Streamlining Commercial Property Investment Financing 

Introduction 

Traditionally, securing loans for commercial property investments proved challenging for the self-employed and retirees. However, lease doc loans have emerged as a solution, simplifying the application process by relying on property rental income. This guide sheds light on what lease doc loans entail, how they are assessed, acceptable security, and the advantages they offer. 

1. Understanding Lease Doc Loans 

Minimal Documentation, Maximum Convenience 

• Documentation Requirements: 
• No need for payslips, tax returns, bank statements, BAS, or financial statements. 
• Security must be a commercial or residential investment property. 
• Loan must be NCCP unregulated. 
• Lease must have at least 12 months remaining. 
• Loan Terms: 
• Borrow up to 70% of the property value. 
• Lease income (after outgoings) must cover loan interest. 
• Assessment Criteria: 
• Financial strength of the tenant. 
• Remaining term of the lease (minimum 12 months). 
• Interest cover ratio (income’s ability to cover interest payments). 
• Interest Cover Ratio Example: 
• If applying for a $1,000,000 loan at 5%, with a buffer rate of 7%, $70,000 in net rent income required. 
• Higher income relative to interest payments strengthens loan eligibility. 

2. Acceptable Security 

Property Types and Locations that Qualify 

• Non-Specialized Commercial Properties: 
• Retail, industrial, office, or warehouse in major metro or regional areas. 
• Residential Properties: 
• Located in towns with at least 10,000 people. 
• Loan must be NCCP unregulated (company loans or loans for commercial property, shares, or a business). 
• Exceptions: 
• Some lenders may consider other locations with lower LVRs and loan amounts. 

3. Residential Investment Properties as Security 

Unlocking Options for Professional Property Investors 

• NCCP Unregulated Loans: 
• Loans in the name of a company or used predominantly for commercial property, shares, or a business. 
• Not for releasing equity to buy another residential property. 
• Owner-Occupied Properties: 
• Not considered for lease doc loans. 
• Lease to own business or related entities doesn’t qualify. 
• Purpose Limitations: 
• Not for releasing funds for personal business. 
• Exclusively for purchasing or refinancing commercial investment properties. 

4. Loan Terms and Interest Rates 

Tailoring Financing to Your Needs 

• Loan Terms: 
• Aligned with lease renewal in most cases. 
• Some lenders offer set terms (5, 15, or 25 years). 
• Consideration for interest-only periods based on interest cover and lease term. 
• Interest Rates: 
• Rates dependent on deposit size, interest cover ratio, and property security. 
• Potential for lower rates with a substantial deposit. 

5. Why Choose a Lease Doc Loan? 

Simplified Process, Broad Accessibility 

• Key Borrower Categories: 
• Self-funded retirees. 
• Individuals with complex financial situations. 
• Self-employed borrowers without income evidence. 
• Advantages: 
• Simplified application process. 
• Easier approval process. 

Conclusion: Simplifying Commercial Property Financing 

Lease doc loans offer a streamlined path for investors, particularly those facing hurdles in proving income. By relying on property rental income, these loans provide accessibility to a broader range of borrowers, including the self-employed and retirees. Understanding the assessment criteria, security requirements, and eligibility criteria empowers investors to make informed decisions when venturing into the realm of commercial property financing.