The Client
The client owned a semi-commercial property, with a hair salon on the ground floor and a first floor flat above. The client had obtained planning permission to build a further two-bedroom flat at the rear, recently completed using bridging finance as a short-term funding solution.
Following the pandemic, many commercial lenders had withdrawn from the commercial market altogether, due to uncertainty in the sector and reduced investor confidence.
The Scenario
Following completion of the works to add the rear flat, the client needed to exit the bridge and secure a new mortgage to repay it, while also putting a long-term strategy in place with lower repayments. The semi-commercial property would now generate rental income from the two flats, as well as from the hair salon.
The Solution
Looking at the semi-commercial mortgage option, we were able to demonstrate to the lender that the mortgage could be repaid using the rental income from the property alone. Although the client did not have substantial personal income, the lender was comfortable relying purely on the rental income generated by the security property.
Summary
Many lenders withdrew from the commercial and semi-commercial mortgage market during the pandemic. Using our expertise and lender relationships, we were able to continue offering these products to clients throughout, even at the height of the uncertainty. Commercial lenders are now increasingly embracing the strength of the market again, and will generally consider a sensible approach to repaying their mortgage.
Frequently Asked Questions
Can a semi-commercial mortgage be repaid using rental income alone?
Yes, some lenders will assess affordability purely on the rental income the property generates.
This can work well even where the applicant has limited personal income, provided the rental income comfortably covers the mortgage payment.
Can I remortgage a semi-commercial property to exit a bridging loan?
Yes, this is a common exit route once building or conversion works are complete.
Moving from bridging finance onto a standard semi-commercial mortgage typically means lower monthly repayments and a genuine long-term strategy.
Do lenders still offer commercial mortgages after a downturn in the market?
Lender appetite for commercial and semi-commercial lending can shrink significantly during periods of uncertainty.
Working with a broker who maintains relationships across the specialist lender market makes it far more likely a suitable lender can still be found.
What counts as a semi-commercial property?
A semi-commercial property combines both commercial and residential use within the same building.
A common example is a shop or salon on the ground floor with one or more residential flats above, as in this case.
Commercial Finance Network is a whole-of-market FCA authorised commercial finance broker working with property investors, developers, and businesses across the UK and internationally. We work across the full specialist semi-commercial and bridging finance panel and will tell you which lenders will engage with your deal, what LTV and rate to expect, and how to structure the application before anything is submitted.
Commercial Finance Network is directly authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Semi-commercial and business-purpose lending secured against investment property is not regulated by the Financial Conduct Authority.
Call us on +44 1494 622 111 or email info@cfnuk.com to speak to a specialist directly.
Related Pages
- Semi-Commercial Mortgages – financing for mixed commercial and residential use properties
- Bridging Loans – fast, flexible funding secured against property
- Commercial Mortgages – whole-of-market advice for commercial property purchases
- Commercial Mortgage Calculator – estimate affordability and stress-tested borrowing