Many customers have gotten in touch with us to enquire about semi-commercial mortgages. Some are ready to apply for one, while others simply want expert advice and to find out whether they\u2019d qualify for the <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/commercial-mortgage-rates\/">best interest rates on the market<\/a>.\r\n\r\nTo answer all of these questions and more, we\u2019ve put together this comprehensive guide to semi-commercial mortgages, and you\u2019ll find the following topics covered below\u2026\r\n<ul>\r\n \t<li><a href="#definition">Semi-commercial mortgage definition<\/a><\/li>\r\n \t<li><a href="#need">Do I need a semi-commercial mortgage?<\/a><\/li>\r\n \t<li><a href="#eligibility">Semi-commercial mortgage eligibility criteria<\/a>\r\n<ul>\r\n \t<li><a href="#deposit-requirements">Semi-commercial mortgage deposit requirements<\/a><\/li>\r\n<\/ul>\r\n<\/li>\r\n \t<li><a href="#how-to-get">How to get a semi-commercial mortgage<\/a><\/li>\r\n \t<li><a href="#rates">How to get the best semi-commercial mortgage rates<\/a><\/li>\r\n \t<li><a href="#mortgage-type">What type of mortgage do I need to run a business from home?<\/a><\/li>\r\n \t<li><a href="#residential">Can I use a business mortgage to buy a residential property?\u00a0<\/a><\/li>\r\n \t<li><a href="#expert">Speak to a semi-commercial mortgages expert<\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="definition">What is a semi-commercial mortgage?<\/h2>\r\nSemi-commercial mortgages are used to purchase property that includes both commercial and residential elements, often referred to as <a href="#need">mixed-use property<\/a>. You might also hear these products referred to as 'part commercial, part residential mortgages' or 'mixed-use mortgages'.\r\n\r\nExamples of semi-commercial mortgages include\u2026\r\n<ul>\r\n \t<li><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/property-types\/flat-above-shop\/">Mortgages for shops with flats above them<\/a><\/li>\r\n \t<li><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/pub-mortgages\/">Mortgages for pubs<\/a> which include residential living space<\/li>\r\n \t<li><a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/bb-mortgage\/">Mortgages for guest houses<\/a> with owner\u2019s accommodation<\/li>\r\n \t<li>Mortgages for any other type of property with both residential and commercial floorspace (even if there is more residential floorspace\u00a0than commercial)<\/li>\r\n<\/ul>\r\nGenerally speaking, a mortgage for a semi-commercial property would be assessed and handled in the same way as a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/">business mortgage<\/a>, so a commercial lender rather than a residential mortgage provider would finance the purchase.\r\n<h2 id="need">Do I need a semi-commercial mortgage?<\/h2>\r\nIf the property you\u2019re buying has a combination of residential and commercial floorspace, the answer is most likely yes. Even if the development in question has a higher percentage of residential floor space, it would still be classed as mixed-use.\r\n\r\nThe only exception would be if the residential portion of the building has a separate entrance, so the occupier would not need to set foot in the commercial floorspace to access their home. In this case, two separate mortgages could be taken out on the property, one commercial and the other residential.\r\n\r\n<strong>Take note: <\/strong>Lenders view the classification of semi-commercial and commercial very differently. Some work on the 60\/40 square footage rule (whereby if it\u2019s less than 60% commercial they class this as regulated). To confuse matters, some lenders work on the actual split in monetary value terms to determine if it\u2019s semi-commercial or full commercial.\r\n\r\nIf you're unsure what type of mortgage you need, get in touch with us so we can match you with a broker who specialises in mixed-use property transactions. They can tell you what type of finance you need and help you get the best deal if you choose to proceed with an application.\r\n<h3>What type of mortgage do I need for a flat above a commercial premises?<\/h3>\r\nThe answer depends on whether the flat has its own entrance. If the occupier has to enter the commercial premises to access their home, a semi-commercial mortgage is needed for a property of this nature.\r\n\r\nHowever, it may be possible to get a residential mortgage for a flat above a commercial property if the flat has its own entrance that is not connected to commercial floorspace, but you should be aware that some residential providers won\u2019t lend under these circumstances.\r\n<h2 id="eligibility">What is the eligibility criteria for a part commercial, part residential mortgage?<\/h2>\r\nCommercial mortgage lenders assess applicants based on the following factors\u2026\r\n<ul>\r\n \t<li>Affordability<\/li>\r\n \t<li>The amount of deposit you have<\/li>\r\n \t<li>Credit rating<\/li>\r\n \t<li>Trading history<\/li>\r\n \t<li>The strength of the investment<\/li>\r\n<\/ul>\r\nRead on to find out how each of these factors can affect your mortgage eligibility...\r\n<h3>Affordability<\/h3>\r\nWhen assessing semi-commercial mortgage <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/commercial-mortgage-affordability\/">affordability<\/a>, the lender will want to see that the business or individual\u2019s projected income is high enough to cover the loan. Business lenders work this out by looking at earnings before interest, depreciation and amortisation (EBITDA), but there\u2019s no hard and fast rule on how much you can borrow based on this.\r\n\r\nThe lender will need to be confident that the company\u2019s operating performance is strong enough to cover the monthly payments. If the investment or business is not likely to perform well enough, some lenders will allow the borrower to declare other legal income.