A mixed-use property blends residential and commercial elements. Examples include:

• A shop with a flat above
• A commercial building converted into flats
• A semi-commercial investment with tenants in both parts
• A residential property with part used for business (e.g. B&Bs or salons)

These hybrid assets can offer higher yields and diversified income, but they fall outside the criteria of many mainstream mortgage lenders.

Why Financing Mixed-Use Properties Is Different

Lenders view mixed-use deals through a different lens due to:

• Valuation complexity (residential vs. commercial rates)
• Tenant risk (commercial tenancies carry different covenants)
• Usage restrictions (planning class and permitted development rights matter)
• Mortgage regulation (residential elements can trigger FCA rules)

Some banks consider these deals too specialist unless they have a dedicated commercial or semi-commercial team.

Who Offers Mixed-Use Mortgages?

There are three broad lender types:

1. Specialist Buy-to-Let Lenders

Some accept semi-commercial assets, especially when the residential element is dominant and separately accessed. Typical up to 70–75% LTV.

2. Commercial Lenders

They underwrite based on rental income, tenant covenant strength, and yield. They may offer interest-only terms, longer amortisation periods, and more flexibility on structure.

3. Private Banks & Boutique Lenders

These are ideal if you're a portfolio landlord or high-net-worth individual buying a prime location asset with future development or refinancing potential.

Key Lending Criteria in 2025

Expect lenders to look closely at:

• Split of use (Is it more residential or commercial by value and usage?)
• Property location and tenant demand
• Condition of the asset (is refurbishment needed?)
• Experience of the borrower—first-time investors may be limited to simpler structures
• Income and affordability, if personal guarantees are required

What to Watch Out For

Here are common pain points we’re helping clients solve in 2025:

• Flat above a takeaway or restaurant—many lenders decline due to fire risk or nuisance issues
• Unregulated lenders offering high LTVs with punitive rates—expensive long-term
• Planning class confusion—ensure correct classification before application
• Limited access between commercial and residential—some lenders require separate entrances

Finance Structures That Work

Here are examples of structures that typically gain approval:

• Ltd company buy-to-let mortgage for investment properties with a residential flat above a low-impact commercial unit (e.g., an office or retail shop)
• Commercial term loan secured against the full freehold for high-yielding properties
• Bridging finance for refurbishment or change-of-use prior to long-term refinance
• Private bank lending with flexible underwriting if the borrower has broader assets or future plans for the site

Final Thoughts

Mixed-use properties are appealing—but structuring the right finance is critical. The blend of residential and commercial elements requires careful lender selection, clear presentation, and forward-thinking strategy.

At Willow Private Finance, we guide clients through the nuanced lending market and help secure terms that reflect the real value of their asset—not just its complexity.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.