What Properties Are Classed as Semi-Commercial?
The banner of ‘semi-commercial’ covers a wide range of properties. Any property that comprises of both a commercial element and living accommodation will be classed as semi-commercial.
Some lenders charge lower rates for semi-commercial properties than are charged for fully commercial buildings. Where this is the case, there are sometimes splits in the ratio of residential to commercial space needed to secure the lower rate.
Another point that could exclude your property from being eligible, is where there is a single access to the property, meaning it could only be occupied by a single tenant or business owner.
Living in the Residential Portion of the Property
If you’re planning on living in a portion of a semi-commercial property and either working from, or letting the commercial element, most lenders will treat your application as FCA regulated. Although this will reduce the number of lenders who would be willing to accept the application. However it is still acceptable to some.
Specialist advice is crucial, and we are highly experienced in this situation.
How Much Can I Borrow?
We offer semi-commercial mortgages from £25,000 with no maximum loan amount. Regardless of the size of your application, we can usually help.
Lenders will usually allow you to borrow up to 75% LTV when buying or remortgaging a mixed-use property. Of course, as with other types of mortgage, the maximum loan may also be restricted by the lender’s affordability calculations.
Semi-Commercial Mortgage Costs
Semi-commercial mortgage rates start from as low as 2.75% per annum. The interest rate charged will vary depending on the quality of the application, the size of the loan and the LTV. Larger loans will usually receive lower rates than smaller ones, for similar quality applications.
In addition to the interest, lenders will charge an arrangement fee, which is usually between 0.75 – 2% of the loan amount.
Semi-commercial mortgages can usually be completed in around 6 – 12 weeks from the initial application. Of course, the timescales for each application can vary.
By ensuring you provide all the required information upfront, and any additional information as it is requested, you can cut down your application to the lower end of this scale.
What Information Will I Have to Provide?
When applying for a commercial mortgage, you will need to provide the following information:
A fully completed application form
3-6 months personal bank statements
3-6 months business bank statements (for owner-occupied applications)
2 years accounts (for owner-occupied applications)
A copy of any leases or ASTs (for commercial investment applications)
Assets, liabilities, income & expenditure information
Who Lends on Semi-Commercial Property?
There are a lot of lenders out there, and they can largely be broken down into smaller groups:
High Street Banks – High street banks are still very active in the market and tend to offer the lowest rates to borrowers. The flipside to this is that criteria is tight, as are affordability rules. High street banks will usually want to see strong financial performance when lending to a business, long leases to strong tenants for commercial investments and clean credit history from applicants.
Challenger Banks – The rise of the challenger bank has been a major positive since the credit crunch. These lenders tend to have more flexible criteria than high street banks and may overlook minor adverse credit. In addition, affordability rules may be more lenient and shorter leases acceptable for investment applications. Over recent years, the rates of challenger banks have reduced significantly, bringing them much closer to those of high street banks.
Specialist Independent Lenders – There are other specialist lenders in the market who will lend against semi-commercial property. These lenders tend to be the most flexible and as such charge the highest rates. They will accept heavier adverse credit, very short-leases or poor-quality tenants and very relaxed affordability rules for business owners. When borrowing from these lenders, the maximum loan to value will usually be lower, around 65-70% of the property value.
I’ve Never Owned Commercial Property Before, Will I Be Eligible?
We can fund first time commercial property owners, whether you’re looking to purchase for your business or as an investment.
We’re starting to see an uplift in first-time buyers who are looking to invest in semi-commercial property, which is something we can help with.
Get Started Today
We offer you two ways to get started with your application right now.
- Compare semi-commercial mortgage rates online and apply online instantly. We will run through your application to ensure it will meet the lender’s criteria and has the best chance of success and then submit the application for you.
- Contact us to talk to an adviser and they will be able to run through your application in detail, and offer you written terms in under two hours. From there, they will work with you until you’re 100% satisfied with the terms offered.