In This Article
What is a mixed-use property mortgage?
A mixed-use mortgage is often referred to as a semi-commercial mortgage. A mixed-use mortgage is taken against a property that has both a commercial and residential element to it.
If you plan to live in the residential part of the property yourself, this would mean a mixed-use mortgage would usually be taken. The reason is, that the residential part of the building that you plan to live in would require a regulated product due to the intention of making it your main home.
However, with a commercial element to the building such as a retail unit under a flat, this would be outside the criteria of many mortgage lenders offering residential products.
A mixed-use property mortgage is designed to allow the owners to live within the property whilst occupying or renting out the commercial space too.
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Are commercial mortgage rates higher for a mixed-use mortgages?
It is likely the commercial mortgage rates for a mixed-use mortgage will be higher than that of a standard residential product.
The reason is that the commercial element to the building would take the application outside of the criteria for many residential lenders.
Lenders also believe that it would be more difficult to sell a mixed-use property if they ever had to take possession.
Your mortgage adviser would be able to search the market looking for a suitable lender for you to lend against a mixed-use property. They would be able to advise the interest rates and fees involved with a mixed-use mortgage.
What mortgage loan do I need for a commercial or a semi-commercial mortgage?
A mixed-use mortgage would be needed if a shop had a residential element to it that you plan to live in.
If the property was simply just a retail unit, the type of mortgage that would be needed is a commercial mortgage. This would be taken to purchase a shop that you plan to run your business from or let to another business.
If, for example, the shop had a flat above it, a commercial mortgage could be suitable if you intended to rent this residential element out. As the property would be rented, the mortgage would not need to be regulated unless a family was residing in it.
If you are looking for semi-commercial finance mortgages, you should find an experienced commercial mortgage broker.
They will likely be a member of the National Association of Commercial Finance Brokers (NACFB).
Can you get buy to let property mixed-use mortgages?
If you are looking for a mortgage for a mixed-use property that you intend to rent out, it may be possible to get a buy to let mortgage on this building.
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.
It is likely, due to the commercial element, that the mortgage would need to be a commercial product as it may be outside the criteria of most standard buy to let lenders.
Your mortgage adviser would be able to get an understanding of the property to then advise on suitable products.
Can a first time buyer get a mixed-use mortgage?
It may be possible for a first-time buyer to get a mixed-use mortgage. Lenders will need to understand the first time buyer’s intention with the property, whilst also assessing their full income and expenditure.
If you plan to occupy the commercial element of the building yourself, they would wish to know the details of your business to be comfortable that you can afford the mortgage.
This is equally important for the residential part of the building as your earned income will need to be generated to make payments on your mixed-use mortgage.
Your mortgage adviser would be able to get a full understanding of your income and expenditure to be able to calculate how much you may be able to borrow on a mixed use mortgage.
Can you get a mixed-use mortgage if you have bad credit?
It may be possible to get a mixed-use mortgage if you have bad credit.
Each lender has its stance on adverse credit and it can depend on many different things when considering you as an applicant. Adverse credit can come in many different forms such as bankruptcies, debt management plans, arrears, defaults, IVAs, county court judgements and more.
Your mortgage adviser would need to get a full understanding of your credit background, along with your intentions with your mixed-use property.
Whether you can get a mixed-use mortgage with adverse credit can also depend on other things. This includes your deposit amount, your income, details of your business, debt obligations and other commitments.
If you would like to learn more about your credit history, you can go to Check My File to sign up for a free trial.
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Do I need a special type of mortgage broker for mixed-use mortgages?
The mortgage that you need for a mixed-use property would depend on what you intend to do with the building once a mortgage has been placed.
If you do not plan to live in the residential part of the building, you will likely need a commercial mortgage. Therefore, in this situation, you should look for a commercial mortgage broker that can give you your options.
If you intend to live in the building whilst either occupying or renting out the commercial element, you will need a residential, regulated mortgage.
If this is the case, it would be recommended to look for a residential mortgage adviser that has experience in arranging mixed-use mortgages.
You should ask your mortgage adviser whether they have handled such applications in the past and are familiar with transactions similar to your own.
Most mortgage advisers will be able to offer you a free consultation to understand your requirements before any chargeable work is needed.
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Conclusion
It can certainly be possible to get a mixed-use mortgage for a property that has both a commercial element and a residential element. Depending on what your plans are with the building, this will determine whether you need a residential mortgage or a commercial mortgage.
Residential mortgages are underwritten on the affordability of the applicants, so lenders would need to look at full income and expenditure details.
If you were looking for a mixed-use mortgage, it would be wise to find an experienced mortgage broker who can give you your options.
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They are experienced, which can boost your chances of being approved.
