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Semi Commercial Mortgages
Mortgage Lane are award winning brokers that specialise in mortgages for Semi commercial properties. If you are a new investor or business owner looking for mortgage options on semi commercial properties or a portfolio landlord, we can help simplify the path to securing a semi-commercial mortgage. Even if you’re venturing into this space for the first time, rest assured, no prior experience is required, plus you don’t need to own a home to qualify.
PROCESS BREAKDOWN
1
Information gathering and advice
The first process in your semi commercial mortgage application will be gathering or updating information in relation to the property, tenants, or yourself. Once this has been established your broker will make a product recommendation.
2
Credit approval
Once you are satisfied with the product recommended and have confirmed to proceed, this will usually be submitted the same day to give you a decision, until this point there is still nothing to pay! As long as the Agreement in Principle (AIP) was approved, we can move to application stage where fees become payable.
3
Application, valuation & underwrite
Once the application is submitted, your valuation will be booked in and most of the time (depending on the lender) usually completed once your initial underwriting has been completed. Once the valuation is returned, if acceptable, the lender would then look to make a formal offer. You can then move to legal stage.
4
Offer and completion
Once you have had your semi commercial mortgage offer, you will require adequate legal advice and then once you’re happy, your solicitor can draw this down once the legal requirements are satisfied. Your broker at Mortgage Lane will always be checking in on the application post offer, so we are chasing for you too!
Type of Semi Commercial Mortgages
With semi commercial properties being used for both investment and owner occupiers, there are a lot of different types of mortgage products and a lot of variations that might be required by borrowers. Below we explain all the types of variations you might come across as well as information on different ownership types and how this can impact your mortgage options.
Retail and flats
With retail semi commercial purchases, it is good to check whether there is separate access and separate utilities. If so, you may have a split valuation which might be more generous, however if not, it will be valued as a block, as well as the rental valued as one.
With the retail unit, if this is rented then you may be able to use the commercial rental towards your affordability if you are eligible.
Owner occupiers may need to evidence accounts showing profit in order for the loan to be affordable with the cheapest avenues.
Retail shops with flats above are a common semi commercial asset, with Loan to Values up to 75%.
Heritage properties
Semi commercial properties may also be grade 1 or 2 listed buildings, this means that they carry extra responsibility and regulation. For this reason, not all lenders accept these asset types but for those investors that are keen to purchase heritage semi commercial properties, Mortgage Lane can connect you with suitable mortgage products. These properties usually come with large ticket prices, so it is important the rental income is affordable to take a mortgages.
Speak to a broker at Mortgage Lane to establish your heritage semi commercial mortgage options.
Applicants based overseas
At Mortgage Lane we have a well connected global reach of customers who we regularly assist with Mortgage Advice against semi commercial UK property.
For Expatriates otherwise known as Expats these are applicants where individuals are from the UK but now living abroad. Often we deal with expats in Dubai, America, Australia, New Zealand, China, Hong Kong, Singapore and many more locations.
Where every you are, we have lenders that are able to lend to expats in the following circumstances:
- No minimum income
- No experience
For Foreign nationals that are not UK domicile (tax status) are able to get a UK semi commercial mortgage, many of our investors reside in the above location and lenders typically base their lending around experience, credit foot print in the UK and sometimes a minimum income requirement. We do have lenders that will lend to a foreign national where the applicants have low income or no experience.
At Mortgage Lane we also assist overseas nationals get UK property mortgages where the country them are residing and where deposit funds derive, may be high risk on the Basel Index which is an annual ranking used by lenders to grade the countries Anti Money Laundering (AML) procedures.
If you also require a processing agent to make yourself eligible for UK mortgages, then we can also recommend a suitable company to assist you.
Pubs with flats above
Public houses are also a common purchase in the semi commercial world. In terms of lending, the public house aspect will make your case more specialist. Being a higher risk commercial venture not all lenders allow for this asset type but there are lenders that have products specifically designed for this.
Borrowers looking to occupy these assets will need experience and good accounts to get the best products, however, applicants without such a good covenant may find mortgage options in higher tiers to help you get started!
Speak to an expert semi commercial mortgage broker today!
Deposit funded by pension
As long as your SASS or SIPP provider has permitted the intension of the funds, we work with mortgage lenders that recognise the source of these funds. Our lenders would need to see the trust documents associated with the SASS pension.
