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What is a Semi Commercial Mortgage?

Do you want to add to your property portfolio and add a new source of income? Are you considering buying a retail unit with one or more flats above? Maybe you’ve recently redeveloped or built a large property which you’ve converted into a mix of flats, office space and shops. If you are confused about refinancing your property due to its mixed usage, one option you can consider is a semi-commercial mortgage, also known as a mixed use mortgage.

 

Semi-commercial mortgages enable businesses and individuals to borrow the funds they need to buy a mixed use property that they intend to let out. These properties normally consist of residential units let to tenants on shorthold tenancies and commercial units which a business could lease for up to 5 years. The commercial element may consist of one or more retail units such as a shop, gym, restaurant or hairdressers. It’s not unheard of for a mixed use property to encompass residential flats, a shop, takeaway and offices all on the same premises. If you intend to buy or refinance a property of this type you will need a semi-commercial mortgage.

 

When applying for a semi-commercial mortgage, you will normally have the option to borrow either on a repayment basis – reducing the capital owed over time, or on an interest only basis. Buying on an interest only basis can be helpful for cashflow reasons as it reduces your monthly payments, but the original balance will still need to be repaid by the end of the mortgage term.

 

Semi-commercial mortgage criteria can be stringent and some borrowers struggle to find the right mortgage. It’s therefore worth speaking to a mortgage broker for your best chance of success. Speak to our friendly team on 0333 090 2025 or get in touch to start your application.

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Who Are Semi Commercial Property Mortgages For?

Semi Commercial property mortgages are for business owners or investors.  It allows them to purchase or refinance a property with multi-use spaces which can be individually let to residential tenants or business. With multiple residential and commercial tenants in the development, the owner can potentially receive a higher return on their investment from the various rents charged on the units. Some business owners are also drawn to semi commercial properties due to the tax implications. Investors who purchase mixed use properties typically pay stamp duty based on commercial rates rather than residential rates which can lower their tax liability.  

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Mixed Use Semi Commercial Mortgage Criteria Explained: Common Scenarios

There are several common scenarios where a semi commercial mortgage is suitable, these include:

  • Shop(s) with one or more apartments on floors above
  • Larger developments/redevelopments which may include office space, new homes, and retail space
  • Pubs / guest houses with accommodation (specialist rules apply, contact us to find out more)
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Is it Hard to Secure a Semi Commercial Mortgage?

Many business owners will be successful in securing a semi commercial mortgage, but some do struggle. Some individuals struggle to get a mortgage either due to the type of property, its condition or current usage. Income can also be an obstacle to securing a mortgage – whether it’s because you derive your income from multiple streams, your income is inconsistent due to the nature of your business or whether your income is low but you are asset rich. Experience also has a part to play when trying to secure a mortgage. If this is your first time applying for semi-commercial finance,  you have no or limited experience with owning commercial property, this can sometimes work against you. If you have a history of bad credit this can also make it trickier to get a mortgage. 

If any of the above applies to you, this won’t necessarily mean you won’t qualify for a mortgage. That’s why it’s so important to speak to our friendly mortgage experts to give you the best chance of success. Our team will take the time to discuss and understand your situation with you and use our extensive experience and knowledge of the market to help you decide which lender is the best fit for your circumstances. And we’ll also liaise directly with everyone connected with your application on your behalf, to make the process go as smoothly as possible.

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Commercial Properties: Mortgages For Buildings With Separate Access

With all semi commercial properties, there must be separate access to the residential and commercial parts of the property. Depending on the size of the space the business occupies, you may have to take out a commercial mortgage. How the property shows on the land registry will determine whether it is eligible for separate mortgages for each element.

If the different units are registered as separate titles on the land registry then you wouldn’t be able to have one mortgage covering all units. Instead, a separate mortgage would need to be taken out for each title – i.e. you’d need a buy to let mortgage for the accommodation you intend to let out for residential purposes and a commercial mortgage for the commercial element (depending on the split of the accommodation). 

If the units are leasehold, and the leases are owned by different companies, then separate mortgages would also be required in this instance as well. Much depends on the property tenure as well. If the freehold for all units is owned by one individual or company then a semi-commercial mortgage will be suitable to cover the property.

Not sure about your individual property’s qualifications? Please contact us to discuss your property. Our friendly team, will be only too happy to help.

Semi Commercial Mortgage Criteria Explained

The criteria for semi commercial mortgages varies based on the lender, the type of property, and your business. Generally speaking though, you’ll need to be:

  • Borrowing £25,000 or more
  • Aged 18 or over
  • Providing a deposit of 20-40%
  • Able to provide your trading history, projected income and proof of current  income/assets
  • Not intending to live at the property

Lenders will also check out your credit history. If you do have any issues, it’s worth speaking to our team for advice. Adverse credit history won’t automatically prevent you from getting a mortgage but it could affect the loan and rates offered. 

Why Choose Simple Fast Mortgage For Semi-Commercial Mortgage Advice?

Thinking of working with Simple Fast Mortgage? Here are some of the reasons why you should choose us for your Semi Commercial Mortgage:

  • We have over 20 years experience of working with business owners so we are confident we can find a semi commercial mortgage that’s right for you.
  • Access to specialist lenders – Each application for a semi commercial mortgage is unique. Mainstream lenders are not always flexible but our advisors have access to specialist lenders so we can find the right solution for you.
  • Unrestricted access to mortgage lenders – Our team has unrestricted access to the market so you aren’t restricted based on who you bank with. This means you have more options across a broader range of lenders to help you find a semi commercial mortgage that best suits your needs.
  • Appointments that work for you – We offer flexible appointments that work for your schedule (over the phone or via video call).
  • We are transparent about fees – There are a lot of expenses involved in buying a semi commercial property. A business owner should keep a close eye on the budget so you’ll always be clear about the fees and know where you stand.
  • Stress-free process – Buying a property can be stressful, especially when there is an element of commercial usage. When you work with us, we’ll take care of the details and work directly with your lender, accountant, solicitor etc.).

We’re also proud to provide trusted advice on commercial finance, get in touch with our team of friendly experts today to find out more.

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