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Can I get a semi-commercial mortgage through an SPV?

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 9, 2021

The question I received from Maria below is asking about using a Special Purpose Vehicle (SPV) for a commercial property. This is a common question as people want to make use of any tax benefits available when investing into property. Our dialogue is below.

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Question

Hi Pete,

I’m hoping to buy a shop with a flat above it. I’ve been in the retail business for a while and my plan is to run the shop myself and move into the residential accommodation above it.

As the floorspace of the shop and upper level flat is almost a 50/50 split, I understand that I will need to use a semi-commercial mortgage to buy this property. A colleague of mine has suggested setting up a special purpose vehicle (SPV) and applying for my mortgage through it to take advantage of the tax benefits.

I’ve heard of people applying for buy-to-let mortgages through SPVs, but is it possible to get a semi-commercial mortgage via one? 

Thanks in advance,

Maria, Devon

Answer

Hi Maria,

Thanks for reaching out. I’d be delighted to offer you some guidance on this. While it’s possible to use an SPV to apply for a semi-commercial mortgage, I would suggest finding a specialist mortgage lender for this particular deal.

That isn’t purely because it’s a semi-commercial deal, but the fact you’re buying a shop with a flat above it might put some mainstream lenders off. The issue here is that a property like this would be classed as ‘non-standard’ and they’re often more difficult to sell if the lender ever had to repossess it.

The good news is that there are lenders who specialise in SPV mortgages for non-standard properties like this one, and the best way to find one is to use a mortgage broker who knows the market. This is a much easier alternative to wading through the market yourself and risk being turned away multiple times while in search of the right mortgage provider.

For a deal like this, you might need a larger deposit to bring down the overall risk and the rates can be higher than they are for standard properties, but with the help of a whole-of-market broker, a good deal is by no means impossible.

Thanks,

Pete


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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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