Commercial Mortgage Deposit Percentage | What You Need to Know

Typical commercial mortgage deposit percentage

Commercial property loans usually require a higher upfront deposit than residential mortgages because lenders view them as higher-risk investments. The required percentage depends on the property, the borrower and the lender’s risk appetite. What influences the deposit required:

• Borrower profile: Business cash flow, financial stability and credit history.

• Property type: Stable, income-producing assets are considered lower risk than specialised or vacant properties.

• Lender differences: Banks and non-bank lenders set varying requirements based on risk levels and policy.

Because deposit expectations vary widely, HeyNest brokers compare lenders and match you to those offering the most favourable terms for your business and property type.

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How LVR impacts your deposit?

The Loan-to-Valuation Ratio (LVR) determines how much you can borrow relative to the property’s assessed value. It works inversely to your deposit: a lower LVR means a higher deposit, and a higher LVR means a smaller deposit. How LVR shapes your deposit:

• Risk assessment: Lenders offer higher LVRs when they view the asset and borrower as low risk.

• Property purpose: Owner-occupied purchases may qualify for better LVRs than purely investment-based purchases.

• Valuation matters: LVR is based on a formal valuation, which may be more conservative than the purchase price.

Maximising your LVR requires presenting a strong, well-structured application. HeyNest brokers specialise in negotiating higher LVRs, helping you reduce the deposit needed upfront.

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Strategies to reduce your commercial mortgage deposit

Businesses can lower their required deposit by reducing lender risk and strengthening their application. With the right structure, it’s possible to qualify for more favourable terms. Ways to lower your deposit requirement:

• Provide additional security: Use equity in other assets to strengthen the proposal.

• Show strong financials: Demonstrate consistent revenue and serviceability with a clear business plan.

• Secure quality tenants: A long-term lease and strong rental yield can improve terms for investor purchases.

• Use guarantees: Personal or corporate guarantees may support a lower deposit requirement.

• Submit a professional application: Clear financials and well-prepared documentation improve lender confidence.

Securing better terms is about strategy, not guesswork. HeyNest connects you with independent brokers who know which lenders offer the most flexible deposit options and how to position your application for the best result.

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Frequently asked questions

Can I use equity from my home for a commercial mortgage deposit?

Yes, using equity (cross-collateralization) from a residential property is a common strategy to cover the deposit or improve the LVR on a commercial mortgage.

Is Lenders Mortgage Insurance (LMI) available for commercial mortgages?

Generally, LMI is not a standard feature in commercial lending; lenders simply adjust the LVR (and thus the required deposit) based on their risk assessment.

Does the deposit percentage change if I'm an owner-occupier?

Often, yes. Lenders typically view owner-occupiers as slightly lower risk than investors, potentially allowing for a slightly higher LVR (lower deposit percentage).