\r\n\r\nOther lenders such as high street and challenger banks might use their own semi-commercial mortgage calculator to work out how much you can afford to borrow, so it\u2019s important to seek advice from a whole-of-market broker to make sure you\u2019re paired with the right mortgage provider, based on your needs and circumstances.\r\n<h3 id="deposit-requirements">Deposit requirements<\/h3>\r\n<a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/commercial-mortgage-deposit\/">Deposit requirements<\/a> for semi-commercial mortgages are generally the same as commercial, ranging from 20-40%. They can vary depending on the level of risk and there\u2019s a slight difference between owner-occupier and commercial investment deals.\r\n\r\nOwner-occupied commercial mortgages, which are for businesses buying a premises to work from, usually come with a maximum loan to value (LTV) ratio of 80%, while commercial investment typically comes with a lower LTV cap of 75%.\r\n\r\nIt may be possible to get a semi-commercial mortgage with higher LTV ratio than 75% by putting down extra security, such as properties or assets you own and hold equity in.\r\n<h3>Credit rating<\/h3>\r\nAs semi-commercial lending is usually bespoke and tailored to the individual, every lender has their own stance on individuals\/businesses with <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/bad-credit-commercial-mortgage\/">bad credit<\/a>. Some prefer to deal with borrowers whose credit report is spotless, while others will offer flexible deals for those with various forms of adverse against their name.\r\n\r\nThe thing to remember is that the market is vast, and with a whole-of-market broker on your side, it may be possible to find a lender who specialises in clients with your specific type of credit issue, whether that\u2019s something minor like a missed invoice payment, or a severe credit problem such as a bankruptcy.\r\n\r\nSpecialist bad credit commercial lenders are usually flexible enough to take the age and severity of the credit issue into account, and offer you a deal based on these factors.\r\n<h3>Trading history<\/h3>\r\nSome lenders will only offer you a semi-commercial mortgage if you have a strong track record in the same industry as the business venture in question. This is especially true if it\u2019s high risk sector such as retail, and the amount of time you will need to have been trading for can vary across the spectrum.\r\n\r\nThat said, there are lenders who cater for first-time investors and start-up businesses, as long as they present projections and a strong business plan.\r\n<h3>The strength of the investment<\/h3>\r\nMost commercial lenders will only offer a mortgage if they\u2019re convinced the investment is viable, and they will judge this on a number of factors that we\u2019ve already covered.\r\n\r\nThey may ask to see a business plan and proof of you\/your business\u2019s track record in the relevant industry to assess your past performance and future projections.\r\n\r\nFor commercial investment mortgages, some lenders will expect 190% forecast rental coverage for a business property or 130% for a <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/commercial-buy-to-let\/">buy-to-let<\/a>, but it may be possible to find a provider that will accept anything between 110-125% rental coverage.\r\n<h2 id="how-to-get">How to get a semi-commercial mortgage<\/h2>\r\nHere are three steps you should take to get your application off to the best possible start...\r\n<ol>\r\n \t<li><strong>Find the right mortgage broker:\u00a0<\/strong>There are so many variables to consider with semi-commercial mortgages and the mortgage agreement will differ depending on whether you want to occupy the property or simply invest in it. It's recommended that you start by seeking professional advice from a broker who specialises in semi-commercial mortgages. <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-commercial-mortgage-specialist\/">Make an enquiry\u00a0<\/a> and our advisor-matching service will pair you up with a broker who has the expertise you need.<\/li>\r\n \t<li><strong>Prepare your documents: <\/strong>The mortgage lender will request these documents:\u00a0Photo ID, proof of address, proof of income (bank statements or accounts), details of any existing property investments, building leases.<\/li>\r\n \t<li><strong>Check your credit reports:\u00a0<\/strong>This will give you the chance to make sure they're up to date and challenge any inaccuracies on them, as this could affect the mortgage rates you qualify for. Your broker might also be able to suggest ways to optimise your credit file for your mortgage application. You can <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/your-credit-score\/">download your credit reports here<\/a>.<\/li>\r\n<\/ol>\r\nFrom here, your mortgage broker will guide you through the next steps and will start by rounding up the best deals that you qualify for. They might suggest applying for an agreement in principle first, but some semi-commercial mortgage lenders prefer to move straight to full application.\r\n<h2 id="rates">How do I get the best rates on a mixed-use mortgage?<\/h2>\r\nLike commercial mortgage rates, semi-commercial mortgage interest rates are not determined in advance. The lender will decide which terms to offer you on a bespoke basis, based on the strength and viability of the investment, among other factors.\r\n\r\nIn general, semi-commercial mortgage rates are usually higher than residential mortgage rates, but favourable deals are still possible under the right circumstances. At the time of writing, it's possible to get a mixed-use mortgage with an interest rate of less than 3%, but keep in mind that rates can change at any time.