Mortgages for Flats above Shops

Miiri

Just looking for thoughts - am starting to house hunt for my first home and living in London, many of the properties available are above shops and commercial units. Have read various thoughts on whether these are a good investment or not but my main concern is how easy are they to get a mortgage on. I appreciate they have downsides but I also love the larger spaces they often offer.

Some of the flats I've seen advertised are really nice but I don't want to waste my time (or the owners!)if they are hard to get a mortgage on.

Are there particular lenders who are more open to these kind of properties?

Thanks
Fi

Simon_gloster

It's all about the resale if the flat in case of a quick repossession sale. You'll probably look for an LTV of 60% normally if the unit is not a pub/fast food outlet.

Location is key though, done flats above shops I know have gone for 75% LTV, but they were London. Any form of unsociable opening hours is generally s no no.

80% LTV above a charity shop as example in an undesirable area would also be hard to lend on.

holly_hobby

Notwithstanding any criteria restrictions, it will come down to the surveyors comments and whether he believes it represents sufficient security for the lender (ie we are looking at a reasonably quick sale in the event of possession).

He will consider the business use of the unit its over, and that of other neighbouring/close proximity outlets/businesses.

They are looking at late night customers which may cause a noise issue (and put off potential buyers), such as pubs and winebars (issues with noise disturbance to residents upon last orders/letting out), restaurants etc. Also food outlets such as takeaways, again due to late night patrons but also food smells, etc. And of course the area will play a part.

Ideally, I wouldn't really pch anything over a commerical unit, for several reasons, but mainly because in doing so I am limiting my pool for a future re-sale - in that if you want to sell on at a later date, you want be exposed to the widest audience possible - and a flat over comms prems will restrict your pool (both in respect of attracting purchasers and they finding (if reqd) a lender.

Of course there are exeptions to the above - and if you want to pursue this ask the Vendor if they have a mge, and whom the lender is (can't see any reason why they would refuse this request, if you make it clear its to enable you to pch the property) - and although there is no gte that the existing lenders criteria will still accept the property (or you as a suitable mortgagor), it will give you a place to start.

Other than that, local broker and ideally local lender (familiar with the area and type of unit etc) would be the most productive route to find a home for this (surveyor comments permitting of course!), in the shortest time.

Good luck if its what you want.

Hope this helps

Holly x

mollyjester

Just a note in addition to what others have said.... I worked for two lenders in the past who would not lend on flats above fast food outlets. They categorized commercial units so places like a florist or something quaint, quiet and none smelly would be A1 and lending not an issue and at the bottom of the scale was fast food as generally you get food smells, dirt, foot traffic, noise and late night opening. While this may not be an issue for you it needs to be considered in respect of resale value as it could be hard to sell in the future. Also the price should reflect the fact its above this kind of unit so for example if its in a row of 10 this flat being the 10th it should be cheaper than flat number 1 who is above a florist. If not I personally wouldn't consider but that's just me :rotfl: