Understanding Semi-Commercial & Mixed use Mortgages: A Guide for Investors.
Please note that semi-commercial or mixed use mortgages are only available as a property investment as part of a wider property portfolio, you can not live in the residential part of the property.
What is a Semi-Commercial Mortgage?
A semi-commercial mortgage is a type of mortgage secured on a property that combines both residential and commercial usage. A good example would be a retail unit on the ground floor with a residential flat above.
Semi-commercial mortgages are designed for property investors, landlords, and business owners seeking to capitalise on high-yield investment opportunities. With flexible financing options and competitive rates, these mortgages can help you expand your portfolio, increase rental income, and maximise returns.
In this guide, we’ll explore:
What a semi-commercial mortgage is
Which property types qualify
Why they’re a profitable investment
The top lenders offering semi-commercial finance
Discover how a semi-commercial mortgage can help you unlock the full potential of your property investment. Contact us today.
Types of Property:
Properties eligible for semi-commercial mortgages can vary but typically include:
• Retail units with one or more flats above
• Restaurants and pubs with self-contained residential accommodation
• Professional practices such as doctors and dentist practices with residential accommodation
Essentially any property which has both a commercial element and a separate access residential element will be classed as a semi-commercial property. The titles are usually freehold and encompass both the commercial and residential elements.
What is the lending criteria for mixed use mortgages?
• 3 to 25 years mortgage term
• Interest only and repayment options
• Typically, 2,3- or 5-year fixed rates or Bank of England base rate trackers
• Up to 75% loan to value
• Loan from £150,000 with no maximum
Advantages of Using a Commercial Mortgage Broker:
Engaging a commercial mortgage broker can provide numerous benefits for borrowers seeking semi-commercial mortgages, including:
Expertise and market knowledge: Commercial mortgage brokers specialize in this niche market and have extensive knowledge of the lenders, products, and criteria involved.
Access to multiple lenders: Brokers work with a wide network of lenders, giving borrowers access to a broader range of financing options.
Tailored advice and solutions: Brokers analyse a clients unique circumstances and requirements to provide personalized recommendations and secure the most suitable mortgage terms.
Time and effort savings: Brokers handle the complex mortgage application process on your behalf, saving you time and reducing stress.
Is investing in Semi-Commercial Property a Good Investment?
Investing in semi-commercial properties can offer several advantages, such as:
Diversification: Owning a property that generates both residential and commercial income provides a diversified revenue stream, potentially increasing stability and reducing risk.
Higher rental income potential: Commercial units generally yield higher rental returns compared to purely residential properties, enhancing the overall investment yield.
Potential capital growth: Well-located semi-commercial properties can benefit from both residential and commercial market growth, potentially leading to increased property values over time.
Lenders that Offer Mixed Use Mortgages:
Various types of lenders are willing to provide financing for semi-commercial properties, including:
High street banks: Traditional banks often offer semi-commercial mortgages, especially for borrowers with a strong credit history and who have existing commercial property ownership.
Specialist commercial only lenders: Certain lenders focus specifically on providing mortgages for commercial and semi-commercial properties, offering flexible criteria and tailored products. Bridging finance providers: Bridging loans can be an option for short-term financing to bridge the gap until a permanent mortgage can be arranged for a semi-commercial property. The same can be said for clients wishing to buy semi-commercial property who then plan to change the commercial element o residential under permitted development planning rules.
Semi-commercial mortgages by Fox Davidson
Semi-commercial mortgages are a flexible financing option for properties that combine residential and commercial elements. Engaging the services of a commercial mortgage broker such as Fox Davidson can greatly assist borrowers in navigating the complexities of this specialised market. By understanding the unique benefits and seeking the right lenders we advise investors on how they can capitalise on the potential returns and diversification offered by semi-commercial property.
To discuss your mixed use mortgage requirements with one of our advisors please do get in touch. We look forward to working with you.
Frequently Asked Questions
What is a semi-commercial mortgage?
A semi-commercial mortgage is a loan secured against a property that combines both residential and commercial elements, such as a retail unit with a residential flat above.
What types of properties qualify for semi-commercial mortgages?
Properties that have both residential and commercial components, like shops with flats above or office buildings with attached residential units, typically qualify for semi-commercial mortgages.
Why invest in semi-commercial properties?
Investing in semi-commercial properties can offer diversified income streams from both residential and commercial tenants, potentially leading to higher returns and reduced risk.
What deposit is required for a semi-commercial mortgage?
Deposits for semi-commercial mortgages typically range from 20% to 40% of the property’s value, depending on the lender and the borrower’s financial profile.
Are interest rates higher for semi-commercial mortgages?
Interest rates for semi-commercial mortgages can vary but are often lower than those for full commercial mortgages due to the residential component, which may be perceived as less risky by lenders
For personalised advice and to explore your semi-commercial mortgage options, reach out to the experienced team at Fox Davidson.
