Mixed use bridging loan:finance for buildings with several uses
A mixed use bridging loan is short-term finance secured on a building that combines more than one use, such as shops, offices, a restaurant and flats, which lets you buy, refinance or reposition it quickly and repay from a sale, a break-up or a term mortgage. We arrange mixed-use bridging finance through a wide panel of bridging lenders, from specialist lenders to private credit funds.
Mixed-use buildings are where commercial and residential lending rules meet. The lender has to value each part on its own evidence, decide which lending policy the building falls under, and check whether anyone connected to you will live there, because that can decide whether the loan is regulated. Getting those three points right at the start is what keeps a mixed-use deal moving.
Key takeaways
Mixed-use buildings are valued component by component, then as a whole, and the whole is often worth less than the parts.
Whether the building is mainly commercial or mainly residential affects which lenders will lend and how.
LTV up to 70% to 75% is common on a first charge for let buildings, lower where floors are vacant or need work.
If you or close family will live in part of the building, the loan may be regulated and we introduce it to a directly authorised firm.
Break-up exits need a sales appraisal, title split plans and a realistic timetable.
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What counts as mixed use for a bridging lender?
Any building with two or more distinct uses can be mixed use. Common examples include:
a high street building with a shop on the ground floor, offices on the first and flats above;
a town centre block with a restaurant, a gym and residential apartments;
a former bank or post office split into commercial space and flats;
a terrace of shops with a mix of flats, storage and offices behind;
a larger scheme with commercial podium units under residential floors.
The simpler version, one commercial unit with a flat above, is usually called semi-commercial, and our page on the semi commercial bridging loan covers it. This page deals with buildings where several uses, tenancies and valuation methods sit together.
How is a mixed-use building valued?
The valuer works through the building component by component, then considers the value of the whole as a single lot.
The last row matters. The value of the whole building sold to one buyer is often lower than the sum of the individual parts, because a buyer of the entire block expects a discount. Lenders lend on the whole-building figure on day one; the higher break-up value supports a sale exit.
How does the commercial and residential mix affect LTV?
Lenders first decide which policy the building falls under. Where most of the floor area or value is residential, some lenders treat the building closer to a residential investment; where commercial dominates, it is a commercial loan. That choice affects which lenders will look at it and how they price it.
On a first charge, a mixed use bridging loan commonly runs up to 70% to 75% loan to value where the building is let or readily lettable. Expect a lower LTV where:
large parts are vacant or need heavy refurbishment;
the commercial element is specialist, such as a nightclub or a fitted-out takeaway;
the flats are held on long leases you do not control;
Have a deal in front of you?Send us the property and the numbers. We will tell you quickly whether it is fundable.
Mixed-use bridging: where is the regulated line?
A mixed use bridging loan secured on a building held for investment or business purposes is unregulated, and we arrange it directly. The position can change if you or an immediate family member will live in part of the building.
A loan to an individual or trustees is a regulated mortgage contract where at least 40% of the property is, or will be, used as a home by the borrower or a related person, and it must then be arranged by a firm directly authorised by the Financial Conduct Authority. We are not directly authorised by the Financial Conduct Authority, and because the 40% measurement can be finely balanced, we introduce every case where you or your family will live in the building.
Scenario
Position
All units let to unrelated tenants
Unregulated, we arrange it
You trade from the shop, flats let to unrelated tenants
Unregulated, we arrange it
One flat let to an unrelated employee
Unregulated, we arrange it
You, your partner, child or parent will live in one of the flats
May be regulated, depending on who borrows and the flat's share; introduced to a directly authorised firm
Even where one family flat in a large building falls well short of 40%, we still introduce the case to an authorised firm, so tell us at the outset. Our guide to regulated vs unregulated bridging explains the line in more detail.
Tenancies, compliance and planning across several uses
A mixed-use building carries the compliance load of every use inside it, and the lender's solicitor will want to see each part in order:
Commercial leases: covenant, term, breaks and whether they are protected under the Landlord and Tenant Act 1954.
