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Purchase of a shop with flat above where the residential element exceeds 40% of the total property

Commercial finance


Brightstar were presented with a case where the customer wanted to purchase a vacant commercial property with the intention of setting up a convenience store on the ground floor and living in the flat above the shop.


The residential unit was over 40% of the overall property and hence this was simultaneously a regulated mortgage and a commercial mortgage. This is a combination that does not fit with many lenders. Additionally, the property was vacant and with no financial accounts for an existing business to be able gauge affordability. Finally, the clients had no previous experience of running a retail business.


Brightstar approached a number of the mainstream commercial lenders in an attempt to obtain the lowest possible pricing for the clients, but unfortunately their lack of relevant experience led to the application being declined. Brightstar discussed the alternatives with the customer and they were certain of the potential for the property that they were happy to look at higher interest rates to secure the property. Ultimately, we were able to find the funding for the £130,000 purchase at 60% LTV.


READ MORE about the commercial finance criteria available