Looking for a Semi Commercial Mortgage?
We specialise in Semi Commercial or Mixed Use Property Finance in the UK whether you are looking to purchase or refinance.
How Can We Help?
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Whole of the market brokers – We can compare most UK lenders who are prepared to provide semi-commercial mortgages.
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Term length– We can arrange both short-term and long-term lending options from 3 months to 30 years.
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75% Loan to Value – We can source semi-commercial mortgages up to 75% of the property value (in some cases this can be higher).
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Finance within a short period of time – We can secure the funding you need swiftly.
The Following Topics Are Covered Below
What Is A Semi Commercial Mortgage?
How Do I Know If I Need A Semi Commercial Mortgage?
What Is the Eligibility Criteria For A Semi Commercial Mortgage?
What Documents Are Needed For A Commercial Mortgage?
What Fees Are Charged On A Semi Commercial Mortgage?
What Is A Semi Commercial Mortgage?
Semi- Commercial mortgages are used to purchase or refinance property that includes both commercial and residential elements, often referred to as a mixed-use property.
In layman’s terms, mixed-use property is a combination of a residential property (whether that be a buy-to-let or a standard home) and a commercial premises.
Some examples of mixed-use properties include an office, store or retail outlet with a domestic residence above it, all of which are included in the same freehold agreement. Other examples include guesthouses in which the owners themselves live and public houses above which the proprietor has a permanent residential address.
How Do I Know If I Need Semi-Commercial Mortgage?
If the property you're considering buying or refinancing has a combination of both residential and commercial floorspace, the likelihood is yes.
In scenario's where the residential element of the development in question has a higher percentage, it would still be classed as mixed-use.
The 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.
Take note: Lenders view the classification of semi-commercial and commercial very differently. Generally speaking lenders work on a 60/40 square footage rule.
What Is The Eligibility Criteria For A Semi Commercial Building?
Commercial mortgage lenders assess applicants based on the below factors:
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Affordability
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The amount of deposit you have
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Credit rating
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Trading history
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The strength of the asset
Read on to further understand each criteria in more detail:
Affordability:
When assessing semi commercial mortgage affordability, the lender will want to see that the business or individuals projected income is enough to service the loan.
Business lenders assess this by looking at earnings before interest, depreciation and amortisation (EBITDA), but there is no hard and fast rule on borrowing based on this.
It's important to have strong accounts as the lender will need to be confident with the company's operating performance. If the business has not been performing well enough, some lenders will need other declared income.
Deposit Requirements:
Generally speaking, the deposit requirements for semi-commercial properties is similar to commercial. ranging from 20-40%. and is assessed based on the level of risk and whether it's owner-occupied or not.
Credit Rating:
Tier 1 and 2 lenders prefer to deal with borrowers whose credit report is excellent, and some are more flexible when there is bad or adverse credit .
The market is vast, and with a whole of market broker by your side you'll have a better chance of finding a lender who specialises with specific credit issues whether it is a missed credit card or phone bill or a CCJ.
Trading History
Some lenders will only offer a semi commercial mortgage if there is a strong track record in a stable business. With higher risk sectors such as retail, most lenders will require a few years financial accounts with strong trading behind the company.
However, there are lenders that cater for first time investors and start ups provided there are strong projections and a solid business plan
The Strength Of The Asset
Most commercial lenders will only offer a mortgage if they’re convinced the investment and asset is viable, and they will judge this on with a number of factors including the location, rental stream and capital growth in the area
What Type Of Documents Do I Need To Apply For A Semi Commercial Mortgage?
During the loan application process, the majority of lenders will request the following documentation:
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Identification with a photo, such as a passport or a driver's license
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Proof of address like a utility bill, bank statements, or accounts to demonstrate revenue
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Information regarding existing property investments, and any building leases.
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It is highly recommended to have your credit reports prepared, particularly if you have had credit problems in the last six years.
Collecting as much information as possible about other property investments will also be beneficial in the application process.
In the event that you have a property portfolio, your lender may request to view copies of the tenancy agreements.
What Fees Are Charged On Semi-Commercial Mortgages?
When taking out a mortgage, there are various fees that need to be paid.
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The lender arrangement fee is typically a percentage of the loan amount, usually between 1-2%, and is paid upon completion of the mortgage application. It may be possible to add this fee to the loan.
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Brokers may also charge fees for their services, but some, like us, receive a procuration fee from the lender instead.
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Legal fees are also incurred, which vary depending on the loan size and solicitor used. These fees are paid in two parts, with an upfront payment made before the solicitors begin their work, and the remainder paid once the application is complete.
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Finally, the valuation fee is paid during the application process and can't be added to the loan. The amount of this fee varies based on the value, type, and location of the property.
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