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

Mini Case Study:

A landlord approached us with a mixed-use property in Bristol — two residential flats and a ground-floor retail unit. The existing lender valued the property at £850,000 with an LTV cap of 65%. We approached specialist lenders who valued at £900,000 and offered 75% LTV, releasing an additional £90,000 for the client’s next investment.

📞 Want Help Navigating Today’s Market?

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