Mortgages for a shop with flats above.

The whole building or only the flat?

Confirm the exact property interest in the sale. If you are buying just a residential flat above someone else’s shop, you may need residential mortgage advice. We do not arrange regulated residential mortgages. Where regulated funding is required, we refer the enquiry to an FCA-regulated counterparty.

For a whole-building investment, draw up a schedule showing the shop, each residential unit, current occupiers and the rent attached to each part.

Access and the commercial use

Record whether residents have an independent entrance and whether utilities are separately metered. Explain the actual commercial activity, including cooking, late opening, deliveries or anything else that could affect the residential accommodation.

Do not infer suitability from the label “shop”. A vacant retail unit, a restaurant and a convenience store have different operating characteristics. Give the lender and valuer the actual details.

Read the leases as well as the rent

A headline annual rent is not the whole income story. Note lease expiry dates, break clauses, rent-free periods, repairing obligations and any arrears. Residential tenancies should be described separately from the commercial lease.

• Title plan and floor plans for the entire purchase.
• Shop lease and tenant details.
• Residential tenancy documents and access arrangements.
• EPCs and details of any known condition issues.
• Whether you or a related person intend to live there.

A property-first finance discussion

Send the sales particulars, purchase price and deposit alongside the unit schedule. If personal occupation is involved, establish the appropriate referral route before treating this as non-regulated investment finance.

Are you buying the whole building or just the flat?

This is the first question to settle. A mortgage for a whole shop-and-flat building is different from a mortgage for a leasehold flat situated above somebody else’s shop. Both searches can produce similar results online, yet the security, income and borrower circumstances can be quite different. Our service concerns non-regulated property finance; a flat-only or personal-home requirement may need a regulated counterparty.

If you are buying the whole freehold, provide a schedule of the commercial premises and every residential unit. If you are buying a leasehold interest, identify exactly what the lease includes and what remains with the freeholder. An address shared by a shop and a flat does not prove that they share one title. Your solicitor should establish the position from the legal documents.

For a whole-building investment, a semi-commercial mortgage considers the commercial and residential parts together. The commercial mortgage lender needs to understand their occupation, condition and contribution to value and income. For a flat-only purchase, the activity below, lease terms, access and other residential lending considerations may be important, but that does not turn the loan into a whole-building mixed-use mortgage.

How do commercial leases affect the mortgage proposal?

A commercial lease can run for a different period from a residential tenancy. Record the contractual rent, lease expiry and any break clause, together with concessions or arrears. An apparently long lease may include an earlier opportunity for a tenant to leave. Conversely, the rent stated in an agreement may differ from the cash currently being received because of a rent-free period or dispute.

Explain the tenant’s business and whether it is connected to you. A shop let to your own trading company is different from a lease to an unrelated business. If the shop is empty, label any expected rent as an estimate and explain the letting position. A lender’s assessment of sustainable rental income should not be pre-empted by presenting all units as fully occupied at an optimistic future rent.

The lease also allocates obligations. Repairs, insurance contributions and service charges affect the owner’s costs and the tenant’s commitments. Your solicitor should identify material rights and liabilities; your financial budget should reflect the costs you will actually bear. A gross annual rent figure on sales particulars does not tell you the investment’s net cash flow or prove that mortgage repayments are affordable.

Why do access and services deserve an early check?

Identify how residents reach the flat. Separate street access, a shared hallway and access through commercial premises are materially different arrangements. Describe the existing route and ask your solicitor to confirm the legal rights that support it. A floor plan can make a complication visible before valuation and legal work are advanced.

Consider bins, deliveries, parking, fire escape routes and any shared external space. Record who maintains the roof, stairs, common areas and drainage. Explain whether gas, electricity and water are separately metered or recharged. These details can affect management costs and the practicality of occupation; they are not matters that can be resolved by selecting a mortgage rate alone.

If you plan to create a new entrance or divide services after completion, provide the scope and estimated cost of the works. Do not describe proposed access as though it already exists. Any required permissions, building standards, landlord consent and legal rights should be checked with the relevant professionals. Funding an existing let building and funding alterations to make it lettable are different propositions.

Does the type of shop below the flat matter?

Describe the actual use of the commercial premises, including opening hours and any material property issues you know about. A general retail unit, a takeaway and a late-opening business may create different practical considerations for the accommodation above. The lender will consider the actual commercial use alongside the accommodation above.

