Proven Tips to Finance a Medical Centre Purchase

What you need to know about commercial property loans when buying a medical centre in Teneriffe and how lenders assess these deals.

30th September 2026 | Murray

Lenders Treat Medical Centres Differently to Standard Commercial Property

Medical centres are viewed as specialist commercial assets, not general commercial property. Lenders assess them based on tenant quality, lease strength, and income security rather than just location and building condition. A medical centre with long-term GP leases and established patient flow will typically attract better loan terms than a similar-value retail or office building.

In Teneriffe, where health services increasingly serve the surrounding inner-city suburbs, a well-tenanted medical centre near Vernon Terrace or along Macquarie Street can demonstrate strong income stability. Lenders look at the tenant mix closely. A centre with GPs, allied health practitioners, and diagnostic services on longer leases presents lower risk than one dependent on short-term agreements or a single tenant.

Consider a buyer looking at a medical centre leased to three established GPs and two physiotherapy practices. Each tenant has between three and five years remaining on their lease, with options to renew. The income is diversified, and the tenants have been operating from the premises for several years. That structure gives a lender confidence in ongoing cash flow, which directly affects the loan amount and interest rate offered.

What Lenders Want to See Before Approving a Medical Centre Loan

Lenders assess three core elements: the strength of the lease agreements, the borrower's financial position, and the property valuation. Strong leases mean tenants with established businesses, low vacancy risk, and rental income that comfortably covers loan repayments. The borrower needs to demonstrate capacity to service the debt, either through the property's income or their own financial position. The valuation must reflect both the physical asset and the income it generates.

Most lenders will require a loan-to-value ratio between 60% and 70% for a medical centre purchase. That means you'll need a deposit of at least 30% to 40% of the purchase price. Some lenders may go higher if the tenant profile is particularly strong or the borrower has significant other assets. You'll also need to show that the net rental income, after outgoings, covers at least 1.2 times the loan repayment. That's the debt service coverage ratio, and it's non-negotiable for most commercial lenders.

If the property is owner-occupied, meaning you're a GP or health practitioner buying the centre to operate from it yourself, lenders assess the application differently. They'll look at your business income, patient numbers, and operating history rather than lease agreements. Owner-occupied medical centre loans can sometimes attract slightly higher LVRs because the lender sees less tenancy risk.

How the Loan Structure Works for a Medical Centre Purchase

Most commercial property loans for medical centres are structured with interest-only repayments during the loan term, typically between three and five years, with principal and interest repayment options also available. The loan is secured against the property, and the interest rate is usually variable, though fixed-rate options exist for borrowers who want certainty.

Interest rates on commercial property finance sit higher than residential loans. At current variable rates, expect to pay between 1% and 2.5% above the standard variable home loan rate, depending on the lender, LVR, and strength of the deal. A well-structured medical centre purchase with strong tenants and a solid borrower profile will sit at the lower end of that range.

Loan terms are shorter than residential mortgages. While a home loan might run for 30 years, a commercial loan for a medical centre will typically have a term of three to five years, after which it needs to be refinanced or repaid. Some lenders offer longer terms, but they're less common. The loan structure also allows for flexible repayment options, including the ability to make additional repayments or pay out the loan early, though some lenders charge break costs on fixed-rate loans.

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Valuation and Due Diligence for Medical Centre Properties

Commercial property valuation is based on the income the property generates, not just comparable sales. A valuer will assess the rental income, lease terms, tenant quality, and property condition to determine market value. If the medical centre has long leases with high-quality tenants, the valuation will reflect that income security. If leases are short or tenants are unproven, the valuation may come in lower than expected.

In Teneriffe, where the resident population has grown significantly with new apartment developments along the riverfront, demand for local health services has increased. A medical centre close to the residential areas around Vernon Terrace or near New Farm Park can demonstrate strong patient catchment, which supports tenant stability and, in turn, valuation.

Due diligence goes beyond the valuation. You'll need to review each lease agreement in detail, understand any rent review clauses, confirm tenant trading history, and check for any building compliance issues. Lenders will require a full building and pest inspection, and they may also want to see evidence that the property complies with health and safety regulations relevant to medical use. If there are upcoming capital works or building upgrades required, factor those costs into your funding structure.

How Owner-Occupied Medical Centre Loans Differ

If you're a health practitioner buying the centre to operate your own practice, the loan assessment focuses on your business income rather than tenant leases. Lenders will review your patient numbers, revenue history, and operating expenses to determine serviceability. They'll also consider your deposit size and any other assets you can use as additional security.

