Getting A Mortgage On A Flat Above A Shop
Around half of all lenders consider flats above commercial premises, with about 31 supporting mortgages above takeaways and food outlets. We’ve helped thousands in this situation, with 8 experts dedicated to this type of mortgage. We guarantee to get your mortgage approved and find you the best deal. If we can’t and someone else does, we’ll give you £100!*
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Author: Pete Mugleston
CeMAP Mortgage Advisor, MD
Reviewed by: Jon Nixon
Former Director of Distribution
Quick Summary
Flats above shops, commercial units, and food outlets are often seen as higher risk by lenders, which can limit your mortgage options. However, you can still get a mortgage, and we help customers with these types of mortgages all the time!
The concerns usually revolve around fire risk, noise, smells, and how easy the flat would be to resell later on. That said, lender policies vary widely; some are fine if it’s above a café, others might only worry if it’s above a takeaway or pub, and access arrangements can also make a big difference.
Flats above “quiet” businesses like estate agents or salons are generally more lender-friendly than those above takeaways, pubs, or anything with strong smells or late-night noise.
Having separate access is a big plus, and can boost a lender’s confidence. Just be ready—you might need a larger deposit depending on the situation. That’s where we can help!
Yes. While not all lenders approve a loan to buy a flat above commercial premises, mainstream and specialist providers will consider this type of home loan.
However, your pool of potential lenders is somewhat limited, as some are concerned about the resale value in the event of repossession.
This is because they deem flats above commercial premises harder to sell due to possible issues with:
- Noise
- Smells
- Unsocial hours of operation
- Increased risk of fire from some commercial properties, such as restaurants
Most flats above shops are also leasehold. This presents lenders with the additional time and cost involved in examining the lease terms to pre-empt possible changes, so some simply choose not to lend on these types of properties.
Leasehold costs for commercial buildings are usually higher than residential ones, so it could also impact affordability.
The key criteria lenders will look at when they assess your application are below:
- Properties above “quiet” businesses (like estate agents or salons) are more lender-friendly than those above restaurants or pubs
- Separate access to the property boosts lender confidence
- A strong deposit (15–25 %+) might be required
They will also consider these questions when you apply:
- What type of business operates below the flat (e.g. takeaway, bar, retail)?
- Is there a separate entrance to the flat, or is access shared with the shop?
- Is the property leasehold or freehold?
- Has the property ever been mortgaged or sold successfully before?
- Are you planning to live there or rent it out?
Usually, the most difficult part of getting the right mortgage for a flat above a shop is finding the best lender. And the key to that is finding the right advisor.
Our advisors specialise in mortgages for properties above commercial premises and know which lenders to approach and how to submit your application for the highest chance of approval.
It’s possible, but not all government schemes will be eligible. You could use a Lifetime ISA or the Right to Buy a council property, but schemes such as First Homes and Shared Ownership would not be suitable. An advisor will let you know of any possible discounts when they assess your circumstances.
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The key factors that influence lending decisions
In addition to their standard eligibility criteria (which we’ll explain later), lenders will want to know the type of commercial property the flat is connected to.
Commercial premises fall into several categories, with those in question here typically being one of five:
| A1 | General shops such as grocery stores and newsagents |
| A2 | Professional services such as offices or banks |
| A3 | Restaurants, cafes etc |
| A4 | Pubs, bars and drinking houses |
| A5 | Hot food takeaways |
A1 is considered the least problematic, while A5 is of the greatest concern to lenders, so it’s important to understand each provider’s approach to lending before submitting an application.
Other commercial premises categories are:
| B | Light industrial |
| C | Commercial residences (i.e. hotels or nursing homes) |
| D | Leisure facilities (i.e. cinemas and gyms) |
Properties above or close to these types of premises can also be challenging to get a mortgage for the reasons we outlined in the previous section.
General eligibility factors
Lenders determine eligibility factors but typically include:
- Employment status
- Level of deposit
- Credit file – bad credit increases the risk to lenders, which limits those who will accept you
Due to lenders’ concerns over resale value, the required deposit is usually at least 15% for a flat above an A1 commercial premises. This may be higher for properties above A2 – A5 properties.
In addition to the business type, lenders will take into consideration:
- Location – a flat above a shop in Kensington will be more desirable than one on a London housing estate
- Access and security
- Whether the property is directly above the shop or has at least one floor in between
- What type of shops are adjacent to the one underneath
- Whether the property is self-contained
- Whether the title deed is separate from that of the commercial premises
- The operating hours of the business
- The length of the lease
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How an advisor can help find the right lender for flats near commercial premises
Most borrowers are not up to speed with the lending attitudes of the UK’s mortgage providers, which is why it makes sense to speak to an advisor, particularly when looking for a niche product like a mortgage for a flat above commercial premises. Going it alone and being rejected can harm your credit file and reduce your chances of acceptance on subsequent applications.
An advisor who specialises in arranging finance for flats in close proximity to commercial properties will assess your situation and that of the property you’re buying before deciding which provider to approach. Their market knowledge can help ensure you get the best deal possible, too.
Related Articles
- HSBC
- Halifax
- Nationwide
- Natwest
- Santander (only accept applications via a broker)
Several specialist lenders are also available. Some will consider applications regardless of the property’s category, while others will only accept applications for flats above an A1 premises.
A broker can help identify the right lender and product according to your circumstances.
How much can you borrow?
Your income and expenditure determine the maximum you can borrow. Still, the property type – in this case, a home above or next to a commercial premises – can have an indirect impact.
Typically, lenders will lend up to four and a half times your salary, but some will go as much as six times your income. Given that there are fewer lenders for properties above or beside a commercial property, you might be more limited on the income multiples you can access than someone buying a standard home.
Again, each lender calculates income differently, with some taking into account supplementary income and others only calculating affordability based on regular wages or self-employed accounts.
You can learn more about how affordability is calculated in our guide to maximum mortgage borrowing.
What will the repayments be?
The amount of your monthly repayments will depend on your interest rate and term. Rates for mortgages on flats above shops tend to be higher than on other residential properties.
Our mortgage repayment calculator can help you determine how the rates and terms available will affect your monthly payments.
Mortgage Repayment Calculator
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Get StartedCan you get a mortgage for a flat and a shop?
Yes. If you are looking to buy a shop and the flat above it, or already own one of the two and are now buying the other, you can apply for a mixed-use mortgage (or semi-commercial mortgage).
This might be a good option for buy-to-let landlords who want to have control over both aspects of the building.
A mixed-mortgage application is slightly different, as you will need to provide details about your business and your finances. Find out more in our guide to semi-commercial mortgages.
Related Articles
Get matched with an advisor who specialises in flats above commercial premises.
Often, the hardest part of getting the right mortgage for a flat above a shop is finding the best lender. And the key to that is finding the right advisor.
You’ll be paired with one of our advisors who specialises in this type of mortgage and know which lenders to approach and how to package your application for the maximum chance of approval.
To speak to one of our advisors who specialises in flats above shops and commercial premises, call 0330 818 7026 today or enquire online to arrange a free, no-obligation chat.
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We know everyone's circumstances are different, so if you have a specific question about getting a mortgage for a premises above a shop then get in touch.
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Pete Mugleston
CeMAP Mortgage Advisor, MD
Pete, a CeMAP-qualified mortgage advisor and 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 successfully went the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained and 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 Online Mortgage Advisor of course!
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