These products are not very popular, so to help guide you to the right one, please contact one of our expert advisors today.
Properties owned in Trust
If you’re thinking about putting semi commercial properties into a trust to save on taxes, you’re not alone. This setup means the properties are in the trust’s name, not directly yours. Some mortgage lenders might not be comfortable with this, but many are.
The good news is, there is a lot of lenders that do, so whether your properties are owned in trust in British Virgin Islands (BVI) or outside of UK jurisdiction, we work with mortgage lenders that understand these structures.
People set up trusts for different reasons, like planning for the future, sorting out taxes, or giving to charity. When a trust needs a mortgage to buy a property or manage its existing loans, it’s the trust that handles the repayments and any related costs. Be sure to speak with an accountant or solicitor before considering this is the best structure for you!
Semi Commercial Mortgages understood
Semi commercial mortgages are offered on the high street and with specialist lenders. There is a big disparity between these products as they are all designed in a unique way. Many semi commercial mortgages are designed to be “capital repayment”, whilst others allow borrowers to take “interest only” this can impact cash flow in practise so it is wise to check which options you might be eligible for. Semi commercial lenders with the best rates usually require some experience, however, if you are just starting out, Mortgage Lane deal with lenders that also lend without experience! With Semi Commercial mortgages lenders will often use the residential income towards affordability, but depending on the lender, borrower and covenant of your commercial tenant, some lenders may not use the commercial rental aspect which can make it more difficult to achieve desired loan sizes. We work with lenders that are more relaxed using the commercial rental income so we are able to assist borrowers that don’t have the strongest commercial case.We assist the following customers:
- Not experienced
- Tenants not been in situ very long
- Weak covenant on the lease
- Lower incomes
- No separate access
- One utility for both units
- Kennels and Catteries mixed with residential
- Doctors and Veterinary practices
- Cafes and Takeaways
- Pubs
- Restaurants
- Offices
- Shops
- Garages
TRY OUR SEMI COMMERCIAL MORTGAGE CALCULATOR
Frequently Asked Questions About Semi-Commercial Mortgages
What are floor space and valuation split requirements for semi commercial mortgages?
Floor space % some lenders will have a minimum percentage that they would like to be residential, such as 60%. Valuation split between residential and commercial some lenders may have a valuation split ratio of 50/50. Some semi commercial properties have one access point which is a more complex lending situation, it is ideal to have two, but we have lending options for either. For borrowers without experience, you may have fewer semi commercial mortgage options, as well as applicant that are non home owners. The use type of the commercial unit(s) may also impact lending options, as Commercial is a broad sector with a myriad of sub sectors, lenders may not allow for all sectors within their criteria, such as a gym or car garage. Therefore it is important to disclose as much information as possible to your broker to avoid facing any declined applications.
Low tenant lease semi commercial mortgage?
At Mortgage Lane, we specialise in facilitating semi-commercial mortgages, particularly when navigating the complexities of properties with tenant lease durations shorter than the mortgage term. This specialisation includes understanding lender considerations regarding lease terms and how they impact affordability assessments.
Tailored Solutions for Varied Lease Terms in Semi-Commercial Mortgages
Adapting to Lease Term Challenges: Securing a mortgage for a semi-commercial property with a short tenant lease is achievable. While lenders typically prefer lease terms that align with or exceed the mortgage duration, we at Mortgage Lane can identify lenders who are flexible with shorter leases, sometimes under specific criteria.
Navigating Affordability Assessments in Semi-Commercial Lending
Consideration of Commercial Rental Income: In some cases, lenders may not factor in the commercial rental income when assessing affordability. Instead, they might focus solely on the rental income from the residential portion of the property. This approach is particularly relevant where the commercial aspect of the property has a shorter lease term.
Mortgage Lane’s Approach: We understand these unique lending scenarios and offer tailored guidance to investors. Our role is to ensure that you have access to mortgage options that suitably reflect the property’s mixed-use nature and the specifics of its rental income streams.
Professional Support for Complex Mortgage Scenarios
Seeking Expert Guidance: While Mortgage Lane provides specialised advice for obtaining semi-commercial mortgages under these varied conditions, we also highlight the need for legal, tax, or valuation expertise. Professional advice is crucial, especially concerning lease terms and their extensions or renewals.