\r\n\r\nAlthough it\u2019s difficult to predict the exact rate you'll qualify for without a full assessment of your circumstances, there is a way you can make sure you end up with the most favourable deal available to you.\r\n\r\nBy applying through a broker who specialises in semi-commercial mortgages, you can rest assured that you'll find the best deal that you qualify for. They know exactly which lenders are best placed to offer the lowest interest rates on a mixed-use mortgage, plus they can offer you bespoke advice on your investment and help you with all of your paperwork.\r\n<h2 id="mortgage-type">What type of mortgage do I need to run a business from home?<\/h2>\r\nA residential mortgage will still suffice unless you\u2019re making significant changes to your property, such as adding additional rooms to serve as business space. You should also let your lender know that you're running a business from home. As long as your mortgage provider offers their consent, there is a chance you won\u2019t need to switch to a semi-commercial mortgage or a business mortgage.\r\n<h3>Do I need to tell the council?<\/h3>\r\nYou may need to contact the local planning office to seek permission if you\u2019re hoping to make any alterations to your home to support your business. You might also have to contact the local council and get their go-ahead if your business is likely to see regular customers or deliveries arriving at your address, if you will need to advertise outside of your address, or require a license to trade from your home.\r\n\r\nAlso be aware that running a business from home can have tax and insurance implications.\r\nSuch as\u2026\r\n<ul>\r\n \t<li>You may need to take out business insurance as <a href="https:\/\/www.onlinemoneyadvisor.co.uk\/insurance\/home-insurance\/">home insurance<\/a> won\u2019t necessarily cover your stock and equipment<\/li>\r\n \t<li>You might need to pay capital gains tax on the part of your property you use for business if you were to sell your home<\/li>\r\n \t<li>Business rates tax might also be payable on this part of your home<\/li>\r\n \t<li>You can include your business costs in your Self Assessment tax return if you\u2019re a sole trader or part of a business partnership<\/li>\r\n \t<li>You can claim a portion of the cost of living and recoup things like council tax, heating, broadband etc<\/li>\r\n<\/ul>\r\n<h3>Will running a business from home affect my mortgage?<\/h3>\r\nIf the terms of your mortgage don\u2019t prohibit running a business from your home, the lender gives you permission and you aren\u2019t making any substantial changes to the property itself, working out of your abode is unlikely to affect your mortgage.\r\n\r\nThat said, you may incur extra costs in the form of business rates tax and insurance \u2013 see the section above for more information.\r\n<h3>Under what circumstances would I need to refinance to a part residential, part commercial mortgage?<\/h3>\r\nThere is a possibility that you would need to <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/commercial-mortgages\/commercial-refinance\/">switch<\/a> from a residential mortgage to semi-commercial if the needs of your home business require you to make changes to your property, such as adding an extension to give you additional commercial floorspace.\r\n\r\nHow much business floorspace you can have before the property is classed as semi-commercial will vary from one lender to the next, but generally speaking, anything over 30% might call for a semi-commercial mortgage.\r\n<h2 id="residential">Can I get a commercial mortgage on a residential property?<\/h2>\r\nIn a word, no. It is not possible to use a business mortgage to buy a house or any other type of residential property.\r\n\r\nThe property would need to have at least some commercial floorspace for a commercial mortgage lender to consider offering you a loan. If the property was a mixture of commercial and residential, you would likely need a semi-commercial mortgage.\r\n<h3>Can I buy commercial property with a residential mortgage?<\/h3>\r\nNo. If your intention is to buy a premises for your business to operate out of, you will need an owner-occupier commercial mortgage and if you're planning to rent said premises out to a company, you'd need a commercial investment mortgage.\r\n\r\nAny property you're looking to buy to live in yourself would usually require some form of residential mortgage, the only exceptions being when there is a percentage of commercial floorspace. Anything over 30% would likely be classed as semi-commercial.\r\n<h2 id="expert">Speak to a semi-commercial mortgages expert<\/h2>\r\nSemi-commercial mortgages can be complex since they're a middle ground between two product types. For this reason, it can be difficult to get the right advice, but the good news is that there are brokers in our network who specialise in mixed-use mortgages.\r\n\r\nThey know exactly which lenders are best positioned to offer semi-commercial mortgages with the best rates on the market, can guide you through the application process and help you choose the right mortgage option.\r\n\r\nThrough our free broker-matching service, you can rest assured that you'll be paired up with a mortgage advisor with the exact knowledge, expertise and lender contacts to get you the best semi-commercial mortgage available.\r\n\r\nCall Online Mortgage Advisor today on 0808 189 2301 or <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-commercial-mortgage-specialist\/" target="_blank" rel="noreferrer noopener" aria-label="make an enquiry (opens in a new tab)">make an enquiry<\/a> and we'll set up a free, no-obligation chat between you and your ideal mortgage broker today.