Refinancing Mixed-Use Property in 2025: Unlocking Equity and Improving Rates
A practical guide for landlords and investors on refinancing mixed-use properties in the UK’s evolving 2025 lending landscape
Mixed-use properties — those combining residential and commercial elements — can deliver strong rental yields and diversification. But as market conditions and interest rates change, many landlords are finding that their original finance no longer suits their goals.
In 2025, refinancing a mixed-use property can serve several purposes: unlocking equity for further investment, lowering your interest rate, switching to a more suitable lender, or restructuring your debt for improved cash flow. This guide explains how refinancing works, what lenders want to see, and the key steps to maximise your results in today’s market.
Why refinance a mixed-use property in 2025?
1. Unlocking equity for growth
Rising property values in certain sectors mean investors may now hold substantial untapped equity. Refinancing allows you to release capital to:
- Purchase additional properties
- Fund refurbishments or extensions
- Invest in other business ventures
2. Securing a better interest rate
If your current deal is expiring or your property’s risk profile has improved (for example, securing a stronger commercial tenant), refinancing can open the door to more competitive rates.
3. Switching from short-term to long-term finance
Many mixed-use property purchases in recent years were funded with bridging loans or development finance. Refinancing onto a semi-commercial or commercial mortgage provides stability and lower monthly repayments.
4. Improving loan terms
Refinancing can enable:
- Longer repayment terms for reduced monthly outgoings
- Interest-only options to improve cash flow
- Flexible repayment structures that match seasonal or irregular income
5. Restructuring ownership or loan structure
Changes in ownership (e.g., moving a property into a company structure) may require refinancing. This can also be an opportunity to optimise tax efficiency — though tax advice should be sought separately.
Understanding lender appetite for mixed-use refinancing
In 2025, lenders remain selective, particularly regarding the commercial element of a property. The residential proportion still plays a major role in determining the type of finance available.
Semi-commercial mortgages
Suitable where the residential portion represents a significant share of the property’s floor space or income. These products often offer higher LTVs (up to 75%) and rates closer to residential lending.
Full commercial mortgages
Applied where the commercial portion dominates. Lenders will focus heavily on tenant covenant strength, lease terms, and location. Maximum LTVs are usually 65–70%, and rates are priced according to risk.
Key factors lenders assess when refinancing mixed-use property
Current property valuation
A fresh valuation is essential. Lenders will consider:
- Market demand for both residential and commercial units
- Rental income streams and tenant security
- Recent comparable sales
Tenant covenant strength
Commercial tenants with a strong trading history, long leases, and national brand recognition can significantly improve lender confidence.
Residential income stability
Fully let residential units with ASTs (assured shorthold tenancies) at market rents help underpin valuation and borrowing power.
Borrower profile
Experience managing mixed-use assets, credit history, and overall financial position will influence terms.
Loan-to-value ratio (LTV)
Higher equity levels open more competitive product ranges. Some lenders offer rate incentives for LTVs below 60%.
Steps to a successful refinance
Step 1: Review your current mortgage terms
Check early repayment charges (ERCs) and exit fees to calculate the cost-benefit of refinancing now versus later.
Step 2: Prepare a full tenancy schedule
Include lease start and end dates, rent amounts, and tenant details. This demonstrates stability and income reliability.
Step 3: Commission or access a recent valuation
If you believe your property’s value has increased, providing evidence of comparable sales can strengthen your case.
Step 4: Explore whole-of-market options
High street lenders are often limited in mixed-use lending. Specialist and challenger banks can offer more flexible terms, particularly for experienced investors.
Step 5: Factor in all costs
Beyond the interest rate, consider arrangement fees, valuation costs, legal fees, and any ERCs on your current loan.
Market considerations for 2025
- Caution on certain sectors: Lenders remain cautious on high-street retail outside prime locations.
- Demand for resilient commercial tenants: Healthcare, education, and logistics tenants are in favour.
- Energy performance upgrades: Some lenders offer better rates if EPC ratings meet or exceed current efficiency thresholds.
- Interest rate volatility: Locking in a competitive fixed rate now can provide cost certainty if rates rise again.
Example refinancing scenarios
Scenario 1: Unlocking equity for portfolio expansion
An investor owns a freehold with two flats and a ground-floor café in a high-footfall area. Valuation has risen by £200,000 since purchase. By refinancing from 65% to 75% LTV, they release £150,000 to fund a deposit on another mixed-use acquisition.
