A tenant has eighteen months left on the lease. The finance discussion mentions a much longer loan term. It is easy to hear the longer number and assume the property income is equally secure.
It is not. The tenant's commitment and your commitment to the lender run on different clocks. Before choosing finance, establish what happens when the lease ends, what the loan documents require and how you would meet repayments without rent.
Lease expiry does not, by itself, tell you that the loan becomes due that day. Equally, a long advertised maximum loan term does not establish that your application will receive it.
Put four dates on the same page
Start with the current lease expiry. If there is an option to renew, ask your solicitor to explain how it operates and whether it has been validly exercised. An option in a lease is not evidence that the tenant has already committed to the extra years.
Next record loan maturity, when any remaining debt must be repaid under the facility. Then record the end of any interest-only period and the period over which principal repayments are calculated.
Those dates can create different cash demands. An interest-only period may end while the tenant remains. A lease may end while principal-and-interest repayments continue. A loan may reach maturity with a balance still outstanding. You need the proposed facility's schedule to know which situation you are choosing.
Our commercial loan maturity checklist deals with the finance deadline. This exercise starts with the tenant deadline and brings the two together.
Product terms differ
Brighten Commercial Lease Doc says its loan term is subject to the lease term and requires at least twelve months remaining on the lease. It is an investment-only product assessed using property rent, with a current lease and statement of position required. It is worth investigating when an eligible leased investment supports the application, but ask what term the actual lease can support.
La Trobe Financial Lease Doc lists a full lease agreement as the verification requirement and a maximum loan term of thirty years. That gives you another product discussion to investigate. The advertised maximum does not explain how your particular lease, tenant or remaining term will be assessed.
The useful comparison is therefore two written proposals based on the same lease. Ask each lender for the actual term available, repayment schedule, fees and requirements if the tenancy changes. Do not compare Brighten's lease-specific wording with La Trobe's maximum and conclude that one automatically lends longer on your property.
Our commercial loan evidence guide also explains why a rent-based route and an assessment using wider borrower income are different conversations.
Rent is not all spendable cash
Before testing a vacancy, reconcile the current rent with the money you retain. Ask what the owner pays, what the tenant reimburses, whether payments are current and what costs would return to the owner if the premises were empty.
The commercial rent reconciliation guide helps avoid treating a headline annual rent as cash available for debt repayments.
Then budget for a gap. Use the property's actual repayments, owner costs and likely leasing expenses. Add any proposed works or tenant incentives as separate amounts. A reserve calculated only from lost rent can miss the cash needed to secure the next tenant.
A renewal at a lower rent deserves a test too. Keeping a tenant may remove vacancy while still changing what the property contributes. Make the decision with that lower figure visible, rather than assuming continuity means unchanged economics.
Ask before the lease runs down
Obtain the signed lease, variations, rent record and proposed loan schedule. Ask the broker what the lender requires around vacancy, renewal or a replacement tenant, including notification or consent obligations. Have your solicitor explain those clauses in the actual documents.
If the lease will end close to loan maturity, start the discussion while there is time to investigate both the tenancy and the finance. Neither a future tenant nor a refinance is guaranteed. The strongest comparison shows what you can fund if one arrives later than planned.