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If you’re considering investing in a building that has both a commercial unit (like a shop) and a residential flat above, you might be wondering whether a standard buy-to-let mortgage will cover it. The short answer is: not usually. Properties that mix commercial and residential space typically fall under the category of semi-commercial or mixed-use properties, and lenders treat these very differently from straightforward residential buy-to-lets.
Why a standard buy-to-let mortgage won’t usually apply
Traditional buy-to-let mortgages are designed for 100% residential properties. If even a small part of the building is used for commercial purposes, such as a takeaway, hairdresser or small office, most residential lenders will automatically rule it out.
The presence of a commercial tenant introduces added complexity for the lender. They need to assess the stability of the business, lease terms, and potential impact on resale value. This means a more specialist form of finance is required.
What are your mortgage options?
For these types of properties, you’re likely to need a semi-commercial mortgage. These are specifically tailored for buildings that combine residential and commercial elements under one freehold title. Lenders offering semi-commercial mortgages assess both parts of the property — the shop and the flat, looking at rental income, lease terms, and the borrower’s experience.
You can explore these options in more depth on our semi-commercial mortgage page, where we explain how this kind of finance works and what lenders are looking for.
Can the flat still be let on a standard AST?
Yes, and that’s one of the attractions of this kind of investment. The residential element can often be let on a standard Assured Shorthold Tenancy (AST), offering predictable rental income. Some lenders may even base their affordability calculations on the combined rent from both parts, helping you to secure a larger loan.
What about affordability and loan structure?
The loan amount and structure will depend on a number of factors:
- Rental income from the shop and the flat
- Your experience as a landlord or investor
- Type and length of the commercial lease
- Location and tenant type
- Loan-to-value (LTV), usually up to 75%
In some cases, lenders may also offer interest-only options or allow limited company ownership, making these products suitable for more complex portfolios.
Why work with Advocate Finance?
This area of lending sits outside the mainstream, so speaking to an adviser who understands the market is essential. At Advocate Finance, we specialise in semi-commercial and mixed-use mortgage solutions. We’ll assess your investment plans and advise on whether a semi-commercial mortgage or another route is most suitable.
Whether you’re planning to buy, refinance, or raise capital from an existing mixed-use property, we can guide you through the process, from lender selection to application and approval.
Visit our dedicated semi-commercial page to find out more, or get in touch with our team for a free initial assessment.