Residential tenancies: tenancy agreements, deposit protection, gas and electrical safety certificates and EPCs.
Licensing: if any flats are let as an HMO, the right licence must be in place, and selective licensing may apply in some areas.
Fire separation: adequate fire separation between commercial and residential parts, especially above food premises.
Planning: each use should be lawful. Unauthorised flats, or a flat created without consent above a shop, can reduce value or delay completion.
If your plan involves changing the use of one or more floors, see change of use bridging finance and confirm the planning position with a planning consultant.
Common mixed-use bridging deals and exits
Deal
Why bridge
Typical exit
Buying a whole building at auction
Completion usually due within 28 days
Semi-commercial or commercial mortgage
Break-up: buy the building, sell the flats, keep the commercial
Term lenders rarely fund a break-up plan
Flat sales repay part, refinance the remainder
Converting vacant upper floors to flats
Fund purchase and works in one facility
Refinance on the improved building or sale
Re-letting vacant commercial parts
Lenders want income before a term loan
Investment mortgage once let
Refinance from a lender that has called in its loan
Time to stabilise and refinance
Term mortgage
Break-up exits need the most evidence before a lender will agree a mixed use bridging loan on that basis: a sales appraisal from a local agent, title split plans and a realistic timetable. For conversion schemes, see commercial to residential conversion finance.
How is a mixed-use bridge priced?
A mixed use bridging loan is priced per month, and lenders price it on LTV, the share of vacant space, the quality of the exit and how complex the building is. Budget for an arrangement fee of typically around 1% to 2% of the loan, monthly interest (retained interest, rolled up interest or serviced interest), valuation and legal fees, and an exit fee with some lenders.
Because several uses mean more legal work, allow for higher legal costs than on a single-let building. Compare totals with the bridging cost calculator.
Unregulated commercial and investment bridging is arranged directly. Any case where the security includes a home you or an immediate family member occupies, including a flat above commercial premises, may be regulated and is introduced to a firm directly authorised by the Financial Conduct Authority. We are not directly authorised by the Financial Conduct Authority ourselves. Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
What are the top bridging loan companies in the UK?
There is no single top lender for mixed use, because appetite depends on the mix of uses, vacancy and the exit. The market includes specialist bridging lenders, specialist banks, private credit funds and family offices. Our commercial bridging lenders page explains how each type approaches deals, and we compare the panel for your specific building.
Can I get an interest-only commercial mortgage?
Yes. Interest-only commercial and semi-commercial mortgages are widely available for investment property, subject to rental cover and LTV, and they are a common exit from a mixed use bridge. Some lenders require part repayment over the term for owner-occupied premises. Your accountant can advise on how the structure suits your tax position.
Can you have two residential mortgages in the UK?
Yes, many people hold more than one residential mortgage, for example on a home and a second home, subject to each lender's affordability checks. Residential mortgages on a home are regulated, so if one of the flats in a mixed-use building will be your home, we introduce you to a firm directly authorised by the Financial Conduct Authority.
Can a bridging loan be used for a deposit?
A bridge can raise money against property you already own to fund a deposit or a full purchase. However, many mortgage lenders will not accept a borrowed deposit, so if your main purchase is funded by a term mortgage, check that lender's rules first. On commercial purchases it is often simpler to bridge the whole acquisition using additional security.
Is a mixed-use bridging loan the same as a semi-commercial bridge?
They overlap. Semi-commercial usually means one commercial unit with residential above. Mixed use covers buildings with several uses and tenancies, such as shops, offices and flats in one block. The lending principles are the same, but mixed-use deals involve more component valuations, more leases and more legal work.
Will a lender fund a mixed-use building with vacant floors?
Yes, though at a lower LTV than a fully let building. The vacant parts are valued on vacant possession, and the lender will want to see how they will be let, converted or sold. A bridge is often the right tool here, because many term lenders want the whole building income-producing first.
