Insights with Infinance - Commercial property mortgages

In New Zealand’s dynamic property market, commercial property mortgages continue to play a crucial role in supporting business growth and investment.

Insights with Infinance by Brian Coogan

From office buildings and retail spaces to warehouses and rural assets, commercial lending provides the financial backbone for enterprises seeking to expand or secure long-term premises.

Unlike residential mortgages, commercial property loans are assessed primarily on the strength of the business, the property’s income potential, and the borrower’s financial history.

Lenders focus on the property’s ability to generate rental income or enhance business performance, often requiring detailed cash flow projections and a clear exit strategy.

Interest rates tend to be higher than standard home loans, reflecting the increased risk and complexity associated with commercial lending.

Major banks, second-tier lenders, and non-bank financial institutions all operate in this space, offering a range of structures including fixed, floating, and interest-only facilities.

Loan-to-value ratios (LVRs) typically range between 60 and 70%, though this can vary depending on the borrower’s profile and the type of property.

The commercial mortgage market has evolved in recent years, with rising interest rates and tighter credit conditions prompting borrowers to seek more flexible funding solutions.

Non-bank lenders have gained traction by offering faster approvals, bespoke loan terms, and greater appetite for niche sectors such as hospitality, logistics, and development finance.

According to industry observers, businesses with strong fundamentals and sound financial planning remain well-positioned to secure funding despite market headwinds.

For many, partnering with an experienced finance broker or adviser can make the difference—ensuring access to competitive terms and helping navigate the complex lending landscape.

As the economy adjusts to shifting demand, commercial property remains a cornerstone of investment strategy in New Zealand—offering both opportunities and challenges for businesses looking to take their next step.

Written by Brian Coogam, Licensed Financial Adviser and director at Infinance – Taupo              

Don’t wait to buy real estate, buy real estate and wait – Will Rogers