May 4, 2026 Office, Education & Childcare

Commercial Mortgages for a Private School, Explained

Buying the campus your school already runs from is a defining step for any operator, one that turns years of fit-out and rent into equity in an asset you control. At Ardent Capital Group we speak with school operators about this kind of commercial property purchase, and this guide walks through how a lender reads a campus and what shapes the number.

Ardent Capital Group is a specialist in commercial mortgages for private school operators across Australia. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.

Funding scope: Access finance from $100K to $10M+, with larger deals assessed case by case.
Track record: Over $500M in funding facilitated across a decade for more than 1,000 borrowers.
National reach: Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra, Hobart and regional centres.
What we do: Structure owner-occupied commercial mortgages, construction and refurbishment facilities, and refinances aligned to school cash flow.

Owning vs leasing your private school premises

School premises are specialised. You invest heavily in classrooms, science and technology labs, libraries, disability access, acoustics, fire safety, playgrounds and sports facilities. Much of that spend is sunk in the building. Location anchors enrolment patterns, commute times, public transport links and traffic management plans. The sector is comparatively resilient, with multi-year enrolments, recurrent fee income and often waitlists in key year levels. Repayments build equity in a campus that underpins delivery and gives you control over expansion.

Key drivers we see:

Control and continuity: Secure your campus, time upgrades to suit the academic year, and limit disruption from landlord decisions and rent reviews.
Capital efficiency: Direct repayments into an owned asset, reuse fit-out and compliance spend over a longer horizon, and plan staged works with certainty.
Growth and expansion: Add classrooms, modular buildings or specialist spaces when enrolments justify it, subject to planning and building approvals.
Reputation and community: Anchor the school in its catchment, and support long-term fundraising and alumni engagement tied to a permanent site.

Buying does not always suit. A short lease horizon with uncertain renewal, a planned relocation to a different catchment, major capex priorities better deployed into teaching and programs, or volatile enrolments can favour waiting. The decision rests with you. For a clear read on your borrowing position, our team structures a school property loan around how you intend to hold and occupy the campus.

What a private school commercial mortgage looks like

Deposit and LVR. Owner-occupied commercial premises typically gear to around 80 per cent of value, which puts a deposit near 20 per cent within reach. A campus is a special-purpose asset, so the education-specific fit-out and limited alternate use can shape the valuation and where a lender lands, while stronger trading and owner-occupier use support the higher end. Where a borrower brings equity in another property as additional security, gearing can be lifted toward 100 per cent, and our broker team can walk through how that reads.

Loan term and structure. Terms commonly run 10 to 15 years with a bank, while non-bank lenders can extend to 25 to 30 years. Repayments can be principal and interest for steady amortisation, or interest only for a defined period to align with cash flow or staged works.

Security and serviceability. The property is the primary security. Lenders assess audited financials, fee income and government funding streams, enrolment trends, operating surplus, and debt-service metrics. Valuation weighs the site, zoning for educational use, the improvements and the specialised nature of the buildings.

Owner-occupier treatment. Lenders generally view owner-occupied purchases favourably, because the cash flow is tied to the core mission, the property is mission-critical, and the school controls maintenance and occupancy.

Common ways to hold the property

Many private school groups hold the campus in a dedicated entity, a company or trust, separate from the entity that runs the school, and the operating school pays a commercial rent under an arm's-length lease. A lender reads that inter-entity rent as part of the serviceability line, and the arrangement can ring-fence the property from operational risk. The lease documents outgoings, maintenance and fit-out responsibility on clear terms. Our team works through how that entity and lease arrangement feeds into the lending assessment, and your accountant signs off on the ownership and tax position before contracts exchange.

The SMSF route. Commercial premises can qualify as business real property, which means a self-managed super fund can hold a suitable campus and lease it to the related operating entity at market rate, often through a limited recourse borrowing arrangement with a bare custodian trust holding title. It carries stricter compliance, tighter borrowing limits and closer cash management inside the fund, so it suits some profiles and not others. Ardent arranges the mortgage against the campus, and the school's accountant or SMSF specialist confirms the tax, super contribution and ownership mechanics before the bare trust deed is signed.

How your application is assessed

Financial performance: Historical and forecast accounts, fee revenue stability, operating surplus and sensitivity to enrolment changes.
Serviceability: Debt-service cover ratios, seasonality around term starts, visibility on committed funding streams and cash reserves.
The property: Zoning for educational use, planning approvals, building compliance, traffic plans, and valuation of a special-purpose facility.
Deposit and equity: Cash, building fund reserves, pledged equity and any additional security offered.
Lease and occupancy: If a holding entity owns the site, the lease terms, rent level, and evidence of arm's-length pricing. If currently leased, the remaining lease tail until ownership transfers.