Empowering Informed Investment Decisions: Our goal is to support clients in making well-informed decisions in the semi-commercial mortgage market. We commit to guiding you through the complexities of financing properties with shorter tenant leases and varied rental income considerations, ensuring comprehensive knowledge and resources for successful property investment.
Is a Semi-Commercial Mortgage Possible Post-Retirement?
Age is Just a Number! If you’re considering a semi-commercial mortgage after retirement, you’re not alone. Many lenders in this field offer flexibility with age requirements. To find the best fit for your post-retirement venture, reach out to us today!
Can owner occupiers get a semi commercial mortgage?
If you’re an entrepreneur looking for a mortgage on mixed-use properties, consider a semi commercial mortgage. Your eligibility hinges on your financial health, credit rating, and business results. It’s wise to consult a commercial mortgage expert. Lenders assess loan amounts based on your EBITDA (earnings before interest, tax, depreciation and amortisation) ensuring your business is a suitable profitable security.
What lenders do require for a semi commercial mortgage
While application requirements differ across lenders, certain documentation is commonly requested:
Personal bank records (typically spanning 3-6 months).
Business financial statements (often covering 3-6 months).
For owner-occupiers, two years of account records to verify business profitability.
Income and expenditure details.
Who are semi commercial mortgage lenders?
Many familiar high-street banks provide semi commercial mortgages. However, they often have rigorous criteria and typically favour uncomplicated cases. This is where challenger banks, although less recognised, excel due to their expertise and credibility.
Among the well-known names on our panel, you’ll find Barclays, Lloyds, Nat West, and Yorkshire Building Society. Additionally, we feature esteemed commercial mortgage lenders including Allica Bank, Interbay Commercial, Recognise Bank, Shawbrook, Reliance Bank and Redwood Bank.
Are semi commercial mortgages regulated?
It is important to note that semicommercial mortgages are not covered by the Financial Services Compensation Scheme, so borrowers should ensure they are dealing with a reputable lender.
High Street or Specialist Lenders for Semi-Commercial Mortgages?
Choosing between high street and specialist lenders for a semi-commercial mortgage? Established semi-commercial mortgages can often be more cost-effective with High Street lenders. However, they typically demand more experience. On the other hand, specialist lenders may not be as stringent on experience requirements, and their rates have become increasingly competitive over time.
Can I Secure a Semi-Commercial Mortgage with Adverse Credit?
Mainstream lenders might be hesitant, but there are niche lenders out there who might accommodate borrowers with adverse credit. For semi-commercial mortgages, the credit history of every individual in the ownership team matters. If you’re dealing with adverse credit but are keen on a semi-commercial mortgage, please contact us here.
What alternative Finance Options are there for semi-Commercial property?
Besides traditional semi-commercial mortgages, other avenues to consider include equity release from existing properties, prompt bridging loans, or development finance – ideal if you’re aiming to revitalise an older commercial property. And if a business loan is what you’re after, we’ve got you covered!
Are semi commercial mortgages regulated?
Commercial mortgages are typically unregulated. However, if a property comprises over 40% and if the borrower intends to reside within it, it invariably becomes a regulated financial product. This distinction may influence lender considerations but doesn’t preclude obtaining the necessary semi-commercial mortgage.
How long are semi commercial mortgage terms?
Commercial lenders commonly offer terms up to 25 years, with some extending to 30 years. However, extended terms might come with higher rates and more rigorous conditions.
For a concise term, such as 2-5 years, we can potential obtain a mid-term mortgage on the Semi Commercial property, which usually comes with lighter criteria requirements. Shorter than this would require bridging finance.
What rates can I expect for a semi commercial mortgage?
Semi Commercial mortgage rates generally surpass residential rates due to the perceived increased risk. Rates can fluctuate between 6% and 14%. It’s uncommon for us not to identify a fitting lender for your situation, even at the higher end of this spectrum.
Learn more about Mortgages
Learn more about semi-commercial and commercial mortgages with Mortgage Lane.
BEGIN YOUR MORTGAGE JOURNEY WITH US TODAY
Speak to a member of Mortgage Lane’s expert team about semi-commercial mortgages and how we can help you reach the financing you need.