Published 29 July 2019 · Last reviewed 29 July 2019 · Older article — see current rates
Commercial usage near my property is stopping me getting a mortgage
If you are reading this article on “Mortgage declined as near Commercial properties” you are undoubtedly you are feeling frustrated right now. Below I provide an insight to hopefully bring a smile back onto your face.
Just so you know this article forms part of my “my properties are stopping me getting a mortgage series” and other topics include:
- Size of portfolio
- Rental coverage
- Past Habits
Commercial usage near to my property
In this article, we are discussing nearby commercial units that affect the mortgagability of your property. If you run the business will still be able to help but that’s not the subject we are covering here.
Property categorisation
The ranking below gives a typical hierarchy of ease to mortgage, Rank 1 being the easiest to arrange a mortgage on.
Sometimes the willingness to lend is not only determined by what you are above but also the property next door or adjacent. Also, more tolerance may be granted if you are not directly above the commercial unit; for instance, commercial on the ground floor, and your property is on the top floor with flats in-between.
- Rank 1: Modern day new build blocks with a convenience store of a major supermarket chain on the ground floor. This would have formed part of the original planning process and this style of development rarely is a detractor for Mortgage Lenders.
- Rank 2: Offices, warehouses, solicitors, opticians, funeral directors, chemists, estate agencies, stationery, florists, pet shops, vets, dentists, health shops etc.
- Rank 3: Pubs, bars, nightclubs, fast food, launderettes, music entertainment shops, off licence, restaurants, cafes, vape shops, betting shops, hairdressers, garages, builders’ merchants etc.
As a footnote from experience “emergency services” can go either way. Also, empty units with no determined use i.e. vacant can be problematic as the Mortgage Lender cannot categorise them and may default to the worse case scenario.
Re-saleability
Generally, all types of commercials will be referred against the Mortgage Lender’s lending policy, and if potentially passible they will come under further scrutiny from their Surveyors on re-saleability. This is vital to the Mortgage Lender’s decision process as they would need to sell the property in the event the mortgage defaulted.
Some professional Mortgage Brokers, such as Niche Advice, can ask their Lender Contacts to pass judgement ahead of survey, to try and protect the valuation cost. This can be reassuring but does not prevent the Surveyor from getting out of the wrong side of the bed on the day.
The region of the property is in and whether the commercial unit is in keeping with the rest of the area can also play their part in the decision.
Access
As well as re-saleability the access to the property is important. Does the property have its own door or is access through a shop? Is the door street side or around an undesirable alley? How well maintained is the fire exit? Is the access clearly defined on the land registry plans? Is there a flying freehold? To you have the access rights or this held be another unit? These all could determine the mortgage outcome.
Niche Advice is a Mortgage Broker that offers solutions to all types of property and can typically arrange mortgages up to 75% of the property value.