Commercial or residential mortgage? HELP

movetofeedfish

Hi all. We are trying to buy a country property that consists of a house with a garden and behind that some land that’s run as a business. The house has a covenant on it saying it’s only to be lived in by the people running the business. Does this make it a residential or commercial? We have been trying both but being rejected. Any suggestions please? 

MWT

movetofeedfish said:

Hi all. We are trying to buy a country property that consists of a house with a garden and behind that some land that’s run as a business. The house has a covenant on it saying it’s only to be lived in by the people running the business. Does this make it a residential or commercial? We have been trying both but being rejected. Any suggestions please? 

Best suggestion I have is to find another property...

It is mixed use and that restriction on occupation is going make it hard to sell and hard to mortgage, it is best suited for a cash buyer. 

If the business is agricultural in nature then there are brokers/lenders that specialise in that and probably best to try them if you have not already.

Is the business viable though, and how much land is involved?

ACG

Bit of a complicated one, but what percentage of the property as a whole is residential and what is commercial (ballpark). I think (I could be wrong... probably am) but so long at 60% is residential under FCA rules, you can still get a residential mortgage. However...

The fact that there is a restriction on there will affect some residential lenders. 
The fact that the restriction is for commercial will also affect some lenders. 

It might be worth having a chat with a broker. 

MyRealNameToo

ACG said:

Bit of a complicated one, but what percentage of the property as a whole is residential and what is commercial (ballpark). 

@ACG out of curiosity, percentage of what? Total area? Value? 

ACG

I think its percentage of the area. There is just something in the back of my mind about properties that are not fully residential and the FCA make allowances for it. But I dont know the details. 

The Nationwide website is a good example, although it depends what the land is used for. It says they do not allow farms, but you do not say what the land is used for.
 https://www.nationwide-intermediary.co.uk/lending-criteria/property-and-constructions (scroll down to part commercial) 

ACG

Ive found it! I knew there was something somewhere...
At least 40% must be residential to meet the FCAs definition of residential. But lenders can implement their own rules based on their risk appetite. 

https://www.handbook.fca.org.uk/handbook/PERG/4/4.html - Perg 4.4.17 (welcome to the fun that is the FCA handbook)