Commercial Property Equity Release: How Much You Can Borrow Against It
How much equity you can release from an office, shop or warehouse you own, how lenders value it on rent, and which release route fits your file.
Property Lending Hub
Commercial Property Equity Release · Valuation · Release Routes
Picture a self-employed owner who wants cash to grow the business, with a warehouse already leased to a tenant. Whether that works, and how much comes out, depends less on what the owner thinks the building is worth and more on how a valuer reads the rent, the lease and the tenant.
Quick Answer
Commercial property equity release is borrowing against a commercial property you already own, through a refinance, a top-up or a second loan, and the amount turns on how a valuer reads the rent, the lease and the tenant. Expect less to be available than on a home. See how equity release and refinance works.
Also called: commercial property cash-out refinance, commercial equity loan, borrowing against commercial property. They describe the same idea; a cash-out refinance replaces the existing loan, while the others can sit beside it.
What is commercial property equity release?
Commercial property equity release is borrowing against a commercial property you already own, such as an office, shop, warehouse or factory, to raise funds for a business purpose. The equity is the gap between what a lender's valuer says the property is worth and what you still owe on it, and a lender only ever lends against part of that gap.
The mechanics of equity release in general, what the money can be used for and what it costs, sit in our equity release and refinance guide. This insight answers a narrower question: what changes when the security is commercial rather than a home. The short answer is that almost everything about the valuation changes, and the valuation sets the ceiling on what you can release.
The lending itself is a commercial property loan, assessed the way our guide to how commercial property loans work describes. The difference is that you start with the property already in hand, so the lender is reading a building with a history: an existing lease, an existing tenant and a rent that has either held up or not.
How much equity can you release from a commercial property?
How much equity you can release from a commercial property depends on the property type, the lease and the lender, and you should expect less than a home would support. How much less varies by lender. Lenders cap commercial loans at a lower loan-to-value ratio because commercial property usually takes longer to sell and its value moves with its rent.
The table below shows how the same building can support very different amounts depending on its situation. Where a lender will stretch further, and what it wants to see before it does, is covered in our insight on reaching a higher LVR on a commercial property loan.
| Property situation | What the valuer leans on | How lenders usually treat it (indicative, varies by lender) |
|---|---|---|
| Tenanted on a long lease to a strong tenant | The rent, the lease left to run and the tenant's ability to keep paying | Typically the strongest position for a release, with the widest range of lenders |
| Tenanted with a short lease left | The risk the tenant leaves and the time it would take to re-let | Often a lower loan amount, or a lender wants the lease renewed or extended first |
| Owner-occupied premises | Market rent for the space and comparable sales, with your business carrying the loan | Usually assessed on the business's capacity to repay as much as on the property |
| Vacant or partly vacant | Value as if vacant, allowing for letting-up time and incentives | Typically fewer lenders and a lower loan amount, often specialist or private funders |
| Specialised property | A narrow buyer pool and a value tied to one use | Usually the most conservative treatment, and some lenders decline the security |
When an owner's expectation and the lender's offer don't line up, the gap is almost always explained by one of these rows, not by the lender being difficult. The evidence a lender wants before it releases cash, and how much it will release against each kind of proof, is set out in our guide to cash-out limits and evidence.
How do lenders value a commercial property for an equity release?
Lenders value a commercial property for an equity release mainly on its income: it is valued on rent and a market yield, not on house prices. The valuer takes the net rent the property earns and applies a yield that reflects how investors are pricing that type of property in that location right now. This is called an income capitalisation approach, and it is the method most commercial valuations lean on.
The Reserve Bank explains the logic in its Bulletin article on financial stability risks from commercial real estate: commercial property is valued by discounting expected future income, so higher interest rates push values down, and high vacancy cuts the income a landlord receives. Both of those flow straight into the figure your lender lends against.
Source: Reserve Bank of Australia, Financial Stability Risks from Commercial Real Estate, Bulletin, September 2023. Read 12 October 2026.
That is the opposite of how most owners think about their building. A home is valued against similar homes that sold nearby. A warehouse is valued against what its rent is worth to an investor today. Comparable sales still matter, but valuers usually use them to test the yield rather than to set the value on their own.
What about specialised commercial property?
Specialised commercial property is valued more cautiously because its value is tied to one use and few buyers would take it on. Childcare centres, service stations and purpose-built facilities often fall here; our insight on how lenders value specialised commercial security covers how that reading works.
How do the lease, tenant and vacancy change what you can release?
The lease, the tenant and any vacancy change what you can release because they decide how secure the rent is, and the rent drives the value. The two things a valuer reads hardest are the lease left to run and the strength of the tenant. A long-established tenant with years left on the lease reads very differently from a new business on a month-to-month arrangement, even in the same building at the same rent.
On a property with several tenants, lenders look at how long the leases run across the whole income stream. Our guide to weighted average lease expiry explains how that measure is calculated and how lenders read it. If you are thinking of releasing equity on a building you bought with a tenant already in place, our guide to buying a commercial property with an existing tenant covers the lease checks that carry over.
Vacancy is the hardest case. A valuer will assess the property as if empty and allow for the time and cost of finding a tenant, which usually means a lower value and a shorter list of lenders. Our guide to financing a vacant commercial property covers what changes.
Stronger fit for a release
- Plenty of lease left to run, ideally with options
- A tenant with a trading history and a clean payment record
- Rent at or close to market
- A property type with a broad pool of buyers
- A lease that clearly recovers outgoings
Gets tricky
- A lease expiring soon or a tenant holding over
- A related-party lease without market terms
- Rent well above what the market would pay
- Part of the building vacant or recently vacated
- A specialised building tied to one use
Is releasing equity different for owner-occupied premises?