Owner-occupied loans can sometimes access higher LVRs, particularly if you're an established practitioner with a strong patient base and solid financials. Some lenders will lend up to 75% of the property value if the business cash flow supports it. You'll still need to demonstrate debt service coverage, but the calculation is based on your business income rather than rental income.

In a scenario where a GP with a ten-year operating history and consistent revenue buys a medical centre in Teneriffe to consolidate their practice, the lender assesses their business financials, patient retention, and billing records. If the GP can show stable income and the property's value is supported by a commercial valuation, the loan can proceed with a deposit of 25% to 30%, depending on the lender's appetite and the GP's overall financial position.

Structuring the Deal When You're Buying with Other Practitioners

Many medical centres are purchased by groups of GPs or health practitioners who want to own the premises together. This structure can strengthen the loan application because it spreads the financial commitment and demonstrates shared investment in the property's success. Lenders will assess each borrower individually and may require personal guarantees from all parties.

The loan can be structured as a joint borrowing arrangement, where all parties are equally responsible for the debt, or as a unit trust or company structure, depending on your tax and asset protection preferences. If you're buying as a group, you'll need clear agreements in place about ownership percentages, decision-making, and exit strategies. Lenders will want to see those agreements as part of the application.

Your commercial Finance & Mortgage Broker can help structure the deal to suit both the lender's requirements and your group's needs. That might involve using a combination of property security and business cash flow to support the application, or it might mean bringing in additional collateral to reduce the LVR and secure better loan terms.

What Happens If the Medical Centre Has Vacant Tenancies

Vacant tenancies reduce the property's income and increase the lender's risk. Most lenders will discount vacant space when calculating serviceability, which means the loan amount may be lower than expected. If the vacancy is temporary and you have a signed lease ready to commence, some lenders will consider the incoming rental income, but they'll want to see the lease agreement and confirmation of the tenant's financial position.

If you're buying a medical centre with existing vacancies, you'll need a larger deposit to offset the reduced income. You may also need to demonstrate that you have the financial capacity to cover any shortfall between rental income and loan repayments until the space is tenanted. Some buyers use a combination of commercial property finance and a business loan to fund the purchase and cover fit-out costs for new tenants.

Vacancies aren't necessarily a deal-breaker, but they do require a more detailed funding strategy and a higher equity contribution. If you're confident you can secure tenants quickly and the property's location supports strong demand, the purchase can still proceed with the right loan structure.

Using Existing Property as Additional Security

If you don't have the full deposit in cash, you can use equity in other property as additional security. This is common for established practitioners or investors who already own residential or commercial property. The lender will assess the value and equity in the additional property and allow you to borrow against it to fund the deposit or top up the loan amount.

Using residential property as security for a commercial loan means the lender will place a mortgage over both properties. You'll need to have sufficient equity in the residential property and demonstrate that you can service both loans. If you're using commercial property as additional security, the lender will assess the income from that property as well and factor it into the serviceability calculation.

This approach can reduce the cash deposit required and give you access to a larger loan amount, but it does increase your overall debt and risk. If the medical centre doesn't perform as expected, both properties are at risk. Make sure the numbers work before committing additional assets as security.

How to Position Your Application for Approval

Lenders approve commercial loans based on the strength of the deal, not just the borrower. That means the quality of the property, the income it generates, and the deposit size all carry significant weight. Present a clear picture of the property's income, the tenant profile, and your capacity to service the debt.

Provide detailed financials, including tax returns, business activity statements, and profit and loss statements if you're self-employed or buying as an owner-occupier. If the property has tenants, include copies of all lease agreements, rent rolls, and evidence of rent received. The more complete your application, the faster the lender can assess it and the stronger your position to negotiate on rate and terms.

Work with a broker who understands commercial property finance and has relationships with lenders who actively write medical centre loans. Not all lenders have the same appetite for this type of asset, and some specialise in health-related property. A broker can match your deal to the right lender and structure the application to meet their criteria, which increases your chance of approval and reduces the time to settlement.

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Frequently Asked Questions

What makes you different from going directly to a bank?

Banks can only offer their own products and lending rules. We work with a broad panel of major banks, non-bank and specialist lenders, giving us the ability to compare a wide range of finance options and structures to find the right fit for your circumstances.

