The right mortgage for you depends on many factors, including your budget, credit score, life stage, deposit size, the type of property you’re buying and
The right mortgage for you depends on many factors, including your budget, credit score, life stage, deposit size, the type of property you’re buying and
If you’re looking to finance a property that combines residential and commercial use, a semi-commercial mortgage can provide the flexibility you need.
Whether you’re an investor or a business owner, we can help you secure a competitive semi-commercial mortgage tailored to your unique requirements.
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A semi-commercial mortgage is designed for properties that feature both residential and commercial components. Examples include buildings with retail spaces on the ground floor and residential flats above, or bed and breakfast establishments that offer both guest accommodation and private living quarters. These mortgages are provided by commercial mortgage lenders and are generally treated similarly to commercial loans. This makes them particularly suitable for investors who want to generate income from both residential tenants and commercial enterprises.Â
Semi-commercial mortgages are beneficial for those looking to invest in mixed-use properties that have the potential for diversified income streams. They offer the flexibility needed to manage properties that serve dual purposes, and they can be an excellent option for those seeking to maximise their return on investment.Â
What Are The Benefits?
You can choose to rent out the space which will help generate more income for you. If you decide to do this you will need to take out a buy-to-let mortgage and review any existing leases.
Owning a property with a semi-commercial mortgage often provides financial advantages over renting. Monthly mortgage payments may be comparable to rental costs, but you will build equity in the property over time. This equity contributes to your financial security and offers protection for future investments.Â
When purchasing a property with a semi-commercial mortgage, you are exempt from the additional percentage stamp duty surcharge that applies to second residential properties. This can result in significant savings on the overall cost of purchasing the property.Â
What Are The Risks?
Applying for a semi-commercial mortgage can involve more complex paperwork compared to residential mortgages. The process may include additional legal requirements, so be prepared for an extensive documentation process.Â
Typically, lenders require a deposit of 20-40% for semi-commercial mortgages. While this range is common, individual lender criteria can vary. It’s important to save accordingly and be aware of specific deposit requirements from potential lenders.Â
As with any property purchase, there is a risk that the value of the property may decrease. This could lead to negative equity if you need to sell during a downturn. Although property values often recover, selling in a low market can reduce your capital and affect future borrowing potential.
If you’re investing in a property which has both residential and business use, your mortgage won’t be regulated.
A commercial mortgage is secured by a property used solely for business purposes, such as office buildings or retail units. Whereas a semi-commercial mortgage property is used for both residential and commercial purposes.Â
Properties that include both a commercial element (a shop or office) and residential accommodation (flats or living quarters) are eligible for semi-commercial mortgages. Â
These properties must meet the lender’s criteria for both uses.Â
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*Additional costs may apply, so it is important to discuss these with your adviser to understand the full scope of expenses.Â
For semi-commercial mortgages, lenders typically like to see a 20-40% deposit. Whilst this isn’t definitive as each lender will have their own criteria you should keep this in mind when saving for your deposit.Â
As with any mortgage, your credit score will play a part when determining your affordability. A strong credit history can improve your chances of securing favourable terms, while a poor credit score may limit your options. Even with a less-than-ideal score, it is still possible to find a lender with suitable conditions.Â
If your business is relatively new and you’re looking for a semi-commercial mortgage, lenders prefer to see a proven track record in the industry, as it gives them greater confidence that their investment will be secure
UK Mortgage Centre Limited is an Appointed Representative of Refresh Mortgage Network Limited. Refresh Mortgage Network Limited is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register under firm number 1019794.Â
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages.Â
The Financial Conduct Authority does not regulate will writing and taxation and trust advice.
You may be charged a fee for your advice. A typical fee is £495, which would be payable when you receive your mortgage offer. Your dedicated advisor will discuss this further on your free initial phone call.
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