Commercial Lease Document Loans: A Smart, Flexible Option for Property Investors
At Loan Central Hub, we help our clients unlock finance solutions that fit the real world — and one of the most under-utilised options in the commercial space are Lease Document Loans.
If you own or are purchasing a commercial property that’s tenanted with a long-term lease in place, you could access funding without jumping through the usual hoops. Here's what you need to know:
✅ What Is a Lease Document Loan?
Also known as a lease-backed loan or lease stock loan, this type of commercial loan is assessed primarily on the strength of the lease agreement — not the borrower’s personal income or business financials.
These loans only apply for commercial investment properties with an existing lease in place due to the reliance on the existing lease for loan affordability, as well as the nature of commercial investment when comparing to residential investment.
📊 How Are These Loans Assessed?
These loans are typically assessed on an Interest Cover Ratio (ICR) basis. That means lenders look at how well the rental income covers the loan’s interest repayments.
For example:
If your loan's interest only repayments are $100,000 annually, and the lease generates $130,000 in net annual rental income (excluding GST and outgoings), your ICR is 1.3x.
Lenders generally want to see ICRs of around 1.5x or higher, though this can vary depending on the property type and tenant quality.
🏦 Loan-to-Value Ratios (LVRs)
One of the key attractions of lease document loans is the relatively strong Loan-to-Value Ratio options, typically ranging from:
65% to 70% LVR with mainstream or bank lenders
Up to 80% LVR with certain non-bank and private lenders (usually with higher pricing and more restrictive terms)
The higher the LVR, the more scrutiny is placed on the lease and tenant — but these are still strong options for borrowers looking to maximise leverage which include looking at the borrower’s financial position outside the new lease income for any surplus income to contribute to loan affordability.
🔒 Minimal Financial Disclosure
One of the biggest advantages?
Some lenders do not require full personal financial disclosure — which can be a game-changer for self-employed investors or those with complex structures. These loans are also commercial loans, and therefore, not subject to the National Credit Code.
✅ No tax returns
✅ No BAS
✅ No personal servicing assessment (in some cases)
Instead, the lender focuses on the lease:
Who is the tenant?
How long is the lease?
Are there rent reviews and renewal options?
Is the income stable and sufficient to cover the loan?
💼 Who Is This Suitable For?
Lease document loans are ideal for:
✔️ Commercial property investors with strong tenants
✔️ Business owners purchasing premises already tenanted
✔️ Investors looking to further expand their property portfolio but are reaching the limits of their personal borrowing capacity.
The standard terms offered in Lease Document Lending are loan repayments assessed on a notional term of 20-30 years depending on the security type, and for the actual loan term to align with the lease term and options minus 1 year. This is an inbuilt trigger for loan renewal and valuations, to confirm that a new lease is in place that is sufficient to meet the lender’s ICR/LVR benchmarks once renewed.
🧠 Final Thoughts
Lease document loans offer a streamlined, asset-focused way to access funding — particularly useful in a tightening credit environment where traditional full-doc loans can be slow or restrictive.
At Loan Central Hub, we work with a broad panel of banks, non-banks, and private lenders who actively fund these kinds of deals.
If you have a leased commercial asset or a prospective purchase in mind, let’s talk about how to structure a solution — fast, flexible, and aligned with your goals.
📩 Get in touch today — we’ll assess your deal and show you what’s possible.