We also look beyond the individual loan. Where appropriate, we can help diversify your lending across different lenders and structures, reducing concentration risk and helping you maintain greater flexibility and control over your business and personal assets.

What is the best way to finance a business vehicle or equipment?

The right structure depends on what you're buying, how the asset will be used, your business cash flow and how long you intend to keep it.

Typically for most businesses a Chattel Mortgage or Commercial Loan is the recommended finance product, this is because the product gives the business full control and ownership of the asset with all the claimable benefits available to the business. We arrange finance for business cars, utes, trucks, trailers, machinery, plant and other equipment across a wide range of lenders. Our process is to obtain our clients highly competitive rates and more importantly the right structure and agreement that does not create risky charges from lenders. We consider the overall finance structure, including loan term, deposit, balloon or residual, repayment requirements and lender security, so the finance works with your business rather than unnecessarily tying up cash or other assets.

We can also arrange finance for new and used assets purchased through dealers, suppliers or, with selected lenders, private sellers.

Can I get business vehicles or equipment finance without providing full financial statements?

In most cases, yes.

Established businesses are generally eligible for streamlined or reduced documentation asset finance depending on the amount being borrowed, the asset, your ABN and GST history, credit profile and the lender's individual policy.

Lenders however, are not the same, they have different rules when considering the above, it's important to have representation from a good finance broker who knows the landscapre and can workshop your position if necessary before applying anywhere.

We work with a wide range of business asset finance lenders, each with different credit policies and documentation requirements. We can assess your position first and identify lenders that are more likely to suit your circumstances before an application is submitted.

This can be particularly useful when you need to purchase a vehicle or equipment quickly without going through a lengthy full financial assessment.

Should I use a business overdraft, line of credit or working capital loan?

It depends on what you're trying to fund.

A business overdraft or line of credit can be useful for managing ongoing cash flow fluctuations because funds can generally be accessed quickly, repaid and used again within the approved limit. A term business loan may be more appropriate when you need a defined amount for a particular purpose or investment.

We look at how cash actually moves through your business, what the funding is being used for and how quickly it is likely to be repaid before recommending a structure.

The objective isn't simply to obtain more debt, it's to put the right funding in place so your business has access to capital when it needs it without unnecessarily restricting future growth or putting assets at risk.

How much can I borrow to buy a commercial property?

Commercial property lending varies considerably between lenders and depends on the type of property, its location and use, your deposit or available equity, lease arrangements and the financial strength of the borrowing business or investment entity.

We arrange commercial property finance for business premises, industrial property, warehouses, offices, retail and investment properties through major banks and specialist commercial lenders.

For business owners, we also look at how the purchase fits alongside your existing business lending, property debt and available security. Structuring this correctly can be just as important as the interest rate, particularly when you want to preserve equity and borrowing capacity for future opportunities.

Can my SMSF borrow to buy a commercial property for my business?

Generally, yes.

An SMSF can, subject to superannuation rules and the correct legal structure, borrow to acquire certain commercial property. For business owners this may include premises that are subsequently leased to their operating business under appropriate commercial arrangements.

SMSF lending is a specialist area and lender policies can vary considerably. We compare SMSF commercial property lenders and work alongside your accountant, financial adviser and solicitor to coordinate the lending component of the purchase.

Because the SMSF, borrowing structure, property and lease arrangements all need to work together, it's important to investigate the finance position before committing to a property.

I'm self-employed. Can Premium Finance Group Australia help with my investment property or home loan as well as my business finance?

Yes. This is one of the advantages of working with Premium Finance Group Australia.

Business owners often have income spread across salaries, company profits, dividends, trusts or other entities, which means their financial position doesn't always fit neatly into a standard home loan application.

We understand business financials and can consider lenders with different approaches to assessing self employed income for home loans, investment property finance and refinancing.

More importantly, we can look at your business and personal lending together. That helps avoid making a decision on a home, investment or business loan today that could unnecessarily restrict your borrowing capacity, security position or options later.

Do your services cost anything?

It costs absolutely nothing to speak with us.

In most cases, we're paid by the lender, which means our services will not cost you anything directly. We'll always explain how we're remunerated so you can make an informed decision.

Can you help refinance or restructure existing loans?

Absolutely. Refinancing can help you secure a lower interest rate, change repayment obligations, access equity in property, divesify debt risk and help protect your assets when there is business debt. We access loan options from banks and lenders across Australia and provide you options and recomendations to consider.

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