A specialist broker matters because private school properties are special-purpose assets, and lender appetite, LVR and covenants vary meaningfully across the market.

How this might look in practice

This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.

The situation: An independent K-10 school in suburban Melbourne leases a 6,000 sqm campus. Enrolments have grown for five years, fee income sits at $8.5M with an 8 per cent operating surplus, and the landlord wants to sell. The purchase price is $7.5M, with $900K of staged refurbishments to follow.
Options we would map:
- An owner-occupied purchase geared to around 80 per cent of value, with the deposit funded from cash reserves and a building-fund draw.
- A property-holding trust owning the campus and leasing it back to the school at market rent, so the board keeps control of capex planning.
- A short interest-only period to align repayments with term fee inflows, then a step to principal and interest.
- Equity in a related property, such as an early learning centre held by the governing body, brought as additional security to reduce the cash deposit and smooth timing with capital campaigns.
How we would approach it: we would map the ranges, structures and repayments against cash-flow seasonality and capex timing, then present the file to the lenders whose appetite suits a special-purpose education asset, with staged drawdowns for the $900K of refurbishment. The figures above are illustrative, not confirmed outcomes; the LVR, term and pricing are the lender's call, subject to serviceability, lender appetite and approval.

Finance types for private school owners

Asset finance for campus equipment: Fund classroom ICT fleets, AV and PA systems, lab benches and apparatus, security and access control, and school buses on terms matched to useful life.
Fit-out and refurbishment finance: Modernise classrooms, libraries, student services, staff areas and compliance upgrades with staged progress payments; school fit-out finance can fund the works separately from the property purchase.
Working capital loans: Bridge term-start cash flow, manage fee timing and spread large annual costs such as insurance and compliance audits; working capital for a private school keeps operations steady across the fee cycle.
Business overdraft: Cover seasonal swings across terms, excursions, uniform cycles and activity fees without interrupting operations.
Refinancing and debt consolidation: Reset pricing, extend terms, or consolidate multiple facilities into a single structure that aligns with enrolment and capex plans.
Construction and renovation: Fund new classrooms, a multi-purpose hall, sports courts or modular buildings with structured drawdowns and interest only during build.
Business or premises acquisition finance: Acquire an adjoining parcel for expansion, purchase a second campus, or buy out a partner operator where a for-profit model applies.

Owning the premises can strengthen the balance sheet and open future options, for example a refinance that consolidates facilities once capex is complete.

A broker who knows private school property

ACG focuses on commercial mortgages for private schools. We arrange and structure finance around how you intend to hold the campus and how the school will occupy it, including owner-occupied mortgages, construction facilities and refinances.

We work nationally across Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra, Hobart and surrounding metro and regional areas. Ardent Capital Group is a specialist in commercial mortgages and our team can help you today. We have helped facilitate over $500M in funding over a decade for over 1,000 borrowers, and we work to optimal financial outcomes without pressure.

Your questions answered

What deposit do we need to buy our campus? Owner-occupied commercial premises typically gear to around 80 per cent, so plan for a deposit near 20 per cent. The special-purpose nature of a campus can shape the valuation and the final number, and stronger trading and owner-occupier use support the higher end.

Can an SMSF own a school property and lease it to the school? Commercial premises can qualify as business real property and be leased to a related operating entity at market rate. It suits defined profiles and comes with strict compliance and borrowing limits, and your accountant confirms the detail before anything is locked in.

How do lenders assess school cash flow and seasonality? They look at audited accounts, fee inflows by term, government funding timing, operating surplus and how these support repayments, including any interest-only period during major works.

Does special-purpose use affect valuation and LVR? Yes. Education-specific fit-out and limited alternate use can shape the valuation compared with generic commercial property. Strong owner-occupier use and location help.

What holding structure do lenders prefer for a campus? Many lenders are comfortable with a property trust or company that leases to the operating school at a commercial rent, provided the lease and governance are clear and arm's-length.

Can we fund staged upgrades alongside the purchase? Commonly, yes. A purchase facility can be paired with a capex or construction tranche for classrooms, hall or compliance works, with staged drawdowns and interest only during build.

Written by

Nick Chong

Managing Director, M.AppFin, Dip. Mortgage Mgmt

Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.