Commercial mortgages are a type of loan used to finance the purchase or refinance of income-producing properties. These types of loans are often necessary for those looking to buy mixed-use buildings, such as pubs with flats or houses above. They're also required for residential properties if you plan on renting them out, such as B&Bs, kennels and catteries, home-based beauty clinics or nurseries.

The terms of a commercial mortgage differ from those of a residential one. Typically, lenders will only offer up to 75 per cent of the property's value for a commercial mortgage – whereas, for a residential loan, you may be able to borrow up to 95 per cent. You will also likely need to provide a larger deposit as a percentage of the property's value in order to secure a commercial mortgage.

It is important to note that if you are renting out part of your own home, such as a room, then you may not require a commercial loan – however, it is still recommended that you check with your mortgage lender to make sure your current loan is still suitable.

If you are looking to purchase an income-producing property, it is important to research the commercial loan options available and speak to a financial advisor in order to find the right fit for you. A commercial loan can be highly beneficial, but it is important to understand the risks and obligations before committing.

What is a semi commercial property?

A semi commercial property or also known as a mixed use property is one that supports both residential and commercial elements together. For example, a pub or a shop with a flat above is semi commercial as there is a business and a residential aspect to the same building, they can be mortgaged separately and together.

Semi commercial mortgage

Semi-commercial property mortgages would be suitable for the following properties:

• Commercial units with flats connected
• Pubs with self-contained accommodation
• Businesses operating in the home
• Buildings with self-contained offices and flats
• Guest homes that are mortgaged

They can be mortgaged together or separately but this type of mortgage will require a specialist lender, a specialist independent mortgage broker will have access to the correct lenders to have your application approved.

Specialist lenders that are providing semi commercial mortgages may require additional documents compared to a standard mortgage due to both elements of residential and business being within one building. There will be a certain loan to value that you will need to meet. Also, there is no maximum loan size, however, there is a minimum loan requirement of £25,000.

You will likely need a solicitor or conveyancer to help with your purchase, as well as an independent surveyor who may have special expertise in assessing the type of property you’re interested in. In addition, you may need to appoint a specialist surveyor. All these costs will be factored into the loan.

A commercial mortgage can provide you with the financial support needed to purchase your income-producing property, so it is important to understand all aspects of such an agreement before taking out a loan. If you do your research and speak to experienced professionals, you are sure to find the best deal for your particular needs.

If you are interested in a semi commercial mortgage contact us today on 0151 662 0188 or email [email protected]