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Welcome to Advocate Finance, your trusted broker in securing semi-commercial and mixed-use property mortgages!
As established commercial finance brokers, we understand the unique needs of property investors and business owners. We are here to provide tailored financial solutions that help you achieve your goals.
Whether you are looking for a semi-commercial / mixed-use property mortgage, loan or refinance, we cover all aspects to ensure your success.
The terms “Semi-Commercial” and “Mixed-use” are interchangeable words that both relate to a property that has one tenure (freehold or leasehold) with a residential and commercial units with separate access to each unit.
The typical property would be a high street retail property with a flat (a residential 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.
This blend of properties provides multiple income streams and can be a good long term investment.
These are long-term buy-to-let mortgages that provide property investors and landlords with funding to purchase or refinance semi-commercial / mixed-use properties.
This web page focuses on buy-to-let investment mortgages for semi-commercial / mixed-used properties fully let to tenants. However, Advocate Finance can also arrange mortgages for properties where the residential element is lived in by the applicant and/or an applicant’s business trades from the commercial property. From a lender’s perspective, this is a commercial trading business mortgage.
Probably the most significant factor in deciding the mortgage lender and financing terms available is the split between the residential and commercial elements.
Typically, this split between the residential and commercial units is measured by the values, but some lenders consider the split by the total area of the residential and commercial units.
A property that is more residential than commercial is considered a lower risk and the interest rates and funding terms can be better. Advocate Finance can source lenders for all splits.
Using the services of a broker that understands how the property is valued is crucial as it affects the amount you can borrow. Most lenders will value the property as one tenure (freehold or leasehold), called a vacant possession valuation
Our mortgage brokers 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 makes up most of the overall value, some lenders can use an aggregate value that might be more advantageous. If the loan-to-value is low, we can source a buy-to-let lender that ignores the commercial valuation altogether, and the interest rate will be considerably lower.
Single Tenure Valuation | Aggregate/Break-Up Valuation |
This method considers the property as one unit, combining both residential and commercial elements. It is often used for properties with a balanced split between residential and commercial spaces. | This method values each element separately, then combines the values. It can be advantageous for properties where one element significantly outweighs the other in terms of value or size. |
If the residential element of the property has been separated into it’s own legal title (by creating a long leasehold title), and the commercial element remains a freehold, then we could source two loans from either the 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 to a commercial mortgage.
Alternatively, if you don’t need to maximise the borrowing amount, there are lenders that provide a buy to let mortgage and keep both the residential & commercial as one title but base the lending just on the value of the residential unit. This way, you could save up to 2% per annum on the interest rate.
Advantages of Semi-Commercial | Disadvantages of Semi-Commercial |
Overall Yield and Income Sources: Semi-commercial mixed-use properties typically offer higher overall yields compared to standard buy-to-let investments. This is due to the dual income streams from both residential and commercial tenants. The commercial element often commands higher rental income. | Interest rates: They tend to be higher than for residential buy-to-let mortgages, however we can source a standard buy to let mortgage for semi-commercial properties if we can exclude the value of the commercial unit. |
Lower Risk with Diverse Tenants: Having both residential and commercial tenants can reduce the risk associated with vacancies. If one unit becomes vacant, the income from the other units can help cover costs. You tend to have longer-term tenants in the commercial element and there is the option for one tenant to occupy both units. | Valuation: Commercial valuations are required, which can be more expensive than residential valuations. |
Potential for Capital Growth: The flexibility to convert commercial spaces to residential units under permitted development rights can increase the property’s value. Investors can leverage these opportunities to maximise capital growth over time. | Tenants: Commercial tenants can take longer to find but, on the whole, they stay longer as tenants than residential. |
Stamp Duty: The Stamp duty rate for Semi Commercial properties is much lower than the residential stamp duty rate for when the property is let out. Semi Commercial / Mixed Use properties are based on the non-domestic stamp duty rates. |
Expertise and Experience:
Tailored Financial Solutions:
Competitive Fee Structure
Comprehensive Range of Services:
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
Properties that qualify for semi-commercial mortgages include buildings with both residential and commercial elements, such as flats above shops, mixed-use buildings, and properties intended for both living and business purposes.
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; provide payments options such as interest only and capital and repayment.
Commercial Banks that operate through intermediaries such as Advocate Finance, also tend to be 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 HMOs 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.
Interest rates for semi-commercial investment mortgages vary based on factors such as the loan amount, loan-to-value ratio, and the borrower’s credit profile. Typically, rates range from 3% to 7% per annum.
Some lenders may impose early repayment charges. It’s essential to understand the terms of your mortgage agreement, including any penalties for early repayment.
Speak to one of our Advisers today for a free consultation.
As a mortgage broker, we have built up relationships with various lenders. In turn they constantly update us with any criteria or rate changes, meaning we can actively source the best mortgage deal available to your circumstances.
We can also refer cases over to the lenders before application giving them the whole picture, to see if your case is suitable for them; saving you time and money.
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.
Our expert team of mortgage brokers are here to guide you through every stage of the process.
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.
You can check via www.fca.org
We are registered with the ICO, Z1654205 and you can check via www.ico.org.uk.
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.
We may receive a commission that will vary depending on the lender, product, the amount borrowed or other permissible factors.
Advocate Finance is a mortgage and finance brokerage firm that specializes in securing loans and mortgages for various types of properties, including single properties, large portfolios, commercial sites, and development projects. They assist clients regardless of credit history, circumstances, or legal ownership, aiming to provide tailored financing solutions