mortgage for 3rd floor flat abv commercial premises

metso

Hi, i've had an offer accepted on a third floor flat above a commercial premises.

The main entrance to the flats is separate to the commercial premises.

now does the 3rd flat, on the third floor count as being on the third floor or do mortgage lenders also include the ground floor as 1st floor, thus making the top floor flat actually on the fourth floor.

I've heard that getting a mortgage for a flat above the fourth floor to be impossible, does this also include flats actually on the 3rd or (4th floor if counting the ground floor as 1st floor).

There is no lift in the building.

Thanks for your comments

ACG

4th floor is about as high as you can go without it being a major problem (Its classed as the 4th floor as they do include the ground floor whether commercial or residential).

Your biggest problem here will be that its above a commercial property. I think for this your going to need the help of a broker.

holly_hobby

You have several issues here.

You have a flat which 4th floor storey, itself not an easy placement, compounded by the commercial prems its over.

You have a seperate entrance from the comm prems which is a pre-requisite, the flat must also be leasehold, no lift with 4 storeys should be ok. Apart from this, a pivotal issue will be trading of the business its over, and also that of the immediate surrounding businesses, which may cause issues.

For example, anything late night (taxi ranks/off licences), noisy (pubs/restaurants/winebars due to noise of deliveries/leaving clientel) or fast food food trading (smells and noise) , will cause issues for the surveyor recommending this as suitable security for the lender. Anything more sedate, with "normal" business hrs will fair better ie offices, newsagent, chemist, florist, hairdressers, etc (you get the general idea !)

Compounded by this being a 4th floor flat, which (notwithstanding surrounding businesses) unless this is in a really bouyand and popular area (eg London), I would certainly think v carefully about this, for re-sale if nothing else.

One idea if its currently mortgaged, is to ask the Vendor whom their mge is with (explaining to them the possible difficulties in sourcing a lender) to which you could approach their lender in the first instance.

Of course the fact that there is a lender on it currently, does not mean that they would take this on again as new business, but its a starting point. Local lenders whom are familiar with the area, property type and demand could be an answer too.

Of course seek a local mge broker, whom will know pretty much off the top of their head who'll lend on this enquiry, without wasting too much time and effort.

Of course the difficulty you will find in securing a mge will be the same for any potential buyer, should you wish to re-sell (which could affect the price you obtain and the duration its marketed for) - so do consider this as part of the overall decision making process.

Hope this helps

Holly

metso

thank you for you're responses so far, very helpful,

firstly the commercial premises the flat is above is a betting shop,
and next door to the left is a kebab shop and to the right a bar.

Change of use of ground floor to A2 (financial & professional services). – Approved 19/06/06.

Change of use from A2 to A3 (restaurant) including installation of new shop front and erection of ground floor single storey rear extension. FINAL DECISION 08-02-2008 Approve with conditions
(CONDITION: The development hereby permitted shall be begun not later than the expiration of three years from the date of this permission.)

The property is in the borough of islington,

I have a 40% ltv

holly_hobby

I think you'll struggle, given the current trading nature of the neighbours - BUT it will all come down to the valuers comments on survey.

They may be of the opinion that if you are 4 storeys above the street, then late night noise/cooking smells, may not cause as much issue or prevent re-sale. (which is what they are about - establishing if the property is suitable security for the lender, and if necessary will they be able to resell within a reasonable time and without loss, on your default).

As I say, try and find out who the current lender is (if there is one), and speak to a local broker whom may have experience of successfully placing similiar business in the area.

Hope this helps

Holly

kingstreet

I'd also establish insurability and cost. The lending decision on such a property is not the only potential hurdle.

holly_hobby

Of course block blds ins is held by the freeholder or management company - which must be in place for a mge.

Your actual cost will be the annual service/management fee, and of course contents ins (albeit holding contents ins is not a contratual mge T&C).


Hope this helps

Holly

kingstreet

holly_hobby wrote: »

This will of course be the block blds insurer held by the freeholder or management company.

Hope this helps

Holly

Of course...!

It'll be leasehold. Well, just in case.

ACG

At 40% LTV i would say there will be a lender out there. I dont think you will get anything from a high street lender. I would speak to a broker as this will be a tough one to place.

But as holly says, think about this from a resale point of view. If your still hapy fine, if not then its sometimes best to walk away. Even if the demand is there for the property the hardest bit (unless a cash buyer) will be getting the mortgage.