What counts as semi-commercial?

Any single title combining commercial and residential use - shop with flat above, pub with living accommodation, office with a maisonette. If the building splits into separate titles, lenders may prefer to finance each part separately.

Is SDLT lower on a semi-commercial purchase?

Mixed-use property is charged at non-residential SDLT rates, which usually works out cheaper than residential rates on the same price and avoids the additional-dwelling surcharge. Confirm the position with your solicitor for your specific transaction.

Can I borrow if the shop is empty?

Yes, but expect a lower LTV and pricing based only on the residential income until the unit is let. Some cases are better served by a bridge, let the unit, then refinance onto a term facility at full value.

Do I need a personal guarantee?

For SPV and limited company borrowing, almost always - typically a full guarantee, occasionally capped at 20-30% of the loan for stronger cases.

How is the interest cover calculated?

Combined commercial and residential rent divided by the payment at the lender's stressed rate, commonly 2% above the pay rate or a floor around 8%. Meeting stress, not LTV, is usually what caps the loan.

Commercial property finance

Semi-Commercial Mortgage

A semi-commercial mortgage funds a mixed-use property - most often a shop, salon or office with flats above - under one facility rather than splitting the building into two loans. Lenders advance up to 75% loan to value on a 3 to 25 year term, price from around 6% to 9% depending on tenant strength and the residential share, and underwrite on interest cover: the combined rent must usually cover the payment by 125% to 145% at a stressed rate. The residential element is what makes these attractive - the whole building is taxed at commercial SDLT rates, which is frequently cheaper than buying the flats alone.

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At a glance

Criteria and pricing

What lenders on our panel will typically do on this product today.

Maximum LTV: Typically 70-75%
Term: 3-25 years; interest-only and part-and-part available
Interest cover requirement: 125-145% at a stressed rate, on combined rents
Residential proportion: Most lenders accept up to 60-75% residential by value
Borrower: Individual, LLP, trading company or SPV
Vacant possession: Considered where a letting plan is evidenced; LTV usually reduced
Arrangement fee: Typically 1.5-2%, often added to the loan
Early repayment: Fixed periods carry ERCs; trackers are often penalty-free

Worked example

Worked example - retail unit with two flats above

Purchase price: £520,000
Mortgage at 70% LTV: £364,000
Commercial rent: £18,000 pa
Residential rent (2 flats): £26,400 pa
Total rent: £44,400 pa
Payment at 7.25% interest-only: £26,390 pa
Interest cover achieved: ≈ 168%
SDLT at commercial rates: £20,500 vs £34,000+ residential

Figures are typical UK market ranges as at 2026 and are indicative only - your terms depend on the asset, the income, the exit and the lender we place the case with.

Honest fit

Who this works for — and who it does not

You are likely to qualify if

Deposit of 25-30% plus fees and SDLT
Evidence of rent: leases, ASTs or a valuer's market rent opinion
Landlord or trading experience, or a managing agent appointed
Clean recent credit; historic adverse considered by specialist lenders

This is the wrong product if

Buildings that are more than roughly 75% residential by value - those route to a portfolio BTL product
Properties where the commercial unit has been vacant for years with no letting evidence
Buyers with no deposit expecting 100% funding against value
Very short leases on the residential flats without a lease-extension plan

Timescales

What actually happens, and when

Week 1
Criteria fit
We size the loan against rent, stress rate and the residential split, then confirm which lenders will look at it.
Week 1-2
Decision in principle
Terms issued and valuation instructed on payment of the fee.
Week 2-5
Valuation and underwriting
Commercial valuer reports on both elements; underwriters review leases, accounts and the letting history.
Week 5-10
Legals to completion
Six to ten weeks total is normal for a semi-commercial case; a bridge can complete first if the deadline is tighter.

Questions

Frequently asked

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