Morgan Stewart answers your questions on Semi-Commercial Mortgages.
What is a Semi-Commercial property?
A Semi-Commercial property usually has a shop downstairs and a residential flat upstairs.
Who are Semi-Commercial mortgages for?
This type of mortgage is intended for experienced landlords, not anybody can get one. It depends on your personal circumstances, so a doctor on £200,000 a year with no property experience may find a lender, whereas someone on a lower salary with no experience in property ownership would be more challenging.
Can you buy a residential property with a Commercial Mortgage?
Commercial mortgage is quite a misunderstood term. From a broker’s perspective, a Commercial Mortgage is any mortgage that is used for a property which is not your main residence. When we go into the actual definition, a commercial mortgage is for commercial property and you wouldn’t use them to buy residential property.
Are Semi-Commercial mortgages more expensive than residential?
Yes, they are significantly more expensive.
What is the lending criteria for a Semi-Commercial mortgage?
With a Semi-Commercial mortgage it’s a lot easier than a full-blown commercial mortgage, because you’ve got an element of residential letting, meaning you’re not reliant on just the lease of the commercial let. There is more demand for flats and they are therefore easier to let out.
How much deposit do you have to put down on a Semi-Commercial mortgage?
For a Semi-Commercial Mortgage it’s a 25% deposit, as it would be for a Buy to Let. The important thing to consider is what business is underneath. There are businesses that lenders will be unlikely to support a mortgage application, such as tattoo parlours and charity shops. The type of lease downstairs will therefore have an impact on the lender that we approach.
Some lenders will have a max maximum split between the two. So for example, one lender will only lend if 60% of the floor space is residential properties and 40% is commercial.
How do I apply for a Semi-Commercial Mortgage?
The underwriting questions are going to be different than if it’s for a residential mortgage, for example, the length of the lease is of importance for the commercial aspect of the property, as a lot of lenders would like a five year lease in place before completion.
The application is the same, however, and can be done directly with the lender, or through a Mortgage Broker, who will take care of the application for you. To set up an initial chat with one of our team, complete the contact form our website and one of our brokers will contact you as soon as possible.
Morgan Stewart T/A GPS Financial are authorised and regulated by the Financial Conduct Authority for credit broking and mortgage advice (FCA 711306). Your property is at risk of repossession if you do not keep up repayment of any loans secured against it. GPS Financial, Cardiff Bay Business Centre, Lewis Road, Cardiff, CF245FA
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments or any other debt secured on it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of debt and increasing the total amount you pay.
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