Mixed-use property finance
Finance for a multi-unit building combining commercial space with several residential flats on one title.
Financing mixed-use block
A mixed-use block is a larger semi-commercial property that combines one or more commercial units at ground level with several self-contained residential flats above, all held on a single title. It is the building-scale version of the shop with a flat above, and it is funded with a semi-commercial mortgage or a mixed-use mortgage sized on the whole rent roll. Many investors hold a mixed-use block through a limited company for the way rental income and interest are treated.
We are a finance arranger and introducer, not a lender, and we cover the full range across a block: a term mortgage to hold the rent roll, bridging to buy a part-vacant or auction block quickly, light or heavy refurbishment finance to reposition units before letting, development finance to add flats over the commercial units, and bridge-to-let to refurbish then term out onto a mortgage. On a mixed-use block lenders look at the split between the commercial element and the residential element across the building, the number and quality of the residential tenancies, and the strength of the commercial leases. The widely used rule of thumb is that where the residential part is roughly 40 percent or more of the property by floor area or value it can be treated as residential, but a genuinely mixed block stays in the semi-commercial bucket and is valued on its blended income.
Configurations we finance
- Ground-floor commercial units with flats on the upper floors
- Parade or corner block with multiple shops and flats
- Period building converted into commercial space and flats
- Limited company held mixed-use investment block
Indicative terms
- Indicative rate6.5 to 8.5% a year
- Loan to valueUp to 70 to 75% of value
- Deposit25 to 30%
- Affordability125 to 140% ICR on combined rent
- OwnershipPersonal or limited company
Indicative only. Terms vary by lender, property and borrower and are not an offer of finance.
How we fund a mixed-use block
For a hold, we size a term loan on the combined commercial and residential rent across the block, stressed at an interest cover ratio of around 125 to 140 percent, typically to 70 to 75 percent loan to value with a 25 to 30 percent deposit on a 5 to 25 year term. Where a block is bought part-vacant, below value or at auction, semi-commercial bridging at about 0.70 to 0.95 percent a month completes quickly and funds works, then exits onto a term loan once the rent roll is stabilised. Light or heavy refurbishment finance funds unit upgrades or conversions, and a scheme adding flats over the commercial units is funded by semi-commercial development finance on a loan to cost and GDV basis. Many lenders prefer a clean rent roll with manageable voids and a commercial proportion that keeps the building in semi-commercial territory. Holding through a limited company is common and accepted by most specialist lenders. The valuation turns on the blended income and the lettability of each unit, so a well-tenanted block at a sensible loan to value attracts competitive pricing.
Lender appetite for mixed-use buildings
Specialist and challenger banks including Shawbrook, InterBay Commercial, Together, Allica, Cynergy Bank, Cambridge & Counties and Paragon actively fund a mixed-use block, often lending to a limited company. Lenders weigh the commercial-to-residential split, the spread of tenants, and the strength of the commercial leases. A block with a healthy commercial proportion, low voids and a stable residential rent roll draws the deepest appetite, while a heavily residential block may be pushed toward buy to let portfolio treatment instead.
Exit and refinance options
A mixed-use block is usually held long term and refinanced at the end of each term, frequently onto a semi-commercial remortgage to release equity created by rising rents or asset management. Where a block is bought below value, part-vacant, or in need of works, semi-commercial bridging can complete the purchase and fund the refurbishment before a term loan takes out the bridge on the improved rent roll. Larger or multiple blocks can also be folded into semi-commercial portfolio finance under one facility.
Finance structures that suit this sector
- Mixed-use mortgageThe direct product for a multi-unit commercial and residential block.
- Semi-commercial mortgageCore term loan across the block's blended income.
- Semi-commercial investment mortgageFor an investor holding the block for rental income.
- Semi-commercial bridgingBuy a part-vacant or auction block quickly, then refinance.
- Heavy refurbishment financeReposition or convert units before letting and term-out.
- Semi-commercial portfolio financeFolds several blocks into one facility.
Finance a mixed-use block
A view on lenders and likely terms within one working day.
How a mixed-use block is modelled
A mixed-use block earns income from several commercial units and several flats, and lenders build the valuation from the whole rent roll rather than any single tenancy. They capitalise the blended commercial and residential rent at a semi-commercial yield, stress it at an interest cover ratio of around 125 to 140 percent, and treat the diversification across tenancies as a cushion against voids. The commercial-to-residential split keeps the block in semi-commercial territory and shapes the lender field.
Indicative mixed-use block rates
We arrange mixed-use and semi-commercial mortgages on a block from 6.5 to 8.5 percent a year, to 70 to 75 percent loan to value with a 25 to 30 percent deposit over 5 to 25 years, in personal names or through a limited company. A part-vacant or refurbishment purchase can complete on semi-commercial bridging at 8.5 to 11 percent a year, then exit onto a term loan on the improved rent roll.
Local commercial planning activity
Recent commercial planning records relevant to mixed-use block, drawn from local-authority data.
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Smithfield Birmingham Masterplan, Bullring, Pershore Street, Birmingham B5 6PB
Hybrid planning application for the redevelopment of Smithfield Birmingham to provide a mixed-use scheme including residential, retail, F&B, leisure, hotel, office and public realm, by Lendlease Europe and Birmingham City Council
View on the planning portal → -
Curzon Investment Plan, Eastside Locks, Cardigan Street, Birmingham B4 7BL
Outline application for mixed-use redevelopment of Eastside Locks within the Curzon Investment Plan area, including office, residential, hotel and F&B, supporting HS2 Curzon Street station enabling works
View on the planning portal → -
Beorma Quarter Phase 2, Digbeth High Street, Birmingham B5 4BU
Mixed-use scheme: 36-storey residential tower, 19-storey hotel, 10-storey office building and ground-floor retail / F&B, fronting the Curzon Investment Plan area
View on the planning portal → -
Sutton Coldfield Town Centre Masterplan, Birmingham Road, Sutton Coldfield B72 1QH
Outline application for mixed-use redevelopment of Sutton Coldfield town centre, including retail, leisure, residential and public realm improvements
View on the planning portal →
Frequently asked questions
Can you get a mortgage for a mixed-use property?
Yes. A mixed-use block of commercial units and flats is funded by a mixed-use or semi-commercial mortgage, sized on the combined commercial and residential rent across the whole building and held in your name or through a limited company.
What qualifies as mixed-use?
A property that combines a commercial element and a residential element, such as shops with flats above. The widely used rule of thumb is that where the residential part is roughly 40 percent or more by floor area or value it can be treated as residential, otherwise it sits in the semi-commercial bucket.
Can a limited company hold a mixed-use block?
Yes, and most specialist lenders are comfortable lending to a limited company on a mixed-use block. Many investors prefer a company structure for the way rental income and interest are treated, though you should take your own tax advice.
What deposit does a mixed-use block need?
Typically 25 to 30 percent, for a loan to value of 70 to 75 percent. The loan is sized on the blended commercial and residential rent at an interest cover ratio of around 125 to 140 percent.
Financing a mixed-use block?
Tell us about the property and we will come back with a view on lenders and likely terms.