How to Secure a Mortgage for a Flat Above Commercial Premises

*Collaborative Post

You’ve searched and searched for the perfect place to live, and now you’ve found it. The best part? There’s one thing that makes it extra unique: it’s a flat above a shop. Maybe it’s got a lovely bakery below, the smell of fresh bread wafting up to greet your mornings. Or perhaps it’s a bookshop downstairs that gives off serious You’ve Got Mail vibes. Whatever the charm, you love the idea of living above the action. 

But then you start thinking about it… is it harder or different to get a mortgage if you have a flat above a commercial premise?

Living Above a Shop

Living above a shop has its advantages. Convenience? Check. Who wouldn’t want their daily essentials a staircase away? Character? Double check. Flats above commercial premises often have charm and quirks you won’t find in a generic apartment. And they’re usually in the heart of the action, where life is buzzing just below your feet.

But as much as you’re imagining sipping your morning coffee while soaking up the street noise, the journey to getting that mortgage feels like navigating a maze blindfolded. Banks and lenders aren’t always keen on properties that don’t fit the box.

So, what’s the problem? Why is this so hard?

Why Lenders are Hesitant on Flats above Shops

Here’s the thing, lenders see flats above shops as a bit of a risk. Why? For starters, they’re worried about resale value. Let’s say there’s a kebab shop downstairs (nothing against kebabs, we love them too), but the smell of grilled meat isn’t everyone’s cup of tea. That could scare off future buyers.

Then there’s the noise or disturbance from the business below. Imagine late night deliveries or the hum of an air conditioning unit—these can be deal breakers for a lender. Plus properties like these often come with legal quirks such as lease restrictions or zoning issues that make lenders squirm.

But don’t let that stop you. With a bit of know-how, you can still get that flat. Let’s get into the details of how to get a mortgage for flat above shop.

1. Know Your Property Inside Out

Before you even apply for a mortgage, do some research. And by research, we don’t mean a quick Google search—get into the nitty gritty.

• Type of Commercial Business Below: Banks love predictability. Flats above quiet businesses, like offices or boutiques, get the green light faster than those above a pub or fast food joint.
• Building Structure: Is the flat structurally sound? Is it self-contained or do you have to walk through the shop to get home? Lenders eat these details for breakfast.
• Leasehold vs Freehold: Most flats above shops are leasehold, meaning you don’t own the land it’s built on. Know the lease terms—how many years left on it? Lenders often shy away from leases with less than 70 years remaining.

2. Find a Specialist Lender

An important thing to know is that mainstream lenders may ignore you. Fortunately, there are plenty of specialist lenders out there who love unconventional properties. These lenders understand the quirks of properties like yours and are more willing to take the risk.

Ask your broker (and yes, you’ll want a good one on your side, so make sure to shop around) for recommendations. Mortgage brokers are like detectives—they’ll dig around and find the best deal for your situation.

3. Make Yourself More Appealing to Lenders

Lenders can be a bit fussy and want everything lined up perfectly—if you have a touch of perfectionism, it might be the perfect career for you. You need to make sure you present yourself as confident and put together as possible.

• Be Financially Spotless: Get your credit score sparkling like a new coin. Pay off debts, don’t take on new credit and keep your spending in check. A clean financial record is your golden ticket.
• Save a Bigger Deposit: The more you have invested, the more lenders will feel comfortable. Aim for at least 15-20% deposit to offset their risk.
• Offer a Guarantor: If your situation is a bit tricky, having a family member co-sign the mortgage can ease the lender’s concerns.

4. Answer Lenders’ Worries Head-On

Don’t let lenders imagine the worst—beat them to the punch by addressing their concerns directly. For example:

• Noise and Disturbance: Mention any soundproofing measures in place or how the business below operates during regular hours only.
• Resale Value: Mention the flat’s USP—close to transport links, vibrant community or rental income potential.
• Planning Permissions: Show proof all permissions are in place and there’s no risk of planning conflicts.

5. Don’t Be Afraid to Negotiate

Getting a mortgage is a negotiation not a dictatorship. Don’t just accept the first offer given to you. Shop around, haggle and ask for better rates. Even small changes can save you a fortune in the long run.

6. Plan for the Unexpected

Now’s where you channel your inner post-apocalyptic prepper and, well, be prepared. Set aside a buffer for unexpected costs, like higher insurance premiums (flats above shops often have more expensive cover). And be prepared for hiccups. Lenders might take longer to approve your application or request more paperwork.

Why It’s Worth It  

Yeah, it is a bit like herding cats. But when you’re in your flat with your feet up, drinking tea (or wine, feel free) and smelling that fresh baked bread, you’ll realise it was all worth it. The bustle below won’t be just background noise, it will become part of your narrative. ‘You’ll have a room that’s your own, full of character and personality that a standard studio just can’t offer. 

And hey, who lives on the top floor of a store has right to boast. It’s not everyday that you can walk out on the street and say, “I live above this fabulous café.” It has that edge, that flair, thatje ne sais quoi. 

Conclusion  

It’s not easy to secure a mortgage for a shop-over-the-counter flat, but with some grit, hard work and a well-planned strategy, you can conquer it like a pro. Keep in mind the quirky aspects of your home are what makes it special, and there is a lender out there who’ll recognize its potential. 

Therefore, get the sleeves up, take on the challenges head-on and start visualizing yourself living in your fantasy flat. You got this!  And who gets the best looks after the hardest ascents — or in this case, most outrageous mortgages?

*This is a collaborative post. For further information please refer to my disclosure page.