legal discharge and settlement before expiry.
Your current bank reassesses income, cover, valuation and covenants at expiry.
From my years in banking alongside credit teams at NAB and Judo, I know an expiry review reads like a fresh application on an existing customer, and the lender looks at four things.
Income and cover. Whether the property rent or the business earnings still cover the repayments at today's interest cost. With the cash rate up a full percentage point since January, the same loan costs more to service, so cover tightens even when income is unchanged.
Valuation. A fresh valuation sets the loan-to-value ratio against what the property is worth now. For an investment property the lender also looks at the lease profile, including how long the tenants are committed.
Covenants and conduct. Whether the borrower has met the terms of the facility, and how the account has run.
Financial position. Current financials for the borrower and any guarantors. Out-of-date financials or tax lodgements are a common hold-up, so bring them current before the application goes in.
A short checklist to have ready before the first conversation:
- The facility agreement, with the expiry date, review terms and any break cost clause.
- Recent loan statements and the current interest rate and margin.
- The lease schedule or rent roll, or the trading accounts if the loan sits behind a business.
- Financials for the borrowing entity and any guarantors.
- A recent valuation, if there is one.
When does moving lender make sense?
Lender appetite varies by asset and sector, and some lenders are growing their business books. Business finance for property purchases reached a record $27.2 billion in the June quarter 2026 (ABS), and Bendigo and Adelaide Bank grew its business lending 12.5% in FY26, which my business partner Gabriel covered in the record lending piece. A lender that wants more of your type of loan will often price and structure it differently from one that does not.
The incumbent's renewal terms are competitive, the structure still suits the property, and the cost of moving would take most of the saving.
The renewal reprices the margin sharply, cuts the limit, or the lender's appetite for your asset type has changed. A restructure, such as releasing equity or splitting facilities, can also be easier with a new lender.
If your bank has told you it won't renew, the timeline matters even more, because a replacement lender needs the same approvals. Start with the checklist, and our commercial property finance in Melbourne page and commercial finance overview set out how we approach the property side. Where a borrower's loan was declined in the first place, our piece on why banks decline commercial property loans covers the usual reasons.
What does refinancing cost?
The costs are a valuation fee, legal costs for the new mortgage and the discharge of the old one, any lender establishment fee, and a break cost if you leave a fixed rate before it ends. Together these can run from a few thousand dollars on a simple file to tens of thousands where a break cost applies, so ask for the break cost in writing before you commit.
Weigh them against the interest difference over the time you expect to hold the loan. On a $2 million facility each 0.25 percentage point of margin or benchmark is $5,000 a year, so a quote that is 0.50 points lower is worth $10,000 a year before costs. A borrower holding for several years can recover the costs of a move well inside the term, while a borrower selling next year may not.
If a renewal letter has landed, send it to me with the facility agreement before you respond, and I'll tell you whether the offer is worth taking.