Flat above a shop

teamzombie

Hi, I just wanted to check that I'm getting this right...

A flat has just come on the market which is in my price range (I'm a FTB with only 10% deposit), but it is above a newsagent. I had been looking at Post Office mortgages as they seem a reasonable deal, but I noticed in their lending criteria that don't accept "‘mixed user’ buildings with mixed residential and commercial use where the LTV exceeds 75%".

That means I've got to look elsewhere, right?

irishcol

teamzombie wrote: »

Hi, I just wanted to check that I'm getting this right...

A flat has just come on the market which is in my price range (I'm a FTB with only 10% deposit), but it is above a newsagent. I had been looking at Post Office mortgages as they seem a reasonable deal, but I noticed in their lending criteria that don't accept "‘mixed user’ buildings with mixed residential and commercial use where the LTV exceeds 75%".

That means I've got to look elsewhere, right?

You're not buying the newsagent, are you? So it shouldn't be a mixed-use purchase.

Your mortgage broker, if you have one, shoudl be able to advise. If not, then phoen and ask.

GMS

Flats above commercial premises can be difficult to mortgage especially at 90%. Even if you can get a mortgage to buy it now you may find it difficult to sell in the future.

If there are takeaways, late night convenience stores or shops with strong odours such as hairdressers nearby it becomes even more difficult.

irishcol

GMS wrote: »

Flats above commercial premises can be difficult to mortgage especially at 90%. Even if you can get a mortgage to buy it now you may find it difficult to sell in the future.

If there are takeaways, late night convenience stores or shops with strong odours such as hairdressers nearby it becomes even more difficult.

Is that not because most people prefer not to live there, or is there a specific issue with gettign a mortgage on these type of places?

GMS

irishcol wrote: »

Is that not because most people prefer not to live there, or is there a specific issue with gettign a mortgage on these type of places?

The first part of the question pretty much answers the second.

Flats above commercial are seen as less desirable therefore more difficult to sell so seen as higher risk.

Of course there are exceptions. A flat above a boutique shop in Central London may be viewed as more desirable. Compare a flat above a Michelin starred restaurant to one above the local Chimese restaurant. Same principle but totally different in terms of how they are perceived.

Lenders tend to hide behind 'valuers comments' on properties like this.

The question with any type of property where mortgage finance can be difficult to obtain should always be 'If I am having trouble now what will any purchaser have in the future?' If you beicome reliant upon a cash buyer then prices are likely to be much lower.

Also if the flat was above a 'nice' shop when bought there is a chance that the florist for example could close and become a kebab shop.

teamzombie

I guess I should call up the Post Office helpline for clarification then. I thought their "mix-user building" statement implied that they wouldn't mortgage a flat in a building where there is also commercial use. I hope I'm wrong though!

teamzombie

Actually, just looking in their FAQs (I would link to it but I can't as a new user), it looks like I'm right, they don't lend on "properties in mixed-use buildings". Bummer.