As mentioned above, a mortgage for a mixed-use property investment can only be obtained through a commercial mortgage lender. They will then calculate the cumulative rental income of both the commercial facet and the buy-to-let residence to arrive at a figure of how much borrowing capital you will be able to access. Because the interest rates for commercial and semi-commercial mortgages are slightly higher than those for standard buy-to-let properties, the amount of money available to you may be significantly different, as well.
However, this difference might not be as pronounced as you may expect, with certain commercial mortgage lenders offering variable rates beginning at 3.24% over the London Inter-Bank Offered Rate (LIBOR), with a loan-to-value (LTV) ratio of 55%. Meanwhile, the fees imposed on individual products typically begin at around 1.50%, which is added to the overall value of the loan itself. In any case, each commercial mortgage lender will offer a varied range of options, so it’s a good idea to discuss your unique needs with your broker so that they can help you to find the best product for your circumstances.
In certain situations, where the buy-to-let aspect comprises over half of the freehold value and the rental income is sufficient to meet the repayments of the mortgage, there are some mortgage providers who will waive the commercial aspect of the property altogether and offer a product based solely on the residential component. The primary advantage of this arrangement is that you can access a slightly reduced rate of interest, with some providers offering mortgages that begin at 2.95%. There are also a range of other incentives, including free valuations, cashback offers and other perks intended to sweeten the deal. We can connect you with these mortgage providers if that is an avenue you wish to pursue.
Regarding minimum income requirements, some providers stipulate that all applicants must earn a minimum of £25,000 per annum, while others only require one which is sufficient to meet repayments and equipped to withstand any downtime or void periods.