30 Oct Can You Secure a Mortgage for a Property Adjacent to Commercial Premises?

Securing a mortgage may be more complex than buying in a fully residential area if you want to purchase a property above or adjacent to commercial premises.
That doesn’t mean that it is not possible.

CAN YOU SECURE A MORTGAGE FOR A PROPERTY ADJACENT TO COMMERCIAL PREMISES?

Yes, obtaining a mortgage is possible if you wish to purchase a flat or house, whether for a personal residence or as a buy-to-let investment, near business establishments such as bars, restaurants, cafes, takeaways, shops, or public houses. However, be prepared for a somewhat more intricate process. When looking at these applications, lenders typically classify these as high-risk borrowing, resulting in a narrower range of available lenders.

Some lenders may outright decline mortgage applications in properties neighbouring commercial establishments. In contrast, others might assess applications on a case-by-case basis.

WHY DO LENDERS CONSIDER THIS TYPE OF MORTGAGE RISKY?

The future marketability of the property is a big reason why these mortgages are considered risky. Before making lending decisions, lenders will always seek reassurance that the property can be quickly sold down the line, especially if they need to repossess it to recover costs.

Securing mortgages for homes near or above commercial properties can prove to be more challenging regarding resale. Demand tends to be lower due to concerns related to the adjacent commercial property, including issues like:

• litter,
• noise,
• cooking odours and drain issues,
• parking issues,
• and disruptive behaviour, all of which could deter potential buyers.

Geographic location can also have a significant impact. Suppose the property is located in a bustling city centre with high demand. In that case, its future marketability may be more powerful compared to a more rural setting off the beaten track.

Most of the time, to help with decision-making, the lender will require an independent property valuation. This valuation report will provide the following:

• Insights into recent sales of similar properties.
• The overall local market conditions.
• Any other factors that might influence the property’s resale value.

HOW A BROKER CAN HELP YOU TO BUY A PROPERTY NEAR A COMMERCIAL PROPERTY

As some of the more well-known high-street lenders may tend to stay away from mortgages on these properties, some lenders will consider and proceed with a mortgage application – using an experienced broker with their knowledge will help you to obtain the mortgage that is Best 4U. If this sounds like something you need help with, contact our helpful team today!