Releasing equity from owner-occupied premises is different because the rent is paid by your own business, so the lender reads the business as closely as the property. Where your operating company leases the building from your family trust or your own holding entity, the lease still matters, but the lender knows the tenant and the borrower sit in the same group. It will want to see that the business can afford its rent and the new debt together.
That cuts both ways. A strong, profitable business can support a release that the rent alone would not, while a business having a lean year can hold back a release on a building that would read well with an outside tenant. Our guide to passive versus owner-operated commercial property sets out how lenders treat each.
If the property and the business sit across several entities, the equity can still be released, but every entity in the chain is usually part of the assessment. Our guide to releasing equity across a group of companies and trusts covers how lenders read that structure. Owners in other trades will find more on borrowing against business property in the Business Owners Hub.
Should you use a cash-out refinance, a top-up, a second mortgage or a lease doc loan?
Choosing between a cash-out refinance, top-up, second mortgage or lease doc loan depends on the terms of your current loan, how quickly you need the funds and what evidence you can give the lender. Each route reaches the same equity by a different door, and the right one is usually decided by the first loan rather than by the new one.
| Route | How it works | When it fits | What to watch |
|---|---|---|---|
| Cash-out refinance | A new lender repays the current loan and lends extra against the same property | The current loan is near expiry, or another lender will lend more against the property | Any break costs on the old loan, and a full new assessment and valuation |
| Top-up with the current lender | The existing lender increases the loan on the same security | Your current lender reads the property well and the facility allows an increase | A fresh valuation and review of your financials, and covenants that may be reset |
| Second mortgage | A second lender lends behind the existing first mortgage | You want to keep the first loan's terms, or you need funds faster than a refinance allows | A higher cost than first mortgage lending, and the first lender's consent is often needed |
| Lease doc loan | The lender relies mainly on the lease and the rent rather than your business financials | An investment property with an outside tenant and limited business paperwork | It needs a strong signed lease, and the rent has to carry the loan |
A cash-out refinance suits owners whose current loan is up for renewal anyway; our guide to refinancing a commercial property loan walks through the process. A second mortgage suits owners who want to leave a good first loan alone, and our commercial second mortgage guide covers the consent and cost questions. A lease doc commercial property loan suits investment properties where the lease is stronger than the paperwork.
Most of the time the decision comes down to one question: is the first loan worth keeping? If it is, a second loan beside it usually makes more sense. If it is not, the release becomes part of a broader refinance. Our comparison of a second mortgage against a bank cash-out refinance goes deeper on that trade-off.
Why can the valuation come in lower than you expect?
A valuation that comes in lower than you expected usually reflects the yield the valuer applied and the security of the rent, not a mistake. When market yields rise, the same rent supports a lower value, so a building that has not changed at all can be worth less to a lender than it was a few years ago. A short lease, a recent vacancy or rent above market pushes the figure down further.
Lenders also instruct valuers to take a cautious view, because the valuation has to hold up if the property ever has to be sold. Our guide to what lenders test in a commercial property valuation covers the assumptions valuers make. The steps below give the valuer the best chance of reading the property fairly:
- Get the lease in order first. A signed renewal or exercised option before the valuation reads far better than a lease under negotiation.
- Give the valuer the full picture. Supply the lease, any rent reviews, the outgoings schedule and the tenant's payment history.
- Check the use matches the paperwork. The permitted use on the lease and the planning approval should match how the property is used.
- Match the property to the right lender. Lenders differ on property types and locations, so the lender choice can matter as much as the valuation.
If the figure still falls short, the options are usually a smaller release, adding other security or waiting until the lease position improves. A broker can tell you which is realistic before you spend money on a second valuation. You can see the wider range of property-secured options in the Property Lending Hub or on our commercial property loans page.
Commercial property equity release is borrowing against a commercial property you already own, and the amount is set by a valuation that reads the rent, the lease left to run and the strength of the tenant. Expect a lower ceiling than on a home, a cautious valuer and a route choice, between a cash-out refinance, top-up, second mortgage or lease doc loan, that depends mostly on whether your first loan is worth keeping.
Key takeaway: get the lease and the paperwork in order before the valuation is ordered, then choose the route that protects the loan you already have.Frequently Asked Questions
There can be a better way than equity release on a commercial property, depending on what the money is for and how quickly you need it. If you want to keep a good first loan, a commercial second mortgage sits behind it rather than replacing it. If the funds are for short-term working capital, a facility secured by the business itself may suit better than new property debt. Our equity release and refinance guide compares the options in more detail.
The main catch with commercial property equity release is that the amount you can borrow rests on a valuation you do not control. Commercial property is valued on rent and a market yield, so a short lease, a vacancy or a rise in yields can reduce the figure. You also take on more debt secured against the property, usually at a lower loan-to-value ratio than a home would allow.
You can usually get an equity loan on your commercial property if there is enough gap between its value and what you owe, and your business can service the extra debt. The funds can come from your current lender as a top-up, from a new lender through a cash-out refinance, or from a second lender behind the first. A broker can check which route fits before a valuation is ordered; see equity release and refinance.
You can sometimes release equity from a commercial property with no tenant, but fewer lenders will consider it and the amount is usually lower. The valuer will assess the property as vacant and allow for the time and cost of finding a tenant. Our guide to vacant commercial property finance covers how lenders approach it.
Whether the interest on released equity from your business premises is tax deductible depends on how the borrowed money is used, not on the property it is secured against. That is a question for your accountant, who can look at your structure and the purpose of the funds. For how the release itself works, see our equity release glossary entry.
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