Semi-commercial mortgages for mixed-use property

A semi-commercial mortgage is a loan secured on a property that is used partly for business and partly as a home. The classic example is a shop with a flat above, but the same label is used for an office with living space or a surgery with a residential unit attached.

It sits between a residential mortgage and a commercial mortgage. The British Business Bank describes a commercial mortgage as a loan that involves paying a deposit followed by monthly repayments with variable or fixed interest rates. A semi-commercial mortgage works the same way, but the lender has to value and assess a building that has two uses.

GOV.UK defines a mixed property as one that has both residential and non-residential elements, for example a flat connected to a shop, doctor’s surgery or office. Lenders use the term semi-commercial for the same thing.

The split matters because the label on the building does not decide how it is treated. Lenders look at how much of the floor area is commercial, whether the commercial unit is let to a tenant or used by your own business, and whether the flat is let or lived in.

Usually not, but it depends on who borrows and how the building is used. The FCA says loans secured on commercial premises are not regulated mortgage contracts, because the property is not used as or in connection with a dwelling. Its guidance adds that loans secured on mixed-use property could be covered if the occupier uses at least 40% of the land as or in connection with a dwelling.

The legal test for a regulated mortgage contract applies to credit given to an individual or trustees, with at least 40% of the land used as a dwelling by the borrower or a related person. A loan to a limited company falls outside that wording. Investment property loans taken out wholly or predominantly for a business are also carved out of the definition.

The main difference is that the lender has to assess the property, the commercial income and the residential element together. The table sets out the contrast in general terms.

Lenders set their own limits on how much of a building can be residential, so a property that one lender declines can fit another’s criteria.

Lenders look at the business or borrower, the property and the income it produces. The British Business Bank says commercial lenders examine your business’s trading history and usually want accounts for at least the past three years, plus projected trading figures.

• Accounts and projections for the business that will use or own the property
• Rent from any tenants, and the leases that support it
• A valuation of the whole building, and how the commercial and residential parts are valued
• The deposit, and how much the lender will advance against the value (see our explainer on loan to value)

Lenders may ask for a personal guarantee from directors, particularly where the borrower is a limited company. Terms, rates and fees vary by lender and are subject to status and lender criteria.

In England and Northern Ireland, a mixed property is charged Stamp Duty Land Tax at the same bands as non-residential property. As of October 2026, GOV.UK shows no tax on the first £150,000 of a freehold purchase, 2% on the next £100,000 and 5% above £250,000.

You must send the return and pay within 14 days of completion. Scotland uses a different tax, Land and Buildings Transaction Tax. Our guide to stamp duty on commercial property goes into more detail, and a solicitor or accountant should confirm the figure for your purchase because we do not give tax advice.

A semi-commercial mortgage is the main long-term route, but a short-term loan can bridge a gap while you arrange it. The British Business Bank says bridging loans typically cover no more than 18 months and carry higher interest than a mortgage.

If the building needs work before a lender will take it on, bridging loans are one option, with a plan to repay from a mortgage or a sale. You can see which providers cover each product in the commercial mortgage lenders in our directory.

The main risk is that the loan is secured on the building, so missed repayments can put the property, and any home in it, at risk. Rent can also fall if the commercial unit is empty, while the mortgage payment stays the same.

• Void periods: a vacant shop or flat produces no rent but still has to be paid for
• Valuation: a lender may value the building at less than you expected
• Guarantees: directors can be personally liable under a personal guarantee
• Costs: stamp duty, legal fees, valuation fees and arrangement fees add to the price

Capzy is a credit broker, not a lender, and is paid by the lender. For a business buying commercial or mixed-use property, we can introduce you to lenders that offer commercial mortgage and property finance, and set out what comes back so you can compare it.

You can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria. We do not give tax or legal advice, so speak to an accountant and a solicitor about the purchase.