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If you’re looking to finance a property that combines residential and commercial use, you’re likely exploring the world of mixed-use mortgages. These property types don’t quite fit into traditional mortgage products, which is why specialist finance solutions are essential.
In this blog, we break down what a mixed-use mortgage is, how mixed-use mortgage loans work, what lenders are looking for, and how you can find the best deal.
What Is a Mixed-Use Mortgage?
A mixed-use mortgage is used to finance a property that combines both residential and commercial elements. Examples include:
- A flat above a shop
- An office building with residential units
- A house with a home-run business in part of the property
These are also known as semi-commercial properties, and because they contain a commercial element, standard residential mortgages don’t apply. Likewise, commercial mortgages aren’t always ideal if the residential portion is significant.
Mixed-use mortgages provide a tailored solution that accounts for both sides of the property’s use.
How Do Mixed-Use Mortgage Loans Work?
A mixed-use mortgage loan operates similarly to other types of property finance but with added considerations. Lenders will assess:
- The percentage of residential vs. commercial space
- The use of the commercial area (e.g. low-risk office vs. high-risk takeaway)
- Your ability to repay (income, credit history, experience)
- The stability of rental income from both parts of the property
These loans can be used for:
- Purchases
- Remortgages
- Capital raising or releasing equity
Repayment structures may be interest-only or capital & repayment, depending on the lender and your goals.
Who Offers Mixed-Use Mortgages?
Mixed-use mortgage lenders include high-street banks, challenger banks, and specialist lenders. Each has different criteria and may offer very different rates depending on:
- Your experience as a landlord or property investor
- The tenant profile
- The property’s location and valuation
- Your loan-to-value (LTV) ratio
Many mainstream lenders have a narrow appetite for mixed-use deals, especially if the commercial element is considered high-risk. This is where working with a specialist broker becomes invaluable.
Why Choose a Specialist Broker?
Finding the right lender is only half the battle. A broker like Advocate Finance will:
- Compare deals from a wide panel of mixed-use mortgage lenders
- Structure your application to match the lender’s appetite
- Secure more competitive rates than if you approached lenders directly
- Save you time, hassle, and potentially thousands in interest
If you’re exploring finance for a semi-commercial or mixed-use property, check out our semi-commercial mortgage hub for guidance and advice.
Contact Us
Mixed-use property mortgages require a different approach than standard residential or commercial loans. Whether you’re looking to buy, remortgage, or raise funds from a mixed-use property, it’s vital to work with a broker who understands the nuances of mixed-use mortgage loans and lender criteria.
Speak to Advocate Finance today to get expert help with your mixed-use mortgage application.
