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Splitting a commercial-residential property

THE QUESTION

If a commercial/residential property is no longer trading and is currently unfit for trading can you purchase the property through a residential mortgage or will you still need to go down the commercial route?  Or are there specialist brokers that deal with 50/50 mortgages?

It’s a 2 bed flat above a chip shop, they’re both connected at the moment and were previously leased as a single entity.  I plan to segregate the shop from the flat, lease the flat out and run the fish shop myself.  The shop needs about 3k spent to get it up and running and the flat needs about 2k to separate it from the shop and make it liveable.

THE ANSWER

What you refer to as 50/50 mortgages, part residential, part commercial don't really exist as a mortgage type.  Commercial mortgage lenders lend on full and part commercial properties, but BTL lenders don't lend on properties that have any commercial usage, part or whole.  

Commercial lenders require the property to be currently trading, not trading equals no mortgage.  From your description this property would be considered unmortgageable by any type of lender.  

The only way you can purchase this is with cash or bridging finance, get the fish ‘n’ chip shop trading and the flat rented out, run that for at least 12 months, then apply for a mortgage.  If you have never run a fish and chip shop before, commercial lenders will want to see a trading history before they consider you eligible for a mortgage.  

Under no circumstances consider splitting the title and try to mortgage each separately.  Getting a BTL mortgage on a flat above a chip shop will be virtually impossible, lenders hate them.  If you do, then expect to pay rates in excess of 7% on the flat.  Keep it all on one title, and then get a commercial mortgage when you qualify for one.

 
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