Semi Commercial Mortgages

What counts as semi-commercial

A semi-commercial property is any building with both commercial and residential use on a single title. Both elements must be structurally or contractually separate. A single-purpose property, or one where the owner simply lives above their own shop, does not typically qualify for semi-commercial lending.

Common types include:

• Retail unit with residential flat or maisonette above
• Office building with residential conversion on upper floors
• Takeaway or coffee shop with residential flat above
• Pub or restaurant with landlord accommodation
• House with annexe or converted garage used commercially
• Mixed-use terrace with multiple retail and residential units
• Care home or HMO above commercial premises

Semi-commercial sits between residential buy-to-let and commercial mortgage underwriting. Lenders assess both commercial and residential elements separately, then lend on the blended income and security of both.

How lenders assess semi-commercial mortgages

Lenders use a hybrid underwriting approach that combines commercial and residential criteria.

Commercial assessment

The commercial element is valued separately. Lenders will require lease documentation, tenant details, rent, and lease expiry. For owner-occupied commercial use (e.g. a takeaway you run yourself), a Debt Service Coverage Ratio (DSCR) is calculated. Typical DSCR requirement: 1.25x to 1.50x depending on the lender.

Residential assessment

The residential element is valued as buy-to-let property. Lenders assess rental income (or rental potential if vacant), condition, and location. Residential mortgages are easier to arrange but lenders will cap LTV lower on mixed-use property.

Combined lending decision

Some lenders use the lower of the two valuations (most conservative). Others use a weighted average or blended DSCR. This means the commercial element's strength directly affects how much you can borrow overall. A strong commercial tenant improves affordability dramatically.

LTV and rates

Semi-commercial LTV is typically lower than residential BTL but higher than pure commercial.

• Residential element: up to 80% LTV
• Commercial element: 60–70% LTV (commercial standard)
• Blended LTV: typically 65–70% overall

Deposit required: 30–40% of purchase price is standard, though cases with strong covenant commercial tenants may go to 25–30%.

Rates are indicative and vary by lender, loan size, property type, and tenant quality. Expect rates from 5.5% to 8% per annum, typically 1–2% above residential BTL and 0.5–1.5% below pure commercial. Interest-only terms are available from most lenders, though capital repayment is common in semi-commercial.

Semi-commercial mortgages are more competitively priced than pure commercial because lenders see reduced overall risk, but carry costs above residential due to the commercial element and blended underwriting time.

The split ratio matters

Where the commercial and residential elements sit on a property's value scale affects which lenders will engage.

• 90–100% residential, 0–10% commercial: some traditional BTL lenders will consider this as residential, though most will require semi-commercial pricing. Smallest lender universe.
• 70–80% residential, 20–30% commercial: sweet spot for semi-commercial specialists. Largest lender universe. Fastest processing.
• 50–50% split: comfortably within semi-commercial range. Requires specialist lenders. Lender appetite is good but no mainstream alternatives.
• 20–40% residential, 60–80% commercial: crosses into commercial-led territory. Fewer lenders available. Commercial underwriting dominates. Can still be faster than pure commercial.
• 0–20% residential, 80–100% commercial: pure commercial lending applies. Full commercial criteria, longer timescales, more stringent requirements.

If your property sits at either extreme, we will run scenarios with both semi-commercial and specialist commercial lenders to find the best fit and rate.

Property types and lender appetite

Not all semi-commercial properties carry equal lender risk.

High lender appetite

• Retail unit with residential above (especially on established high streets)
• Office building with residential conversion
• Quality pub or restaurant with attractive living accommodation
• Mixed-use terrace in good repair

Medium appetite (longer timescale, fewer lenders)

• Heavy commercial use above residential (e.g. HMO or care home above shop)
• Properties in poor condition requiring major refurbishment
• Vacant commercial or residential element
• Atypical splits or unusual property types

Restricted or specialist lending only

• Takeaway, fast-food outlet, or food-led business above residential
• Ground floor nightclub or bar with residential above
• Properties with existing enforcement action or planning history
• Heavy industrial or trade use mixed with residential

We have lenders who specialise in every category. If traditional lenders decline, we can often access bridging finance or development loans as an alternative route.

The application process

Worked example: Retail and residential investment