Ask about extraction equipment, noise, deliveries and responsibility for maintenance where relevant. Do not assume that a planning description, a lease user clause and the activity happening on site are identical. If there is a discrepancy, ask your solicitor or planning adviser to investigate. A mortgage valuation is not a substitute for every specialist property report you may need.

These questions apply to the facts of the building. The implications depend on the property and the lender’s criteria. Equally, an existing mortgage or an agent’s reassurance does not guarantee a new lender’s acceptance. Disclose relevant issues early so the proposed finance can be assessed on an accurate description of the security.

How are the shop and residential parts valued?

The purchase price is what buyer and seller agree; the valuation used for lending is a separate assessment. A valuer may need to understand the whole asset, the commercial lease, residential occupation and the legal arrangement. A standalone flat sold nearby is useful residential context, but it does not establish the value of a flat tied to commercial premises under a different title and access arrangement.

Our location pages label registered-sale evidence, whose aggregate includes residential types and Other records. They do not treat a local median house or flat price as a commercial comparable or a ready-made valuation for a shop with accommodation. A semi-commercial property needs evidence appropriate to the actual security. Avoid multiplying the number of flats by a local average and then adding an assumed shop value to decide what a lender will advance.

If the valuation is lower than the purchase price, your cash contribution may need to rise or the proposal may need to change. Loan-to-value is calculated against the value accepted for the lending decision, subject to the lender’s terms. Rental coverage can impose a separate constraint even where the requested loan appears conservative compared with the price.

What deposit and cash reserve should you plan for?

There is no deposit percentage that applies to every shop-and-flat mortgage. The borrower, property, loan amount, commercial use and income all matter. Compare any proposed maximum loan with the whole acquisition budget: price, legal and valuation costs, tax, lender fees, immediate works and reserves. An advertised loan-to-value is not an unconditional promise to fund your purchase.

For a hypothetical £500,000 purchase with a £325,000 mortgage, the contribution towards the price is £175,000 before costs. If the commercial unit becomes vacant, that deposit does not itself pay the monthly interest or keep the building insured. Separately plan for mortgage repayments, business rates where applicable, service costs, maintenance and a period without rent. Ask your advisers which obligations fall to you.

Keep a record of the source of the deposit and any conditions attached to it. Funds borrowed elsewhere may create another repayment commitment; money owed back to a shareholder is not the same as permanent equity. Explain the arrangement accurately when discussing finance. Neither this illustration nor our calculator assesses your eligibility or the lender’s affordability requirements.

Can you live in the flat while running the shop?

Personal occupation changes the discussion and needs to be raised before treating the transaction as a non-regulated investment. Tell us if you, a family member or another related person will live in the residential part, including an intended move after completion. The description “commercial premises with accommodation” does not settle whether regulated funding is required.

We are not FCA regulated and only deal with non-regulated finance. Where regulated funding is required, the requirement is referred to an FCA-regulated counterparty. We do not recommend a structure designed to disguise occupation as a home, and we do not make a regulatory determination from a single floor-area figure entered into a form. The relevant facts need appropriate assessment.

If your plans are uncertain, say so. A property currently let to a tenant may become a personal residence later, and a proposed change may affect the finance route. Before sharing details with a referral counterparty, we will identify the recipient and explain the introduction. A referral does not guarantee that the counterparty can arrange a mortgage or that any lender will approve it.

What if the shop or flat needs refurbishment?

Separate minor ongoing maintenance from works that change use, create units or prevent occupation. Describe what is needed now, what can happen after completion and what rental income continues during the works. A building advertised with future potential is not the same asset as a completed, independently accessible and fully let investment.

If you are considering bridging finance before a long-term semi-commercial mortgage, prepare an exit plan that addresses the completed property, consents, cost, timing and likely refinance assessment. Do not count an unapproved future mortgage as certain repayment. Include interest, fees and delay costs in your own financial assessment. The eventual term lender will make its own decision on the property and borrower.

How can you prepare a strong first enquiry?

A useful initial summary brings together the property address, price or value estimate, requested loan, deposit, ownership structure and timetable. Add the shop lease and residential schedule when requested, with a clear statement of current occupation and any personal use. Flag known title, access, condition and consent issues before they become last-minute surprises.

Our enquiry form is designed for this outline rather than sensitive documents. Keep bank account numbers, identity documents and confidential third-party information out of the message. We can discuss the non-regulated requirement and what further information would be needed. An enquiry is not a mortgage application, a valuation or a guarantee of funding.

Common questions