Direct answer: There is no single commercial mortgage rate in Australia. A lender prices the property, borrower, leverage, lease or trading income, loan term, repayment structure and execution risk together. Compare written offers using total dollar cost over the expected holding period, not a rate advertised without fees, conditions or a matching credit scenario.
This page owns the decision intent how commercial mortgage pricing works and how to compare offers. For product eligibility and application steps, use the commercial property loans guide. For lender-type comparisons, see bank versus private commercial loan pricing.
What a commercial mortgage quote contains
Commercial pricing is usually a package rather than one number:
- a fixed, variable or reviewable interest basis;
- a lender margin or risk price;
- establishment and documentation fees;
- valuation, legal and due-diligence costs;
- ongoing, line, review or undrawn fees where applicable;
- default, extension, variation and discharge terms; and
- conditions that must be met before and after settlement.
The Reserve Bank of Australia publishes official interest-rate statistics, but a policy or market reference rate is not a borrower quote. Commercial loan pricing also reflects lender funding, capital, operating costs, security and scenario risk.
Pricing-driver matrix
| Driver | Why it matters | Evidence that improves comparison quality |
|---|---|---|
| Property and location | Affects valuation confidence, saleability and lender appetite | Current valuation, property details and comparable evidence |
| Lease or business income | Supports serviceability and downside assessment | Leases, rent schedule, financials and bank statements |
| Leverage | Changes the lender’s loss exposure and policy fit | Purchase price, debt schedule, equity contribution and payout letters |
| Borrower strength | Shows capacity, experience and conduct | Financial statements, tax records and asset/liability position |
| Purpose and term | Determines whether the structure matches the transaction | Contract, refinance statement, project budget or use-of-funds schedule |
| Exit and residual risk | Matters most for short-term or transitional loans | Refinance, sale or cash-flow evidence with dates and contingencies |
Two quotes should not be compared until the loan amount, term, repayment type, security and assumed settlement date are aligned.
Fixed, variable and reviewable pricing
| Structure | Potential benefit | Question to ask |
|---|---|---|
| Fixed | More certainty for the fixed period | What break or early-repayment cost can apply? |
| Variable | May allow more flexibility if the reference rate moves | Which reference or review mechanism changes the rate? |
| Reviewable | Can fit bespoke commercial facilities | When can the lender reprice and what notice or limits apply? |
The label alone does not determine value. A variable facility with clear margins and modest fees may be easier to model than a nominally fixed facility with material exit costs. Legal advice should confirm how the pricing clause actually operates.
How to calculate a comparable total cost
Use a single comparison sheet for every offer:
- choose the expected holding period and a reasonable delayed-exit case;
- calculate interest using the proposed drawdown and repayment pattern;
- add establishment, valuation, legal, broker, review and line fees;
- include discharge, early-repayment or extension costs that could realistically apply;
- note which costs are paid upfront, capitalised or paid monthly; and
- test the result if the loan runs longer or the variable rate changes.
The result should show both total dollars and peak cash required. Do not treat a broker illustration as a binding lender offer.
Borrower-fit guide by transaction
| Transaction | Pricing question that matters most |
|---|---|
| Owner-occupied purchase | Does business cash flow support repayments after the deposit and transaction costs? |
| Investment property | How do lease term, vacancy, tenant concentration and incentives affect serviceability? |
| Refinance | Is the saving real after break, valuation, legal and discharge costs? |
| Short-term bridge | What is the total cost if the documented exit is delayed? |
| Development or repositioning | How are drawdowns, interest, cost overruns and completion conditions treated? |
Lender assessment before pricing
A useful lender submission answers five questions before asking for a rate:
- What is the commercial purpose and requested structure?
- What property and ranking support the facility?
- What income repays interest and principal?
- What conditions or defects could delay settlement?
- What is the primary and fallback exit?
Incomplete information often produces indicative terms with broad conditions. A complete pack makes it easier to identify whether a pricing difference is real or simply based on different assumptions.
Illustrative comparison — not a market quote
An owner-occupier compares a longer-term bank refinance with a shorter non-bank facility. The bank indication has a lower headline rate but needs additional financial evidence and time. The non-bank indication has a higher total cost but may fit the transaction deadline. The right comparison includes the cost of delay, all lender fees, refinance risk and the business’s ability to service either structure—not a claim that one lender type is always better.
This example is hypothetical and contains no current rate, approval or settlement representation.
Common pricing mistakes
- comparing an interest rate with an all-in cost;
- ignoring whether interest is charged on the limit or drawn balance;
- omitting legal, valuation, line, review or exit fees;
- assuming an indicative term sheet is unconditional approval;
- choosing a short term without a funded exit plan; and
- using old market tables as though they are current offers.
Because pricing changes, this page intentionally does not publish a universal “today’s rate” table. Current terms should be sourced from written lender proposals for the same scenario.
Sources and next step
Primary context: RBA interest-rate statistics and business.gov.au guidance on reducing business-loan costs.
For a scenario-based comparison, use the commercial property finance service with the property, purpose, requested amount, current debt, lease or financial evidence and required date. General information only; not financial, legal or tax advice.