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Whether you’re investing in a retail unit with a flat above or purchasing a property that mixes business and residential use, semi-commercial mortgages come with unique considerations – especially when it comes to interest rates.
In this article, we break down everything you need to know about semi-commercial mortgage rates, from what they are and how they’re set, to how to secure the most competitive deal.
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What Is a Semi-Commercial Mortgage?
A semi-commercial mortgage is used to finance a mixed-use property containing both residential and commercial space. Common examples include:
- A shop with a residential flat above
- A takeaway with residential accommodation
- An office with residential elements
These properties don’t fit neatly into the purely residential or commercial category, so specialist lenders offer tailored mortgage products with rates that reflect the hybrid nature of the risk involved.
Learn more about semi-commercial mortgages on our main page.
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What Influences Semi-Commercial Mortgage Rates?
Unlike standard residential rates, semi-commercial mortgage rates vary more widely depending on a number of factors:
1. Loan-to-Value (LTV) Ratio
The lower the LTV, the better the rate.
2. Property Composition
The proportion of commercial vs. residential space can affect rates. A higher percentage of residential usage often leads to slightly better rates.
3. Tenant Risk Profile
A commercial tenant with a long lease and strong financials (e.g. a pharmacy or solicitor’s office) is more favourable than a startup bar or takeaway.
4. Borrower Experience and Creditworthiness
If you have a strong credit profile and a history of managing investment or business property, you’ll likely be eligible for better deals.
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Types of Rates Available
Just like standard mortgages, you can typically choose between:
- Fixed Rates: Secure and predictable payments, often for 2, 3, or 5 years.
- Variable Rates: Usually linked to the Bank of England base rate or lender’s standard variable rate (SVR).
Choosing between fixed and variable depends on your appetite for risk and desire for payment stability.
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What Are the Current Market Rates?
Lenders update pricing regularly based on market trends, so it’s crucial to work with a broker who can compare options in real-time.
For an up-to-date breakdown, check our semi-commercial mortgage rates page.
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How to Secure the Best Deal
- Work with a specialist broker: High street banks rarely offer the best deals for semi-commercial properties.
- Prepare your paperwork: Clear financials and tenant details help speed up approval.
- Aim for a lower LTV: A higher deposit can open the door to better rates.
- Choose the right lender: Not all lenders view commercial tenants the same way.
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Final Thoughts
Semi-commercial mortgage rates are influenced by multiple variables – from property makeup and tenant strength, to your financial profile and lender choice.
By understanding these key factors and working with a broker like Advocate Finance, you can increase your chances of securing a competitive deal tailored to your needs.
Ready to take the next step? Contact us today to explore your options and compare current semi-commercial mortgage rates.
