Mixed-use buildings and flats above shops are common in high street and urban locations—but they can trigger problems when it comes to mortgage finance. In 2025, lenders remain cautious about residential property with commercial neighbours, particularly when there's a business operating directly above or below.

Whether you're buying a flat above a takeaway or a building with retail on the ground floor and flats above, this guide will help you understand what lenders look for—and how to structure the finance correctly.

What Counts as a Mixed-Use or Commercial-Linked Property?

Mortgage lenders may flag a property as “mixed-use” or “commercial-adjacent” if:

• You’re buying a flat above or next to a business (shop, salon, restaurant, bar, etc.)
• You’re buying a building that includes both residential and commercial units
• The title includes both elements (i.e. not split into separate leases)
• There are shared access routes or fire risks due to commercial activity

These setups are common—but often misunderstood.

Why Lenders Are Cautious

Lenders see mixed-use or commercial-adjacent property as riskier due to:

• Resale limitations: Fewer buyers want to live above a takeaway or pub
• Noise, odour, and fire risk from commercial units
• Valuation uncertainty, especially for unique or multi-use buildings
• Insurance and maintenance complexity
• Difficulty enforcing lender’s security if the whole building is mortgaged but only partly income-producing

Mortgage Options in 2025

🔹 1. Flat Above a Shop (Separate Title)

If you're buying just the flat:

• Many lenders will consider this, especially if the business below is low-risk (e.g. pharmacy, estate agent)
• Riskier commercial uses (e.g. takeaways, bars) will limit options
• Expect to need a larger deposit—typically 20–25%+
• Valuation must show adequate soundproofing and separate access

🔹 2. Whole Mixed-Use Building (Retail + Flats)

Buying the entire freehold? You’ll likely need:

• A semi-commercial mortgage, even if most income is residential
• Separate leases or clear demarcation of residential and commercial space
• A lender that specialises in commercial or mixed-use lending
• At least 25–30% deposit—sometimes more, depending on use and tenant covenant

🔹 3. Residential Over Commercial (Owner-Occupied or Let)

Some lenders accept these if:

• The commercial tenant is low-impact
• There’s a long lease in place
• The residential units are self-contained and compliant
• The buyer has BTL or property investment experience

What Affects Mortgage Eligibility

Lenders will consider:

• Type of commercial use
• Banks, estate agents = Low risk
• Takeaways, nightclubs, dry cleaners = High risk

• Access arrangements
• Is there a separate entrance to the residential part?

• Tenant profile
• Is the commercial lease strong and long-term?

• Property condition and compliance
• Fire regs, soundproofing, planning use class

Real-World Example

A Willow client wanted to purchase a two-storey building in Guildford: a coffee shop on the ground floor with a two-bed flat above. The flat had separate access, but the building was on a single title.

We sourced a semi-commercial mortgage at 70% LTV from a lender that accepted hospitality use, based on a 10-year lease and strong trading accounts from the tenant. The client now lets the flat separately, generating a strong combined yield.

How Willow Private Finance Helps

We specialise in:

• Flat above shop mortgages
• Semi-commercial and mixed-use finance
• Portfolio refinancing where commercial units are involved
• Bridging and refurbishment finance for part-commercial conversions
• Navigating lender criteria based on use class and tenant risk

Because we’re whole-of-market, we can place deals others turn away—especially where standard lenders overreact to minor commercial use.



📞 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.