What a Credit Desk Checks First in Each Property Facility
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What a Credit Desk Checks First in Each Property Facility
Commercial, development, private, caveat and second mortgage: five property-backed facilities, each read a little differently. Here is what the credit desk looks at first in each, and the single issue most likely to stop the deal.
Quick Answer
Every property-backed facility is read through the same three lenses: security, equity and exit. What changes is the order the credit desk works through them, and the one thing most likely to stop each deal. Match the facility to your timing, and line up the exit before you sign.
Every property deal turns on security, equity and exit
Every property-backed facility is assessed on the same three things: security, equity and exit. The property is the security, your own money in the deal is the equity, and the exit is how the loan is cleared, by sale, refinance or the business paying it down. In practice, what changes from one facility to the next is not that list, it is the order the credit desk works through it and how much weight each lens carries.
On a longer-term facility such as a commercial property loan, servicing and the security lead. On a short-term facility the exit is read first, because the whole loan leans on it. Either way the numbers are framed against forced sale value rather than a hopeful sale price, and the loan-to-value ratio sets the ceiling. The property lending hub maps the full set of lanes if you want the wider view.
What each facility's credit desk checks first
Each facility leads with a different question, even though the three lenses are the same. Here is what the credit desk checks first in each of the five property-backed facilities, and the deal-killer that shadows it.
The pattern is consistent. A commercial property loan is read like an investment: the desk starts with the property's income and your servicing, which is why lenders study the lease, as our lease-read guide sets out. Development finance starts with feasibility and equity, then presales, with each equity tier unlocking a different structure. The short-term lanes flip the order: private lending and a caveat loan are read exit-first against forced sale value, while a second mortgage lives or dies on first mortgagee consent and a combined LVR typically capped around 70 to 75 per cent (indicative, varies by lender). Industry bodies such as the Property Council of Australia track the commercial and development pipeline that sits behind this demand.
Which lanes move fast, and which take longer
The fast lanes are the caveat loan, second mortgage and private lending, often funded in days; the slower lanes are the commercial property loan and development finance, which run to weeks. Speed simply follows the assessment, the more a lender has to verify, the longer it takes to fund.
Faster lanes (days, not weeks)
- Caveat loan: secured by a caveat on the title, funded on forced sale value and a clean exit
- Second mortgage: quick where the first mortgagee consents and combined LVR has room
- Private lending: moves on the security and the exit, not a full income file
Slower lanes (more to prove)
- Commercial property loan: full servicing, a valuation and a lease review
- Development finance: feasibility, a quantity surveyor, presales and staged drawdowns
- Any deal where the security or the exit is unclear at the outset
The practical lesson is to match the facility to the deal's tempo. If a settlement is days away, a caveat loan or private lending can move, as our guide on when speed is the point explains. If you have weeks and want the sharpest terms, a development finance facility or commercial property loan rewards the extra diligence.
The one thing that most often kills each deal
The one thing that most often kills each deal is a weak or missing exit, whichever facility you are using. Get that right and the rest of the file usually follows.
On the short-term lanes it is obvious: a caveat loan or a private lender is repaid from a defined event, so no credible exit means no loan. On a second mortgage it is usually the first mortgagee refusing consent, or a combined position that pushes the LVR too high. On a commercial property loan it is a short or weak lease that undercuts the income, and on development finance it is a hole in the feasibility or the equity. In practice, the exit is the first thing I map with a client, well before the rate, because it is what a credit desk checks hardest. If you want a broker to pressure-test yours, you can check eligibility or first see how the lanes line up.
Read every property facility through security, equity and exit and the differences fall into place: the term lanes lead with servicing and the security, the short lanes lead with the exit and forced sale value. Match the facility to the deal's tempo, line up a clean exit, and most of the friction disappears before you start. For a build that needs several of these at once, the construction loan pack collects the property-backed facilities in one place.
Key takeaway: choose the facility that fits your timing, then prove the exit, because the exit is what the credit desk checks hardest.Frequently Asked Questions
For a commercial property loan, lenders start with the property's income and your ability to service the debt, then weigh the security itself. The lease, the tenant quality and the passing yield shape how much the property supports, while the loan-to-value ratio sets the ceiling, commonly up to around 80 per cent for an owner-occupier (indicative, varies by lender). A clear exit, whether you hold and service or refinance later, rounds out the read. Our commercial property loan page covers the detail.
In a private lending application, what matters most is the exit, because a private, property-secured loan is repaid from a defined event rather than long-term servicing. Lenders read the security position and forced sale value next, then the equity you hold behind any first mortgage. A credible, dated exit strategy is the difference between an approval and a decline. See our private lending page for how these deals are structured.
A caveat loan can settle quickly, typically within days rather than weeks, because it is secured by lodging a caveat on the title rather than registering a full mortgage. Speed depends on a clean title position, a clear exit and a valuation the lender can rely on. The trade-off for that speed is a higher cost, so it suits short, time-critical moves. Our caveat loan page explains where it fits.
For development finance, the equity you need is driven by the project's feasibility rather than a single fixed percentage, so lenders weigh your contribution against total development cost and the end value. As a guide, a development lender usually wants meaningful equity in the deal, with the exact level moving with presales, location and experience (indicative, varies by lender). The stronger your equity and feasibility, the more flexible the structure. Our development finance page and the equity tiers guide go deeper.
Lenders check the exit on every property facility, but it carries the most weight on short-term products like caveat loans, private lending and second mortgages, where the loan is repaid from a defined event. On longer-term facilities the exit still matters, it simply sits alongside servicing and the security. Either way, a clear exit strategy is what moves a file from maybe to yes. The property lending hub shows how the lanes connect.
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