08/07/2025
For many investors, securing finance is not about lacking funds but about meeting strict lending requirements on paper. This is a common challenge for self-employed professionals, retirees, business owners and high-net-worth individuals. Even with cash or equity available, they can be excluded from opportunities because they do not fit the standard lending model used by major banks.
Commercial property, however, offers an alternative path through a structure known as a lease doc loan. This type of finance allows investors to borrow without needing to prove personal income in the usual way.
Understanding Lease Doc Loans
A lease doc loan is a type of commercial finance where the property’s lease income is used to assess the borrower’s ability to repay the loan. There is no need to provide payslips, tax returns or personal financial statements.
Instead, the lender focuses on the income generated by the property, the quality of the lease, the type of asset such as retail, warehouse or office, and the loan-to-value ratio. Because there is less reliance on personal financials, this type of loan suits borrowers who may not meet traditional serviceability tests.
Why It Works Differently
Unlike residential property, which is often valued based on comparable sales and market sentiment, commercial property is assessed on its income-producing potential. The lease plays a central role, and if it generates stable and sufficient income, lenders can be comfortable proceeding.
If the tenant pays rent consistently and the property provides a strong net return that covers loan repayments with a suitable buffer, then the deal can work – even if the borrower has little or no verifiable income. In this model, the lease effectively replaces the need to prove personal serviceability.
What You Need to Qualify
To access a lease doc loan, you will need a commercial property that is currently leased to a tenant. Ideally, this tenant has a strong payment history and a longer-term lease.
The quality of the tenant and the length of the lease are important, as is the yield. Lenders usually require the net income from the property to cover the interest payments with a buffer, often calculated using what is known as the interest cover ratio. This figure typically needs to sit between 1.25 and 1.5.
A higher deposit is generally required as loan-to-value ratios are more conservative. Most lenders will fund up to 60% to 65% of the property’s value, meaning you will need to contribute around 35 to 40% yourself or have that much equity available in a refinancing scenario.
You will also need to provide lease documentation such as a copy of the lease agreement, rent schedule and details of outgoings. No personal income documents are required.
Who This Loan Type Suits
Lease doc loans are particularly useful for investors who are asset rich but do not have a strong income on paper. This includes people buying through a self-managed super fund, business owners purchasing their own premises through a company or trust, and retirees who have capital but no longer receive regular income.
It can also work well for overseas buyers or migrants with no local income history but with funds available to invest in the commercial sector.
Things to Keep in Mind
Lease doc loans are not without their trade-offs. Interest rates tend to be slightly higher than those offered on full-doc commercial loans, although still often below those on residential investment loans.
You will need more capital upfront due to the lower loan-to-value ratios, and lenders will look carefully at the details of the property. Factors like location, the strength of the lease, the quality of the building and the reliability of the tenant all matter.
There is also the risk that if the tenant leaves and rental income stops, the lender could re-evaluate the loan. If the property no longer meets the required income coverage, this could create pressure on the borrower.
This is why choosing the right property is so important. Working with experienced commercial finance specialists and property advisers can help you assess opportunities more effectively and avoid mistakes.
Lease doc loans offer a smart and flexible solution for investors who have the financial backing but cannot meet standard serviceability requirements. With the right property, a strong lease in place and the capital to support the purchase, this approach can open doors that traditional finance simply cannot.
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