Mixed Use/Semi-Commercial Mortgages

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Mixed Use/Semi-Commercial Mortgages at a glance
Frequently Asked Questions
Case Study

What is a Mixed use/Semi-Commercial mortgage?
A mixed use/semi-commercial mortgage is a loan that is secured against a property. The property is made up of more than one type of property such as shop with a flat above it. The mortgage required will be one that covers retail and residential elements.

What is a Mixed use/Semi-Commercial mortgage used for?
A mixed use/semi commercial mortgage would be applicable if you wanted to buy:
A shop with a flat above it
A public house with owners accommodation included
A Bed and Breakfast/small hotel with owners accommodation included
A professional practise, such as a dentist, with owners accommodation included

How does a Mixed use/Semi-Commercial mortgage work?
Semi-commercial mortgage rates are cheaper than commercial mortgage rates but more expensive than solely residential mortgage rates. They are paid monthly and cover the money borrowed and interest charges.
The size of the loan in likely to be up to 75% of the property value. With loans from £50,000.
The mortgage term is typically between 3 and 25 years, but some can be longer to around 30 years.

Can you get a Mixed use/Semi-Commercial mortgage with another person or as a limited company?
Yes.

Are there different types of Mixed use/Semi-Commercial mortgage?
Yes, there are mixed use/semi-commercial mortgages available to buy mixed use properties. Also, there are mixed use/semi-commercial Buy to Let mortgages to buy mixed use properties to rent out.
If you plan to live in the residential part of the building that you are buying you would require a regulated mortgage product due to the intention of making it your main home.
If you are buying the property with a Buy to Let mortgage lenders will need to know who is going to be occupying the commercial element and the amount of rent that it will generate. They would also need to know how much rent the residential element would achieve.
There are different types of secured loans for Mixed use/Semi-Commercial properties they include:
Interest only: where the interest is the only part of the loan being repaid, you would have to make provision to pay off the capital by the end of the mortgage.
Fixed rate: where the sum repaid is at a fixed interest rate for a period of time, usually between 2 and 5 years. This can be useful to manage your money. After that the interest reverts to the lenders standard variable rate for the rest of the mortgage unless you complete a new mortgage deal.
Variable rate: where the monthly interest base rate is set by the lender and adjusted monthly or annually meaning it could go up or down.
Tracker rate: where the interest rate tracks the Bank of England`s base rate meaning it could go up or down.
Discounted rate: this is a form of variable mortgage, where the interest rate is set just below the lenders standard variable rate, for a set period of time.

Do I need experience?
No, Lenders will look at a number of factors.

Can I get a Mixed use/Semi-Commercial mortgage as a first time buyer?
Yes, It may be possible depending on your circumstances.

If I already have a Mixed use/Semi-Commercial mortgage, Can I Re-Finance?
Yes, depending on the circumstances.

How much does Mixed use/Semi-Commercial mortgage cost?
Typically, the costs include:
Broker Fees
Product fees, charged by the lender
Deposit
Valuation Fee, these can vary
Solicitors/Conveyancers Fees, these can vary
Monthly mortgage payment (see ‘Do I pay monthly?’ below)

Do I need a deposit?
Yes, you will be more likely to secure a commercial mortgage if they have at least a 25% deposit, although lenders can request up to 45% of the property’s value.

Do I pay monthly?
Yes, the amount paid is based on the amount borrowed, interest rate, type of mortgage and term.

Can I get Mixed use/Semi-Commercial mortgage if I have Adverse Credit?
Adverse credit, also known as bad credit, does not necessarily mean you are unable to get a mortgage. Every situation is unique and we can advise accordingly.

How can I check my Credit Report?
Use this link for Check My File Credit Report
https://www.checkmyfile.partners/694W2WN/2CTPL/
Check my file offers a 30-day free trial which is £14.99 per month, thereafter, and can be cancelled at any time.

What should I do next?
When you are ready, please give us a call. One of our friendly advisers will gather information about your enquiry and offer advice accordingly. We offer FREE initial consultations.

Ms X wanted to buy a Mixed use/Semi commercial property for £160,000 that had a retail unit on the ground floor and a 2-bedroom flat above, via a Buy to Let mortgage.
She had a 25% deposit.
The ground floor unit was let to a newsagent who paid £500 per month and the flat was let for £850 per month. She intended to retain the tenants.
After advice, she chose a Buy to Let interest only mortgage over 25 years, and a 5 year fixed deal at 6.94%. This deal had an arrangement fee of 2% and the monthly payments were £708 per month.
Once the fixed rate ends the mortgage will revert to the Lenders Standard Variable rate, currently 8.4% which would mean the payment would then be £840 per month. She could, however, remortgage to a new deal.
This example is based on figures from a high street lender on 16/04/2024 and is for illustrative purposes only.

Your property may be repossessed if you do not keep up repayments in line with the lenders schedule. Think carefully before securing debt against any property.