Buying a residential/commercial property

Charliezoo

We've been thinking about moving house for a while and also need some additional storage for our small business at some point - we were probably going to rent a small warehouse through the business in the next few months.

A house has come up that we like and it comes with a warehouse at the back of it! It's already being used commercially by the current owners but they're selling the house and warehouse together with a residential estate agent. The property is too expensive for us but we'd save a fortune (or rather the business would) long term if we didn't have to rent any storage. Is there any way that we could buy the property partially with a deposit/personal mortgage and partially through our business? Can anyone recommend a way to do this?

ACG

This is probably going to be more difficult than you think.

It should be possible to do, but its not just a case of getting a residential mortgage and a commercial mortgage. It will need to be one or the other.

I have re-written this post about 5 times as im finding it difficult to explain so apologies if it does'nt read too well.

Lets say you have a deposit, and you can raise a mortgage but not for what you need.
Can the company secure finance? This might then enable you to meet any shortfall on your mortgage. The company then may be able to lend it you (im not sure on that, this is where the accountant comes in) or you could potentially look at taking that loan as a wage - but then you have to pay tax on it which is not idea.

tim123456789

Does the WH have a separate title.

If not could the titles be separated?

Charliezoo

Thanks ACG, very useful. Tim, I don't know about the titles but thanks - that's a good question to ask the EA.

If we do manage to get a mortgage for the amount we need personally (we think this should be just about ok) our monthly mortgage payments will be high - our outgoings are what concern us the most. Would it be possible to own the whole property personally and then rent the warehouse to the business? This would obviously make the mortgage payments more manageable for us. It's just another option we'd like to explore as well as ACG's suggestion. We're seeing the accountant next week so it would be useful if we already have some idea of what we can/cannot do before discussing it with him.

ACG

If you get a residential mortgage they do not allow you to work on the property - unless its something like admin work or office type work etc.

JQ.

Speak to your business bank. If anyone's going to lend you the money it's them.

ACG

JQ. wrote: »

Speak to your business bank. If anyone's going to lend you the money it's them.

Thats not true.

Charliezoo

ACG wrote: »

If you get a residential mortgage they do not allow you to work on the property - unless its something like admin work or office type work etc.

Right so it will have to be a commerical mortgage then - if you get a chance would you mind explaining what this might mean for us please? Are the rates higher or is the loan more difficult to get? The bulk of the site is residential, would this make things even more complex? I understand why Tim has asked about separate titles - would two separate mortgages be a possibility in this case or is that just a major headache?

ACG

Commercial Mortgages are usually higher rates and a minimum 30% deposit is required. The mortgage would then be based on the companies income rather than your own (although in your case, even a residential mortgage would most likely require site of your companies accounts as your self employed).

Im not recommending shawbrook bank by any means - im just giving you a link to a commercial lender so you can see for yourself as an example of what is available - https://www.shawbrook.co.uk/business/borrow/small-to-medium-businesses/

Having separate titles could be a good thing or a bad - on the one hand you have a clear distinction between what is residential and what is commercial. On the other you have to pay to get them separated, might have to get planning permission to change one of the statuses and it will cost to separate the titles.

To be honest, there is limited information on any of these posts so all of the replies are just theoretical. You may turn around and say the company is earning £20k a year and your wages are £10k a year but you need a mortgage of £300k and thats never going to work. I understand you probably want to get an understanding of what options there are but i think you really do need to sit down with a broker - get all of the facts and figures down on paper and let them go and find what options are available and run your scenario by some lenders to get an idea of what it will cost.

Itismehonest

It's quite possible that the vendors are unaware of the problem in getting mortgages for mixed use properties. I know for a fact that EAs in this area are either unaware or don't pass on this information to vendors. The basic idea with EAs seems to be that someone with the cash may come along. While true it also means that many mixed properties are sitting on the market for years.

Splitting the deeds can be expensive. It depends upon the set up of the property.
Everything - access, water, power etc. - needs to have separate rights. If the current situation is that all utilities come via the house then it can mean separate metres & any necessary cabling or pipes being installed to the commercial side.

We took our mixed use property off the market in late 2011 when we discovered the situation with lending & & I've been trying ever since to sort out the problem. I'm getting nowhere. :mad:

tim123456789

Fairly obviously, the issue with splitting the title will depend upon whether the WH has separate access.

If It does, I would expect the utilities were already separated as it would be quite usual for the WH to be rented out to a different occupier than the residential property.

If they are separate titles it shouldn't, in principle, be a problem getting a commercial mortgage on the WH (via the company) and a personal residential mortgage on the house. Subject to the parties credit rating, of course

tim