Looking to buy a business and home?

A reader from Lincolnshire is planning to buy a shop and live upstairs. But she is unsure about how to start.

Tony Davis, myfinances.co.uk mortgage expert from Mortgage Meadow, takes her through the problem and what it means to her finances.


Lee from Spalding asks:

My partner and I are first-time buyers who would like to acquire a small business premises with flats above.
We will be looking to work in the shop downstairs and live in the property above.
Do mortgages exist to cover both under one agreement? Would a business loan enable us to buy both the business and the property?

What are the risks in this?

Tony replies:

The answer to the question depends upon the Title of what you are buying.

I am presuming that you are looking to buy freehold property which contains within it a flat and commercial unit.

It is possible to arrange a mortgage on this type of property and it is referred to as semi-commercial (as part of the building is used for business purposes).

Semi-commercial mortgages are available through most High Street bank’s business teams, however, it is a commercial mortgage and as such the terms and conditions are different to a residential loan.

The lenders will want to see your business plan, the accounts of the existing business, be satisfied that you will be able to run the business and you will be expected to provide a much higher deposit than on a standard residential mortgage, be prepared for the lender to ask for a 25 per cent deposit.

Start up business’s are far harder to arrange funding for because such a high proportion fail in the first year. There are many small business owners who live and work in the same premises and the risks you face will depend on what your business is and your experience.

I wish you the very best with your purchase and your business, it takes a great deal of commitment, courage and determination to set up a small business and make it successful.


If you have a question for Tony, go to the myfinances.co.uk Ask the Mortgage Expert section.

Or for more information or mortgage advice go to Mortgage Meadow.

Mortgage Meadow is an independent mortgage broker and is authorised and regulated by the Financial Services Authority.