What is a semi-commercial mortgage?
What a semi-commercial mortgage is, what it funds, and how it differs from a standard commercial or residential loan.
A semi-commercial mortgage is a loan secured against a mixed-use property that has both a commercial and a residential part, such as a shop with a flat above. It is underwritten as a commercial facility, with a deposit of typically 25 to 30 percent and rates of around 6.5 to 8.5 percent a year in mid-2026.
At a glance
- What it fundsMixed-use property
- Deposit25 to 30%
- Rate (mid-2026)~6.5 to 8.5% pa
- Term5 to 25 years
What a semi-commercial mortgage is
A semi-commercial mortgage is a property loan secured against a single asset that combines commercial and residential use under one title. The defining feature is the mix: part of the building trades or lets as commercial space, and part is lived in as residential accommodation.
Because the security is part-commercial, the loan sits in the commercial lending world rather than the residential one. That shapes the deposit, the rate, the affordability test and the lenders who will look at it.
We are a finance arranger and introducer, not a lender. We place semi-commercial cases across a panel of banks and specialist lenders and present the offers side by side.
What counts as a semi-commercial property?
A semi-commercial property is any building that mixes a commercial use with a residential one. The classic example is a shop with a flat above, but the class is broad.
- A shop or retail unit with a flat on the upper floors
- An office with residential accommodation above
- A pub, restaurant or guest house with living quarters
- A retail parade with residential uppers
- An HMO above a commercial unit
- A surgery or salon with a self-contained flat
Lenders judge the split between the commercial and residential parts by floor area or value. Where the residential element is roughly 40 percent or more, the property tends to be treated as residential; a genuinely mixed asset sits in the semi-commercial bucket.
How a semi-commercial mortgage works
The loan is secured by a first charge over the whole mixed-use property. The lender sizes it against the value of the asset and the income it produces, then sets a deposit, a rate and a term.
| Feature | Typical position |
|---|---|
| Loan to value | Up to 70 to 75% |
| Deposit | 25 to 30% |
| Rate (mid-2026) | 6.5 to 8.5% pa |
| Term | 5 to 25 years |
| Affordability | ICR on combined rent, or business cover |
Investment cases are tested on the combined commercial and residential rent at an interest cover ratio. Owner-occupier cases are tested on the trading business that will run from the premises.
Semi-commercial mortgage versus a commercial mortgage
A commercial mortgage funds a wholly commercial property: an office, a warehouse, a standalone shop. A semi-commercial mortgage funds a property that is part-commercial, part-residential.
The residential income in a semi-commercial asset often makes it more fundable than a pure commercial unit, because the flat above diversifies the rent. Many lenders treat semi-commercial as its own product line and price it keenly for that reason.
Who gets a semi-commercial mortgage?
Two broad groups use these loans:
- Investors buying a mixed-use property to let both parts and hold it in a portfolio
- Owner-occupiers running a business from the commercial unit and living in, or letting, the flat above
Both individuals and limited companies borrow this way. A limited company, often an SPV, is the common structure for investors, while owner-occupiers may borrow personally or through their trading company.
Deposit, rates and costs
Plan for a deposit of 25 to 30 percent, which is a 70 to 75 percent loan to value. Rates in mid-2026 run from around 6.5 to 8.5 percent a year, with owner-occupiers toward the lower end and investment cases across the range.
On top of the rate, budget for an arrangement fee, a valuation, and legal costs on both sides. Mixed-use property is charged stamp duty at the non-residential rates, which can work in a buyer's favour on higher values.
Who lends on semi-commercial property?
The market spans high street banks and challenger or specialist lenders. High street names include NatWest, Lloyds, Barclays, Santander and HSBC. Specialist semi-commercial lenders include Shawbrook, InterBay Commercial, Together, Allica, Cynergy Bank, Aldermore, Cambridge & Counties and Hampshire Trust Bank.
Each has its own view on the commercial use, the residential split and the borrower. Running a case across the panel is how the keenest deal for a given property is found, and it is the core of what we do.
- Semi-commercial property
- A single property mixing a commercial use and a residential use, such as a shop with a flat above.
- Interest cover ratio (ICR)
- The ratio of rental income to mortgage interest a lender requires, commonly 125 to 140 percent stressed on a semi-commercial investment loan.
- SPV
- A special purpose vehicle, a limited company set up solely to hold property, widely used by semi-commercial investors.
What is a semi-commercial mortgage?: common questions
What does semi-commercial mean?
Semi-commercial means a property that is part-commercial and part-residential under one title, such as a shop with a flat above or a pub with accommodation. It is also called mixed-use.
What is the deposit for a semi-commercial mortgage?
Typically 25 to 30 percent of value, which is a 70 to 75 percent loan to value. A stronger commercial covenant or a larger residential element can sometimes support a higher loan.
Can I live in a property bought with a semi-commercial mortgage?
Often yes, where you occupy the residential part. Where an individual borrower will personally occupy the residential element, the loan can fall under FCA-regulated rules, and we refer those cases to a regulated firm.
Can a limited company get a semi-commercial mortgage?
Yes. Most investment semi-commercial lending is done through a limited company or SPV, and lenders are well set up for it. Owner-occupiers may borrow personally or through their trading company.
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