Scenario 2: Exiting bridging finance
A developer purchased a vacant mixed-use building with a 12-month bridging loan, refurbished the residential flats, and secured a long lease with a retail tenant. Refinancing onto a five-year semi-commercial mortgage reduced monthly payments by over 40%.
Scenario 3: Rate improvement through tenant upgrade
A property with a short-term retail lease previously attracted a higher interest rate. Upon securing a five-year lease with a national retailer, the owner refinanced at a lower rate, improving net yield.
Risks to consider
- Valuation gaps: Lenders may value more conservatively than expected.
- Tenant turnover: Short commercial leases can affect loan terms or rates.
- Higher costs for certain sectors: Hospitality and leisure tenants may lead to lender caution.
- Refinancing delays: Legal or valuation issues can slow the process — early preparation is key.
How Willow Private Finance can help
At Willow Private Finance, we specialise in refinancing mixed-use properties — from small high-street units to large multi-let developments. Our whole-of-market approach means we can identify the best products, negotiate favourable rates, and manage the process from valuation to completion.
We regularly work with clients who need:
- Higher LTVs to release equity
- Quick exits from short-term finance
- Improved rates through better tenant profiles
- Funding for major refurbishments or conversions
Frequently Asked Questions
What are the main reasons to refinance a mixed-use property in 2025?
- To unlock equity for further investments, refurbishments, or business use.
- To secure a more favourable interest rate if your risk profile has improved (e.g. better tenants).
- To replace short-term or bridging finance with a stable semi-commercial or commercial mortgage.
- To improve loan terms (longer term, interest-only, flexible repayment).
- To restructure ownership (e.g. moving into a corporate structure) or adjust debt architecture. Willow Private Finance
How do lenders view mixed-use property when refinancing in 2025?
Lenders remain selective, often treating the residential portion as supportive and the commercial portion as riskier. They may classify the borrowing as “semi-commercial” where residential dominates, or require full commercial underwriting where the commercial part is substantial.
Willow Private Finance
What key factors do lenders assess in mixed-use refinancing applications?
- Current market valuation, considering comparable sales and demand for both residential and commercial units. Willow Private Finance
- Tenant covenant strength for commercial leases: longer lease term, reputable businesses, stable income. Willow Private Finance
- Residential income stability: fully let residential units under ASTs at market rents. Willow Private Finance
- Borrower experience and financial strength: track record managing mixed-use assets, good credit, and liquidity. Willow Private Finance
- Loan-to-value (LTV): lower LTVs improve access to better rates; some lenders provide incentives under 60 %. Willow Private Finance
What steps will help make a mixed-use refinance successful?
- Review your existing mortgage terms and check early repayment charges and exit costs. Willow Private Finance
- Prepare a full tenancy schedule with lease dates, tenant details, rental amounts. Willow Private Finance
- Obtain a fresh valuation (or comparable evidence) to support your case. Willow Private Finance
- Search across the market — specialist lenders or challengers may offer more favourable terms for mixed-use. Willow Private Finance
- Account for all costs: valuation fees, legal costs, arrangement fees, and any penalties. Willow Private Finance
What market conditions and risks should borrowers in 2025 watch out for?
- Lenders’ caution on weaker commercial sectors (e.g. retail in non-prime locations). Willow Private Finance
- Demand for resilient commercial tenants: sectors like healthcare, logistics, education are more favoured. Willow Private Finance
- Energy performance (EPC) matters: lenders may reward better-rated properties. Willow Private Finance
- Interest rate volatility: locking in a good fixed rate can provide certainty if rates rise. Willow Private Finance
- Valuation conservatism: some lenders may value more cautiously than expected. Willow Private Finance
- Lease turnover risk: short commercial leases may weaken your negotiating position. Willow Private Finance
📞 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.
About the Author: Wesley Ranger
This article was written by Wesley Ranger, Director at Willow Private Finance. Wesley leads our team of specialist brokers, supporting clients in the UK and internationally. Over his career, he has arranged complex and high-value property finance transactions ranging from bespoke residential mortgages in the hundreds of thousands to structured facilities exceeding £100 million for major developments.
Operating within an FCA-regulated, whole-of-market brokerage, Wesley works closely with clients to design tailored strategies that align with their broader financial goals. His experience spans private banks, specialist lenders, and international financing structures, giving clients a competitive advantage in even the most challenging lending environments.
Important Notice
Your home or property may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. The content of this article is for general information only and does not constitute financial or mortgage advice. Mortgage rates, criteria, and product availability can change at any time and will depend on your individual circumstances. Always seek personalised advice from a qualified mortgage adviser before making any financial decisions.
