Semi-Commercial
mortgages

Everything you need to know about semi-commercial mortgages

What properties are classed as semi-commercial?

Mixed-use property consists of a commercial unit and living accommodation. This includes a wide variety of property types, such as: 

• Shops with flats above
• Restaurants/takeaways with flats above
• Offices with flats above
• Pubs with self-contained living accommodation
• Holiday parks with residential accommodation
• Guest houses with owner’s accommodation
• B&Bs with owner’s accommodation
• Home-based health and beauty clinics
• Hair salons/beauticians with flats above
• Garden nursery business with a house attached
• Boarding kennels and cattery businesses with living accommodation

Who can get a semi-commercial mortgage?

Semi-commercial mortgages are available to individuals, partnerships, Limited Liability Partnerships (LLPs), Limited and Trading Limited Companies.

What experience do I need for a semi-commercial mortgage?

For investment mortgages, your landlord experience may impact the rates you can access for a mixed-use mortgage. To secure the best rates, lenders will want more than a year of experience letting commercial property or two years of experience letting more than one buy to let. Some lenders will consider first-time commercial investors, but rates may be higher, or you may need proof that your income could cover the mortgage repayments.

How are semi-commercial mortgage applications assessed?

Commercial vs. residential ratio

Lenders have different criteria depending on the ratio of commercial to residential space.

For example, if the residential element is over 50% of the total property, a lender may insist you take a buy to let or residential mortgage (depending on whether you’re letting it out or living there yourself). 

Similarly, if the vast majority is commercial, or there’s only one entrance to the whole property, you may need a full commercial mortgage. Our expert commercial team can help you determine what will be best for the property in question.

Investment or owner-occupier?

Semi-commercial mortgages can be for investment, where you, the landlord, let out commercial and residential units, for example, a shop with flats above. Or, if you intend to live in the residential element and use the commercial unit to run your business, you can mortgage a mixed-use property as an owner-occupier, for example, a B&B with owner’s accommodation. Whether you’re letting out or occupying the property determines how lenders assess the viability of the mortgage. If you’re renting out the property, the rental income of all the units will need to cover 125% - 140% of the mortgage repayments to pass affordability stress tests. You can find out more about how commercial investment mortgages work here.

If you and/or your business will occupy the property, the lender must be satisfied that your business generates enough profit to pass affordability thresholds and repay the mortgage. Our page on commercial owner-occupier mortgages will tell you everything you need to know about how this works.

How much can I borrow with a semi-commercial mortgage?

Most lenders' minimum loan size for semi-commercial property is £50,000, and maximum loans are £25 million for two to 30-year terms.

Loan to Value (LTV)

Typically, lenders allow you to borrow up to 75% loan to value (LTV) on semi-commercial property. Lender criteria on property types and affordability calculations can restrict the LTV.

How much are semi-commercial mortgage rates?

Generally, semi-commercial mortgage rates are not as high as fully commercial mortgage rates but are still higher than standard residential property mortgages due to the complexity of the properties. Typically, rates start at about 2.5% above the Bank of England Base Rate. Depending on the lender, whether you’re an investor or owner-occupier may also impact the cost of a mixed-use mortgage, with owner-occupier mortgage rates typically a little cheaper. Lenders provide capital repayment and interest-only term options, with some able to offer part and part options.