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The commercial loan opening the door for more investors
As more seasoned investors look for ways to continue expanding their portfolios through commercial properties, more are turning to a loan that allows them to borrow at maximum serviceability.
With the recent changes to self-managed super fund (SMSF) lending as well as the well-documented changes to capital gains tax (CGT) and negative gearing, commercial property has become one of the key methods to continue building wealth.
SPI host and CEO of Managed, Phil Tarrant, said the removal of SMSF lending had led many investors to turn away from residential investment in their portfolios.
He said the introduction of the changes, which kicked into effect on 10 August 2026, would have a significant adverse effect on residential supply.
“I’ve already said before that my indication or my belief would be that the government will probably overturn that decision once the ramifications of the lack of developers being able to get projects off the ground come to realisation,” Tarrant said.
With investors looking for ways to continue creating wealth, Finni Mortgages’ Costa Arvanitopolous said many were turning to lease-doc loans to open the door.
“A lease-doc loan is when the bank lends you money to purchase the property based on the leases of the property that you’re purchasing,’ Arvanitopolous said.
He said that if a lease was worth $100,000 per year, the bank would lend up to 1.5 times that value.
Finni Mortgages’ Eva Loisance said that a lease-doc loan could be used when investors were maxed out on their serviceability.
“$500,000 in cash isn’t enough to buy a residential, but it is enough to pay for a 30 or 40 per cent deposit on the lease-doc,” Loisance said.
“And this doesn’t require servicing out of the lease-doc. If you are completely maxed out there, you can still get in.”
Arvanitopolous said that the banks typically had some flexibility regarding the loan type and a tenant leaving, as long as they were kept informed.
Tarrant said that investors could utilise lease-doc loans to grow their portfolios, manufacture capital, then refinance and transition back to more traditional lending.
Loisance said this more tactical approach would become increasingly more common as more investors looked to maximise their portfolios.
“We don’t see a lot of it yet, but we are getting into conversations about it,” she said.
She said that serviceability concerns would lead more and more investors to consider the loan a viable option.
Arvanitopolous said that one unique way he had seen self-employed investors utilise the loan type was by purchasing an asset they could rent out through their business.
“You know you’re always going to have a tenant, because you are the tenant,” he said.
“But you have to be very conscious that you may outgrow your premises or it might become too big for you, so it still needs to be rentable on the open market.”
Listen to the full episode here
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