| Product | Semi-Commercial Mortgage |
| Location | Cornwall |
| Property | Ground-floor retail unit with two residential flats above |
| Purchase price | £480,000 |
| Loan amount | £360,000 |
| LTV | 75% |
| Repayment basis | Interest only |
| Applicant | Limited company SPV, no prior commercial experience |
| Term | 5 years |
The situation
The client was an experienced residential landlord with a portfolio of six buy-to-let properties, all held in personal name. They had identified a mixed-use property in a Cornish coastal town: a retail unit on the ground floor, occupied by a long-standing independent retailer on a five-year FRI lease, with two one-bedroom flats above on standard ASTs. The purchase price was £480,000 and the client wanted to buy through a newly formed limited company SPV.
The challenge was straightforward on paper and complicated in practice. The client had no prior commercial investment experience, which ruled out the majority of mainstream commercial lenders immediately. The property was also in a secondary coastal location, which some lenders treat cautiously given seasonal trading patterns and limited comparable sales data.
The complications
Three issues needed resolving before any lender could be approached. First, the SPV was newly incorporated with no trading history, so the application would rest entirely on the directors' personal track record and the strength of the property income. Second, the commercial tenant, while stable, was an independent retailer rather than a covenant-strong national operator, which narrowed the available panel further. Third, the residential flats were small, at under 35 square metres each, which some lenders treat as a risk to resale value.
The floor area issue mattered. Several lenders declined at the DIP stage because their criteria set a minimum flat size. Identifying lenders who assess semi-commercial affordability on value split rather than floor area split resolved this.
The rental income from all three units combined to give a strong overall yield. The retail unit produced £18,000 per annum on its FRI lease. The two flats contributed a combined £14,400 per annum. Total annual income: £32,400. At 75% LTV on an interest-only basis the DSCR cleared the lender's minimum threshold comfortably, which was the argument that carried the case.
How we structured it
FD Commercial identified a specialist semi-commercial lender willing to assess the application on value split rather than floor area, accept a newly incorporated SPV with experienced directors, and lend against a secondary location with a strong income story. The application was positioned around the combined rental yield, the FRI lease on the commercial unit providing security of income, and the directors' eight-year track record managing residential investment property.
The lender required a personal guarantee from the directors and a formal rent schedule. Both were provided. The case completed within seven weeks of the initial enquiry.
Outcome
No commercial experience does not mean no commercial mortgage. It means the application needs to be placed with the right lender and positioned around the income, not the borrower's CV.
What this case demonstrates
Semi-commercial lending with no prior commercial experience is achievable when the income stack is strong and the application is structured correctly. The key is lender selection: the criteria on floor area minimums, SPV requirements, and location risk vary significantly across the specialist panel, and submitting to the wrong lender wastes time the deal often does not have.
FD Commercial arranges semi-commercial mortgages for investors and limited companies from £250,000. If you have a mixed-use deal in Cornwall or anywhere else in the UK, call us on 03300 100315.
Mixed-use deal in hand? Let's look at the numbers.
FD Commercial arranges semi-commercial mortgages from £250,000. No broker fees in most cases.