Semi-Commercial Mortgages
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Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance
What is a semi-commercial mortgage? What does semi-commercial mean?
A semi-commercial mortgage is a loan taken out on a property with both residential and commercial uses, such as a shop above a flat. These types of mortgages are generally taken out by investors or landlords to finance property purchases to let.
Is it difficult to get a semi-commercial mortgage?
No, it is not difficult to get a semi-commercial mortgage. You will need a specialist mortgage lender for this type of property purchase and high street banks are unlikely to be interested. However, the lenders that provide mortgages for semi-commercial properties are experts and make the process much easier.
What is the difference between commercial and semi-commercial property?
A commercial property will either be solely used by the business for commercial purposes or have a small ratio of residential space. Generally speaking, a property would be classed as semi-commercial if the commercial element to the property is less than 40%.
What properties are classed as semi-commercial?
Semi-commercial properties are a combination of commercial and residential units under one freehold. This usually consists of a ground-floor business – for example, a shop or café – with residential accommodation on the floor above.
What ratio of the property needs to be commercial to qualify?
Most semi-commercial mortgage lenders will want 40% or less of the overall property to be commercial. There are some lenders that could go as high as 50%. Anything higher and you would be looking at a commercial mortgage.
Can I live in the residential part of the property and still get a semi-commercial mortgage?
A semi-commercial mortgage is predominantly a term used for buy to let mortgages. If you are looking to reside in the property, then this is possible as a mixed-use property mortgage and, provided 40% of the property is for residential purposes, you would be considered on a residential mortgage.
Who can get a semi-commercial mortgage?
You can obtain a semi-commercial mortgage either in your individual name, partnerships, limited companies/Special Purpose Vehicles (SPVs) or limited liability partnerships (LLPs).
How much deposit do I need for a semi-commercial mortgage?
You will need at least a 25% deposit for a semi-commercial mortgage.
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What experience do I need for a semi-commercial mortgage?
To have access to the whole of the market you will need either one year of experience in letting a semi-commercial property or 2 years’ experience in letting at least two or more standard residential buy to lets. If you are a first-time landlord it will not be possible to obtain a semi-commercial mortgage without support from an experienced landlord being on the application. If you do have experience in letting properties, perhaps from working at a letting agency, you might find some lenders happy to consider you.
What rates can I expect for a semi-commercial mortgage?
Due to their complexity, semi-commercial mortgage rates would be higher than a standard buy to let mortgage but not as high as a commercial mortgage.
How can a broker support you?
Semi-commercial mortgages are not available on the high street and require a specialist lender. We have the experience and knowledge to support you with this type of application to ensure a smooth service.