Mortgages for semi-commercial / mixed-use properties explained:
These are long-term buy-to-let mortgages that provide property investors and landlords with funding in order to allow them to purchase or refinance semi-commercial / mixed-use properties.
This page focuses on buy-to-let investment mortgages for Semi-commercial / mixed-used properties fully let to tenants. However, we can also arrange mortgages for those properties where the residential element is lived in by the applicant and/or an applicant’s business trades from the commercial property. This is classed as a trading business mortgage from a lender’s perspective.
What is a semi-commercial / mixed-use property? The terms “Semi-Commercial” and “Mixed-use” are interchangeable words that both relate to a property that has one tenure (freehold or leasehold) but both residential and commercial units with separate access to each unit. The typical property would be a high street retail property with a flat (domestic property) with its separate entry access above a commercial (non-domestic) property.
The residential element can also be a house in multiple occupation (HMO) or more than one residential flat, so in effect, a multi-unit block (MUFB) above a commercial unit.
Probably the most significant factor that decides the mortgage lender and terms available is the split between the residential element compared to the commercial part.
Typically, this split between these is measured by the property’s value, but some lenders consider the split by the total area of the residential and commercial units.
The majority of lenders will value the property as one tenure (freehold or leasehold). They will take into consideration the value of the whole property & the rental income that each residential and commercial unit generates.
Our advisers will carefully consider the suitable lenders for your circumstances depending on how much you are looking to raise relative to the value of the property. But the property’s value can differ depending on the valuation methodology the lender instructs the valuer to use.
With respect to semi-commercial / mixed-use properties, the biggest difference is whether the lender will use a Block value / Market Value or an aggregate/break-up value of the property. If your property’s residential element is the vast majority of the overall value, then some lenders can use an aggregate value that might be more advantageous, or if the loan-to-value is low, then we can source a buy-to-let lender that ignores the commercial valuation altogether, and the interest rate will be considerably lower.
If the residential element of the property has been separated onto its own legal title (by creating a long leasehold title) and the commercial remains a freehold then we could source two loans from either same lender or different lenders to provide the funding solution.
The mortgage on the flat would then be a standard residential or buy to let mortgage as opposed a commercial mortgage.
It is possible to live in the residential flat and let the commercial unit to a tenant and still obtain a semi-commercial / mixed-use mortgage.
The only potential issues are
High Street Banks can provide mixed-use mortgages, but we tend to find that their processes can be slow and the loan to values (LTVs) they offer are limited.
We prefer to work with specialist commercial banks who can offer mortgages that are flexible; provides payments options such as interest only and capital and repayment.
Commercial Banks that operate through intermediaries such as Advocate Finance, also tend to more flexible on the terms of the commercial leases. High Street Banks can require long-term leases to be signed and unless it is a blue chip tenant, it can be difficult to find a tenant prepared to sign a lease for more than 5 years
We do offer bridging loans for semi-commercial properties. These types of loans are short-term and are typically used to bridge the gap between the purchase of a property and the longer-term financing that is needed to complete the purchase. These types of loans can be used for a variety of different property types, including semi-commercial properties, and are often used by investors and developers to acquire and renovate properties. However, the terms and requirements for bridging loans can vary depending on the lender and the specific property.
Yes – We have successfully arranged mortgages for a number of HMO’s above semi-commercial / mixed-use properties.
Yes – We have successfully arranged mortgages for a number of multi-unit properties above semi-commercial / mixed-use properties. These are varied from 6 residential units above a commercial retail shop to a property that consisted of 107 units above 3 commercial units.
Our advisers offer a FREE consultation, so please give us a call or use the “Get in Touch With Us” form at the end of this page.
Advantages of Semi-Commercial
Disadvantages of Semi-Commercial
Important Information
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
We are a credit broker not a lender.
Advocate Finance Ltd, registered at 55 Crown Street Brentwood, Essex CM14 4BD. Company Register number is 05579380. Authorised and Regulated by the Financial Conduct Authority. Our FCA registration number is 592830.
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We conduct both regulated and unregulated business and therefore not all products provided through us are regulated by the Financial Conduct Authority. We source mortgages and loans from a panel of lenders.
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