Semi-commercial vs commercial mortgage: the difference

The core difference

A commercial mortgage is secured against a property in wholly commercial use: an office, a warehouse, a standalone retail unit, an industrial building. A semi-commercial mortgage is secured against a mixed-use property that combines a commercial part with a residential one, such as a shop with a flat above.

Both are commercial-world products, sized on the asset and its income rather than on a salary. The difference is the residential element in a semi-commercial property, which changes the income mix, the valuation and often the appetite of the lender.

What counts as commercial versus semi-commercial

The dividing question is the commercial-to-residential split. Where the residential element is roughly 40 percent or more, the property leans residential and may route to a residential or buy-to-let product instead. Our 40 percent rule guide explains the split in detail.

How deposit and loan to value compare

Both products sit around a 70 to 75 percent loan to value, so a deposit of 25 to 30 percent is the norm for each. The residential income in a semi-commercial asset can support the upper end of that range, because the flat above adds a more stable strand of rent.

On a pure commercial property, a weaker covenant or a specialist use can pull the loan to value down, so commercial deals occasionally need a larger deposit than a comparable semi-commercial one.

How rates compare

Rates overlap heavily. In mid-2026, semi-commercial mortgages run around 6.5 to 8.5 percent a year, and fully commercial mortgages sit in a broadly similar band, with the exact rate driven by the covenant, the loan to value and the borrower.

Semi-commercial can price keenly because the residential rent diversifies the income. A single-tenant commercial property dependent on one trade carries more concentration risk, which can nudge its rate up.

How affordability is assessed

An investment semi-commercial loan is sized on the combined commercial and residential rent at an interest cover ratio, commonly 125 to 140 percent stressed. A commercial investment loan is sized on the commercial rent alone at a similar cover ratio.

Owner-occupier cases of either type are tested on the trading business, on debt service cover, rather than on rent. The combined rent on a semi-commercial property often gives a more resilient affordability picture than a single commercial income.

That difference can change the loan a property supports. A wholly commercial unit dependent on one tenant must clear the cover ratio on that single rent; a semi-commercial asset spreads the test across two incomes, so a void in one part does not, on its own, sink the affordability.

Valuation and the commercial split

Both products are valued on the asset, but a semi-commercial valuation has to weigh the commercial and residential parts. The valuer establishes the value and the split, by floor area or value, and that split feeds straight into whether the property is treated as semi-commercial at all.

A wholly commercial property is valued purely on its commercial use and the strength of its tenant. A semi-commercial property blends a commercial valuation of the unit with a residential valuation of the flat above, which is part of why the residential element can lift the overall fundability.

Why semi-commercial is often more fundable

Limited companies and SPVs are the usual structure for both, and portfolio landlords frequently hold a mix of commercial, semi-commercial and buy-to-let assets together.

Which lenders cover each

The lender panels overlap but are not identical. High street banks such as NatWest, Lloyds, Barclays, Santander and HSBC lend on both. Specialists such as Shawbrook, InterBay Commercial, Allica, Aldermore, Cambridge & Counties and Hampshire Trust Bank are strong on semi-commercial in particular.

Because appetite varies by use and by split, we run each case across the whole panel and present the commercial and semi-commercial offers side by side so the right product wins.

Commercial mortgage

A loan secured against a wholly commercial property, sized on the asset and its income.

Semi-commercial mortgage

A loan secured against a mixed-use property with both a commercial and a residential part.

Covenant

The financial strength of the tenant or trading business behind the rent, a key driver of commercial pricing.