4 min read
QUICK SUMMARY
- The market: Commercial lenders remain open, but they are more selective about serviceability, loan-to-value ratios, valuations and documentation.
- The opportunity: Strongly leased industrial property and profitable businesses in Perth can still attract lender interest.
- The decision: Refinance when the new structure improves your position, not simply because another lender advertises a slightly lower rate.
- The preparation: Complete financials, signed lease schedules, recent entity statements and a clear funding purpose can reduce delays.
- The strategy: Compare lender appetite, fix the structure, stress-test repayments and allow enough time for valuation and settlement.
- The warning: Refinancing involves fees, risks and trade-offs. Lower repayments are useful only if the overall loan remains sustainable.
REFINANCING IS NO LONGER A PAPERWORK EXERCISE
Refinancing used to feel relatively simple. Check the current rate, find a sharper offer, sign a few forms and wait for the new lender to take over.
In 2026, that approach can leave commercial borrowers standing at the back of the queue.
Banks remain interested in quality commercial deals, but they are assessing applications more carefully. Tighter serviceability buffers, stricter loan-to-value ratios, closer valuation scrutiny and heavier documentation requirements mean preparation can be the difference between an approval and a decline.
The good news is that selective does not mean closed.
A well-leased warehouse in Welshpool, Kewdale, Wangara or Forrestdale, supported by credible tenants and sensible borrowing, may still be attractive to lenders. The same applies to a business with reliable cash flow, strong financial reporting and a clear reason for refinancing.
The objective is not to chase money at any cost. It is to present a loan that makes sense for your personal goals, business fundamentals and risk appetite.
WHY 2026 IS A SELECTIVE MARKET
Recent housing weakness has changed the broader lending conversation. NAB has reported a decline in housing applications and warned that recent budget measures may keep flowing through the market.
That does not mean commercial lending has stopped. It does mean banks are being choosier about where capital goes and which deals offer an acceptable balance of risk and return.
Commercial borrowers may now face:
- Higher assessment rates when serviceability is tested
- Lower acceptable loan-to-value ratios
- Increased scrutiny of leases, tenants and property use
- Longer approval timelines where documents are incomplete
Valuations are also under the microscope. A new lender will generally require a current valuation before setting the final loan amount and loan-to-value ratio, and for commercial assets that value can shift based on lease length, tenant quality, passing rent, vacancy risk, building condition and how specialised the property is. In Perth’s industrial market, that means a practical warehouse with broad appeal may be viewed very differently from a niche asset with limited alternative uses.
For broader context on the difference between housing and business lending, see the NAB housing slowdown analysis.
WHEN TO REFINANCE AND WHEN TO STAY PUT
Refinancing is a tool, not a trophy. A lower rate looks nice on paper, but it is not much use if the structure gets worse.
You may want to investigate refinancing when:
- Your current interest rate is materially above available alternatives
- The existing loan structure no longer suits your cash flow
- A balloon payment or loan maturity is approaching
- You want to release equity for a clear, productive purpose
Staying with your existing lender may be smarter when:
- The potential interest saving is very small
- Break costs and discharge fees outweigh the benefit
- Your current lender offers a practical restructure
- A new valuation could reduce your available equity
THE 6-STEP REFINANCE PLAYBOOK
STEP 1: AUDIT YOUR CURRENT LOAN
Before speaking with a new lender, understand exactly what you already have. Review the rate, term, repayment type, maturity date, security and any guarantees.
STEP 2: KNOW YOUR NUMBERS
A commercial refinance application should tell a coherent financial story. Prepare recent financials, tax returns, management accounts, cash flow projections and asset and liability statements.
If the property is leased, include rent schedules, outgoings, lease expiries and tenant details. If it is owner-occupied, explain how the premises support the business and how the new loan fits your broader plan.
STEP 3: FRONT-LOAD THE DOCUMENTATION
In a selective market, incomplete paperwork creates avoidable friction. Provide signed lease schedules, recent entity statements, updated financials, current loan statements, security details and a clear refinance purpose at the start.
The lender arranges and pays for the valuation through its approved panel. Be ready to provide valuer access when requested, along with access to the property and relevant information.
STEP 4: FIX THE STRUCTURE FIRST
A refinance is a chance to fix structural problems, not just move debt from one logo to another. Check the borrowing entity, guarantees, repayment type and whether the facility still matches your goals.
If you are releasing equity, define the purpose before applying. It may support working capital or a carefully assessed business purchase through acquisition finance, but it should not be a band-aid for ongoing losses.
STEP 5: COMPARE LENDER APPETITE
Major banks, non-bank lenders and specialist commercial lenders do not all assess risk the same way. One lender may love a low-geared industrial deal, while another is better suited to complex income or a tighter timeframe.
Do not compare rate alone. Compare loan-to-value ratio, serviceability treatment, fees, covenants, flexibility and the lender’s ability to settle on time.
STEP 6: STRESS-TEST BEFORE YOU COMMIT
Build the refinance around realistic conditions, not your best month and a lucky tailwind. Test repayments at a higher rate and model what happens if rent drops, a tenant leaves or business cash flow softens.
If the valuation lands lower than expected, can you tip in extra equity or trim the loan request? It is far better to find a weak spot in a spreadsheet than in the middle of a rough quarter.
COMMON MISTAKES THAT GET REFINANCES DECLINED
- Submitting incomplete paperwork and assuming the lender will fill in the gaps
- Applying at the last minute when the existing facility is close to maturity
- Relying on outdated financials or unsigned lease schedules
- Using a refinance to mask a structural cash flow problem
Commercial refinances can take several weeks, especially when valuations, legal work and entity changes are involved. Start early enough to leave room for questions, negotiation and unexpected complications.
RISKS AND TRANSPARENCY
Refinancing costs money, and the bill can include break costs, legal fees, discharge fees, establishment fees and valuation-related charges. A lower rate can still leave you worse off if the new loan brings a shorter term, stricter covenants or a structure that does not suit your cash flow.
There is also timing and valuation risk. If settlement drags out or the new valuation comes in light, you may need to contribute extra equity, accept a smaller loan or scramble for a backup plan.
Terms, conditions, fees and charges may apply. Normal lending criteria apply and rates can change. This article provides general information only and should not replace tailored legal, tax, accounting or financial advice.
GLOSSARY
- Refinance: Replacing an existing loan with a new loan, usually with another lender or under revised terms with the current lender.
- Serviceability buffer: An additional interest-rate margin used by a lender to test whether repayments remain affordable if rates rise.
- Break costs: Fees that may apply when a fixed-rate loan is repaid or changed before the fixed term ends.
- Lender appetite: The types of borrowers, properties, industries and loan structures a lender is currently willing to consider.
- Non-bank lender: A lender that is not a traditional authorised deposit-taking bank. Non-bank lenders may offer greater flexibility, often at different pricing.
THE BASELINE DIFFERENCE
A selective lending market rewards preparation, not panic.
Baseline Finance provides jargon-free commercial finance guidance for Perth business owners, investors and ambitious entrepreneurs. We compare lender appetite, prepare the application, manage the paperwork and negotiate with lenders so you have one clear point of contact from strategy through to settlement.
Our Strategic Funding Plan provides a comprehensive, benchmarked roadmap within 7 days, built around your personal goals, risk appetite and long-term business fundamentals.
CONTACT BASELINE FINANCE
Phone: 08 6108 3925
Email: commercial@baselinefin.com.au
For guidance on commercial property loans, refinancing or your next strategic funding move, speak with Baseline Finance before you apply.
