How does the shop next door affect a mortgage application?

denisehealy1970

A good friend is hoping to buy a small flat above an interiors shop. The shop next to this is a nice restaurant (quiet, clean, sit down meals etc.). Her mortgage broker has advised that the restaurant could affect her application with the lender. She has her heart set on the flat and is quite worried by what the broker has said. Does anyone have any experience or advice that is relevant?

Thank you so much in advance!!!

holly_hobby

The problem is that, especially if the restaurant has a licence until late into the night, - there will be a lot of people coming and going, noise, taxis & cars arriving, some people may be tiddly etc .... which is all noise and disturbance in the quiet hrs, and what people consider when they are buying a property.

There may also be cooking smells from the kitchens etc (that filter into the flat), kitchen fire to shops around and flats above ..etc.. etc... that could affect the flat your friend is after.

Naturally the underwriter and valuer will certainly consider all these issues, as it is there role to ensure that the property is suitable for mge purposes, and that they will be to move it on quickly in the event of repossession - a sad hard fact - but one they must always consider.

So ... having said all that .... would your friend still want to buy it ... as they same goes for her ... she MAY get her mge, move in and its a nightmare, then she struggles to move it on for the very reasons above.

Hope this helps explain why flats over shops can sometimes be better rented then bought ... !!!

Holly

ruggedtoast

Afaik its not a good idea to buy above a shop unless its an investment. Whatever shop it is can easily close down and reopen as an all night kebab shop.

Annisele

The restaurant may be quiet and clean with sit-down meals now - but in a year's time, it may be a completely different sort of restaurant.

In any case, the time to set your heart on a property is after it's yours. Beforehand try to think of it as just a business transaction; that'll make you less likely to overpay and give you fewer sleepless nights.

denisehealy1970

Thanks very much all. I'll pass on all of the thoughts.

The flat is not actually above the restaurant, in fact nothing is. But the flat is above a shop adjoined to the restaurant. Does this make any difference to the lenders?

GMS

Criteria will vary from lender to lender. Some will not do a flat above commercial premises full stop. Others will rely on the valuer's comments. Any poor comments would most likely stop or restrict any lending

As mentioned it could quickly change from a desirable property to a less desirable with the change of shop use. Having said that it could be argued that the same could apply to any property should the area change.

holly_hobby

The fact it is in close proximity means that it will have an effect on the valuers comments.

My personal opinion - is that I would tread with exteme caution ..... if your friend finds it difficult to secure a mge based on the valuers comments, so will anyone else if she ever puts it up for sale. (and the conditions remain the same).

From my yrs in mge placement both as an advisor, and running placement desks where brokers themselves ring for advice on where to go - flats over commerical units are tricky.

But we can only give guidance and the benefit of our experience, your friend if her heart is set on it, will no doubt go her own way .... either way I wish her nothing but luck .. but please ask her to think carefully before jumping in with both feet.

Holly x