Commercial loan vs home loan: the key differences for Perth borrowers
By Nathan Ellis · Updated 2026-07-24
A commercial or business loan (including a commercial mortgage over business premises) differs from a residential mortgage or home loan in 3 ways that matter to a Perth borrower: the law that applies, how the lender assesses you, and what the loan costs. Consumer credit law, the National Credit Code, covers loans for personal, household or residential investment purposes, not business purposes. Lenders assess a business loan on the business’s financials rather than your payslip. And small business credit costs more: in July 2026 new small business loans averaged 7.44% a year against 6.24% for new owner-occupier home loans, according to the Reserve Bank.
Commercial loan vs residential loan at a glance
| Home loan (residential) | Commercial or business loan | |
|---|---|---|
| Main law | National Credit Code applies | Generally outside the National Credit Code when the loan is wholly or predominantly for business purposes |
| What the lender assesses | Your personal income and expenses | The business: at least 2 years of business and personal financial statements and tax returns at Westpac, for example |
| Average rate on new loans, July 2026 | 6.24% (owner-occupier) | 7.44% (small business), 6.26% (medium), 5.54% (large) |
| Typical maximum lending (Westpac) | Up to 80% of a residential property’s value | Up to 65% of a commercial property’s value |
| Loan term | 30 years is Moneysmart’s example term | From 30 days to 15 years at NAB; up to 30 years at CommBank and Westpac, depending on product and security |
Sources: RBA lenders’ interest rates, ASIC on the National Credit Code, Westpac business loan guide, NAB commercial loans, CommBank BetterBusiness Loan, Moneysmart. RBA averages include variable and fixed loans.
The purpose of the loan decides which rules apply
The National Credit Code applies to a loan made to an individual when the money is wholly or predominantly for personal, domestic or household purposes, or to buy, renovate or improve residential investment property (ASIC). A loan used mainly for a business sits outside it.
The security does not decide this. A loan secured against your home but used to buy business equipment is a business-purpose loan. A loan to buy a residential investment property is covered by the National Credit Code, even though it is an investment.
The purpose can be made formal with a business purpose declaration. Under the National Credit Code, credit is presumed not to be for Code purposes if you sign a declaration before the contract. The regulations require the declaration to carry this warning: “By signing this declaration you may lose your protection under the National Credit Code” (NCCP Regulations, regulation 68).
An example of what changes: a lender advertising fixed-term credit for personal, domestic or household purposes must show a comparison rate, under Part 10 of the National Credit Code. Business credit is not covered by that rule, so compare the total cost of a business loan, fees included, yourself.
Only sign a business purpose declaration if the money really is mainly for the business. If a lender or broker asks you to sign a declaration for a loan that is mostly personal, stop and ask why.
How lenders assess a business loan
A business loan is assessed on the business rather than on your salary. Westpac’s business loan guide asks for at least 2 years of business and individual financial statements and tax returns, plus proof of your personal income and a statement of your financial position (Westpac).
For a commercial property bought as an investment, lenders look closely at the property itself: the lease, the tenant and the rental income that will repay the loan. The type of property matters too. Standard offices and warehouses have more willing lenders than specialised property such as childcare centres or service stations.
If you are self-employed and buying a home, not a business asset, the loan is still a home loan. Our guide on self-employed home loans covers that case.
Interest rates: what the RBA data shows
Small business loans cost more than home loans on average, and the gap depends on the size of the business. In July 2026, according to the Reserve Bank:
- New owner-occupier home loans averaged 6.24% a year.
- New small business loans averaged 7.44%, about 1.2 percentage points higher.
- New medium business loans averaged 6.26% and new large business loans 5.54%.
These are averages across all loans in each group, variable and fixed. Your own rate depends on your lender, the loan and the security you offer, so compare more than 1 lender.
Deposit and security
Lenders will usually lend less against commercial property than against a home. Westpac, for example, says it generally lends up to 80% of a residential property’s value, 65% of a commercial property’s value and 70% of a rural property’s value (Westpac). On a $1,000,000 commercial property at 65%, that is a loan of $650,000, so the other $350,000 has to come from a deposit or other security.
That maximum is the loan to value ratio (LVR). It varies by lender and by property type, so treat 65% as 1 bank’s published figure, not a market rule.
