Getting a Mortgage on a Home Next to a Commercial Property

If you want to buy a property above or next to commercial premises, getting a mortgage is possible. However, the process won’t be as straightforward as buying in an entirely residential area, and your choice of lender will be limited.

In this comprehensive guide, we’ve gathered everything you need to know about getting a mortgage for this specific type of property purchase, including why you’ll have fewer options, the eligibility criteria you’ll have to meet, and which lenders will consider your application.

Read on for more information, or use the links below to jump to the section relevant to you.

Can you get a mortgage on a home next to a commercial property?

Yes, if you want to buy a flat, either to live in or as a buy-to-let, above or next to a business premises—such as a bar, restaurant or cafe, takeaway or shop, or a public house—then it’s possible to get a mortgage. However, the process isn’t always straightforward. Lenders will consider you a high-risk borrower, so you’ll have fewer options when it comes to products and deals available to you.

Some lenders will not even consider an application for a mortgage above or next to a commercial property, while some will accept applications and make their decisions on a case-by-case basis.

An experienced broker specialising in complex mortgages such as this can tell you which lenders to approach.

Eligibility criteria

You won’t have to meet any specific eligibility criteria. The requirements will be pretty much the same as they’d be if you were applying for a mortgage on a standard property. So, the lender will consider your age, profession and credit history.

The only difference is that you may have to put down a larger deposit. With mortgages on standard properties, it’s possible to borrow up to 95% loan-to-value, which means having a deposit of just 5%. If you’re buying a property above or next to commercial premises, you’ll probably have to put down closer to 20% upfront.

How a broker can help you buy near a commercial property

Whatever type of property you’re buying, it’s always worth seeking advice from a broker who can find the best lender and most competitive deal to suit your circumstances. However, a broker should be a non-negotiable if you’re buying a property above or next to commercial premises.

As mentioned above, only certain lenders will consider lending on these property types. A specialist broker will know which lenders to approach – and which to avoid – saving you time and money on wasted applications. They’ll have relationships with representatives from lenders and can discuss your application with them and even negotiate on your behalf.

The brokers we work with have years of experience securing mortgages for people buying properties above commercial premises. Get in touch today and we’ll match you with an expert from our extensive network.

Which lenders will consider your application?

As mentioned, the pool of lenders available to you will be limited. Most mainstream lenders won’t have the appetite for this type of lending. However, a few, including HSBC, Barclays and Natwest, may consider your application.

You’re probably better off going for a non-high street or specialist lender such as Aldermore, Together or Shawbrook. Your broker will be able to identify which lenders can help based on your specific situation and the property you’re looking to buy.

Why do lenders consider this type of mortgage risky?

It all comes down to the property’s future saleability. Before lenders make any lending decisions, they want to be assured that the property will be sellable in the future in case they have to repossess it later and recoup their costs.

Unfortunately, mortgages for homes above or near commercial properties tend to be trickier to resell. Demand is typically lower because of concerns related to the use of the commercial property, such as litter, noise, smells from cooking, and anti-social behaviour, all of which could deter potential buyers.

Geographical location may make a difference. If the property is in a busy city centre with high demand, its saleability may be greater than if it were in a more rural location.

The lender will request an independent valuation of the property, which will help determine their decision. The valuer’s report will provide information on similar properties that have sold recently, the local market in general, and any other factors that may affect the resale value.

Can you get a buy-to-let mortgage above or next to a commercial property?

You can, but these are even harder to come by than residential mortgages, which typically command a higher deposit. Expect to put down a minimum of 25%.

Lenders will want to know what the commercial property attached to the flat or house is used for and what trades are carried out in any nearby commercial properties. This will help them determine how easy it will be for you to rent out the property and make your mortgage repayments.

You’ll probably struggle to get a buy-to-let mortgage from a mainstream lender, but several specialist lenders will consider lending to you.

Get matched with a mortgage broker who specialises in complex properties

Getting a mortgage on a home next to a commercial property won’t always be straightforward, but it’s possible as long as you know which lenders to approach. A broker specialising in securing mortgages on complex properties can provide invaluable guidance and advice.

Our broker matching service can connect you with an expert who can review your situation and advise you on how to secure the right home loan.

Call us on 0330 818 7026 or make an enquiry and get matched with an expert today for a free initial conversation.