Mortgage on house/shop - help!

emv

Cross-posted frommortgage board as no-one on there has responded!
We are looking to downsize & to combine work & business in a cheaper property. We currently own a house & rent a shop, paying £8k pa in rent. We are looking to buy a cheaper property which includes a shop which was rented out until recently. Is there any way of adding in the rental value of the shop into our mortgage calculations so that we could borrow more money (our income is fairly low so we could only borrow about £50k & need more than that even with downsizing). We know that the shop would rent out for at least £6k & we know that our company can afford £8k so is there any mortgage lender that would consider this? Or any other way of including the shop rental value? I don't think looking at a commercial mortgage is the way ahead at the moment but we would consider this....

Vix

paulwf

I think you need to take a step back and sort out the business first before being even more tied to it by mixing it with your home.

In your other thread you say you are struggling to pay the current rent, which after all is quite a small rent. You also say the business has not grown since it started. Relocating the business means you could loose all your current custom so you are entering into unknown territory.

Renting/buying a shop with a flat above and living there can be very cost effective, but you need a mature and profitable business...you're usually buying a shop with property tagged on not the other way around.

There's plenty of £8K rental units available, you'll have many more options in the future if you just rent for the business and buy a flat to live in.

emv

Thanks for your thought, Paul. No chance of moving to a flat as there is very little property available locally & if we're going to move home, we'd rather move to our preferred area of the country where we'll have family. Plus the mortgage on the new property will be about £100 more than our mortgage on just our house, i.e. we'll be saving £600+ per month in mortgage/rent, let alone business rates which are half the current rates for the new property. Plus the property offers an additional 11 rooms which are currently used for storage but could be converted to all sorts of other things to make some money!

Vix

paulwf

To clarify I meant downsizing by buying a smaller property or flat in the new area then renting a business unit there.

From your other thread it sounded like the business wasn't in a prime retail area, nearly any "bricks and mortar" business benefits from good footfall so be careful buying a property that is cheap because in business terms it is in a rubbish location. You may actually find you'll business will increase net profit by paying more rent...hard to say without knowing more details, but cheaper isn't always better.

11 rooms may bring in a lot of revenue or it may be an albatross round your neck...in the current climate it may be the latter. You really need to speak to a good accountant and a good commercial agent before taking things further.

I just think that if you mortgaged a cheapish domestic property and rented a business separately you have the option to walk away from the business and get a job if needs be.