Loan terms
Business loan terms are often shorter than home loan terms, but not always. Moneysmart uses 30 years as its example home loan term (Moneysmart). NAB’s commercial loans run from 30 days up to 15 years. CommBank’s BetterBusiness Loan can run up to 30 years depending on the security, and Westpac quotes repayments over 1 to 30 years.
A shorter term means higher repayments. Match the term to how long the asset will earn for the business, and check whether the loan has to be refinanced or repaid in full at the end.
Using your home to secure a business loan
Banks such as Westpac and CommBank will lend for a business against your home. Westpac’s figure of up to 80% of a residential property’s value applies to its business lending, and CommBank lets you secure its BetterBusiness Loan with residential or commercial property.
2 things change when you do. Your home is now at risk if the business cannot repay. And because the purpose is business, the loan is generally outside the National Credit Code, even though the security is your home. Get independent legal and financial advice before you put your home up for a business debt.
If something goes wrong
The Australian Financial Complaints Authority (AFCA) can take complaints from small businesses with fewer than 100 employees. AFCA cannot consider a small business credit facility over $6.3 million, for complaints lodged on or after 1 January 2024 (AFCA). Our resources page lists the regulators and free help available in WA.
How a broker fits in
264 businesses are listed in our commercial and business finance directory. Commercial lending terms vary between lenders, from the maximum LVR (65% of a commercial property’s value at Westpac) to the loan term (up to 15 years at NAB, up to 30 years at CommBank), so a broker who works with several commercial lenders can compare more than rates. Before you sign anything, check the broker’s credit licence. See the best commercial and business finance brokers in Perth, ranked on their Google reviews. Sponsored placements are labelled and never change the order.
Checked against RBA, ASIC, AFCA, the NCCP Regulations and lender sources on 26 September 2026. This is general information, not financial or legal advice. It does not consider your objectives, financial situation or needs.
Frequently asked questions
Home loan or business loan: which fits?
A home loan and a business loan are not interchangeable. The loan purpose decides which one fits: money for your home or a residential investment property is consumer credit under the National Credit Code, and money mainly for a business is business credit. What you can choose is the security, for example borrowing for the business against your home, which can mean a larger loan amount (Westpac lends up to 80% of a residential property’s value against 65% for commercial property) but puts your home at risk.
Does the National Credit Code cover business loans?
The National Credit Code generally does not cover business loans. The National Credit Code covers loans to individuals that are wholly or predominantly for personal, domestic or household purposes, or for residential investment property. A loan used mainly for a business sits outside it, and a signed business purpose declaration means the credit is presumed to be outside the Code.
Do business loans cost more than home loans?
Small business loans cost more on average. In July 2026, new small business loans averaged 7.44% a year and new owner-occupier home loans 6.24%, according to the Reserve Bank. Large business loans averaged 5.54%, so size matters.
How much deposit does a commercial property need?
The deposit for a commercial property depends on the lender and the property. Westpac generally lends up to 65% of a commercial property’s value, compared with up to 80% for a residential property. At 65%, a $1,000,000 commercial property needs $350,000 from a deposit or other security.
Is a residential investment loan business credit?
A loan to buy, renovate or improve residential investment property is covered by the National Credit Code, whatever the lender calls it. It is treated as consumer credit, not business credit. Our investment property finance guide covers that case.
Can a business complain to AFCA about a loan?
A small business can complain to AFCA if it has fewer than 100 employees and the credit facility is $6.3 million or less, for complaints lodged on or after 1 January 2024. AFCA is free for the person complaining.
Frequently asked questions
- Are commercial loans covered by the same consumer protections as home loans?
- Not always. Loans predominantly for business purposes generally sit outside the National Consumer Credit Protection framework that applies to most home loans, which changes how the lender is required to assess and disclose the loan. It doesn't mean fewer protections apply universally, but the rules differ.
- Does a commercial loan need a residential property as security?
- Not necessarily. Commercial loans can be secured against business assets, commercial property, or in some cases backed mainly by cash flow, rather than requiring residential property as security. What's required depends on the lender and the size of the loan.
- Why might a commercial loan have a shorter term than a home loan?
- Commercial lending is often structured around the useful life of the asset or the business cycle rather than the standard 25 to 30 year home loan term, so terms can be considerably shorter, sometimes with a requirement to refinance or repay at the end.
- Do I need a specialist broker for business finance?
- It helps. Commercial lending policies vary more between lenders than home loan policies do, and a broker who works regularly in this space will usually know which lenders suit your industry and loan size.