Self employed Mortgage question

TwoYearToMove

Deleted_User wrote: »

There are a lot of regulatory reasons for the split in ocmmercial/residential but from a pure business point of view pretty much every decision a lender makes is based on the question:

'If this person doesnt pay their mortgage and we have to reposess the property can we sell it quickly and get back our money?'

A property that is also a currently trading business would put off a very large part of the purchase market so it presents a bigger risk than the lender is willing to take on


I have seen it a lot with equestrian properties as I get a lot down where I am. Some are worried too much land with a property will give someone the opportunity to turn it in to a stables/equestrian business and it limits the number of people who would buy it when it is sold later.

Few things come to mind regarding that. First is that obviously I'll have my own indie author business, which by then at least would be earning a fair amount, i.e. I wouldn't need the shop to pay the mortgage or anything, that would be surplus. Also I would buy a property that was in a good location (within any shopping area of a town) and would probably improve the property over time, meaning I imagine it would be able to be sold easily to recover its lending costs.

But I get what you're saying, the problem with a property with a shop is that there's just less people who want to buy it? If that's the case, how does a mixed use mortgage mitigate that?

And as I understand it a mixed use mortgage would be difficult for me to get/not the best option for a first time buyer, anyway?

ACG

Come on, a shop is a shop.
If my kitchen has no fridge or cooker, it is still a kitchen. Is the downstairs set up commercial trading? Is it liable for commercial rates? If it looks, walks and quacks like a duck...

Mortgage rates are what, 1-3% in the main? They are low rate, low mark up, pile it high and sell it cheap ways for the banks to make money. Why would they want to take the risk of commercial properties when they can lend that money to commercial lenders at higher rates?

Commercial mortgages are higher because the risk is higher.

If you are in a flat above a shop:
Commercial properties are not exempt from squatters, so you could get squatters.
You could open a business that devalues the property (off license, bookies etc).
You could open a business that is high risk (launderette, cafe etc - higher chance of burning down).
Assuming the property is in a row of shops, one of those shops could become a bookies/off license/take away etc and you have very little control over that.

TwoYearToMove

ACG wrote: »

Come on, a shop is a shop.
If my kitchen has no fridge or cooker, it is still a kitchen. Is the downstairs set up commercial trading? Is it liable for commercial rates? If it looks, walks and quacks like a duck...

Mortgage rates are what, 1-3% in the main? They are low rate, low mark up, pile it high and sell it cheap ways for the banks to make money. Why would they want to take the risk of commercial properties when they can lend that money to commercial lenders at higher rates?

Commercial mortgages are higher because the risk is higher.

If you are in a flat above a shop:
Commercial properties are not exempt from squatters, so you could get squatters.
You could open a business that devalues the property (off license, bookies etc).
You could open a business that is high risk (launderette, cafe etc - higher chance of burning down).
Assuming the property is in a row of shops, one of those shops could become a bookies/off license/take away etc and you have very little control over that.

I know you're talking generally with the points above, but I would be living above the shop, so no chance of squatters. That's actually part of why I wouldn't want to get a house and then get a separate shop at some point or rent a shop, I prefer to be above it. The shop business eventually would be a specialist bookshop, so hopefully no chance of any of the dangers you mentioned, but as you say I wouldn't have any control over what happens nearby.

So if I wanted to get a flat/shop then it would have to be a mixed use mortgage, and that would make it impossible for me to get as a first time buyer? or possible? what kinds of extra costs are involved with that as apposed to just getting a normal mortgage?