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A semi-commercial mortgage (also called a mixed-use mortgage) is a loan secured against a property that has both residential and commercial use. The most common examples are retail premises with flats above, but they also include pubs with living accommodation, offices with residential wings, and live-work units.
These properties sit between the residential and commercial lending worlds. Mainstream residential lenders will not touch them, and not all commercial lenders are comfortable with the residential element. Specialist semi-commercial lenders assess the whole property holistically, considering both the commercial rental income and the residential value.
Valuation methodology for semi-commercial properties combines investment yield assessment on the commercial element with comparable evidence on the residential element. The split between commercial and residential floor area influences the loan amount available.
Lenders typically categorise properties as predominantly commercial (more than 40% commercial floor area) or predominantly residential. The category determines which lending rules apply and whether consumer credit regulation affects the deal.
| Criterion | Predominantly Commercial | Predominantly Residential |
|---|---|---|
| Maximum LTV | Up to 70% | Up to 75% |
| Loan term | 5 to 25 years | 5 to 25 years |
| Affordability | Combined rent vs debt service | Combined rent vs debt service |
| Regulation | Unregulated | Potentially regulated |
| Personal guarantee | Usually required | May be required |
| Minimum loan | From £100,000 | From £75,000 |
Semi-commercial applications follow a similar path to pure commercial mortgages: fact-find, lender selection, decision in principle, commercial valuation, legal due diligence, and completion. The valuation stage requires a specialist RICS valuer experienced in mixed-use property, and legal work encompasses both the commercial lease and any residential tenancy agreements in place.
This is the most common semi-commercial scenario. Lenders consider the commercial ground-floor rent and the residential upstairs value together. We identify lenders who offer the most generous combined LTV for this asset type, accounting for whether the commercial unit is let, vacant, or owner-occupied.
Pubs with accommodation are assessed by specialist lenders who understand the hospitality sector. Trading performance, wet stock sales, food revenue, and accommodation income all contribute to the lender’s assessment. We work with lenders experienced in licensed premises who do not apply blunt commercial criteria to what is effectively a hybrid business.
Live-work units are a growing asset class in urban regeneration areas. Some lenders treat these as residential, others as commercial, and a few have specific products for this category. We identify the lender whose criteria best match your intended use and the planning conditions on the unit.
Equity release from a semi-commercial asset is achievable through refinancing. The amount available depends on the current value of both elements and the rental income in place. We compare the refinance market to find the best rate and the highest loan available relative to your goals.
Speak to an adviser to discuss your circumstances and find out how we can help.
Clear,honest answers to the questions we hear most from clients and introducers.
Yes. Owner-occupation of the residential element is possible, though it may affect which lenders and regulatory framework apply. We clarify this upfront so there are no surprises during the application process.
Vacant commercial units reduce the rental income available to service the debt, which can limit the LTV. Some lenders will still lend on the property value assuming a market rent, particularly where the property is in a strong commercial area with high demand.
If more than 40% of the property is residential and the borrower will occupy that residential element, the mortgage may be regulated under the Consumer Credit Act or FCA rules. We identify the correct regulatory treatment upfront and source lenders accordingly.
A specialist RICS valuer assesses both elements: the commercial floor using yield methodology based on passing or market rent, and the residential floor using comparable sales evidence. The combined figure determines the maximum loan available.
Our advisers specialise in semi-commercial and mixed-use property finance. Contact us today to discuss your requirements.
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