Content Writer
Mortgage Advisor & Director
It's perfectly possible to get a mortgage for a flat above a shop or restaurant, although lenders tend to be more cautious about these kinds of properties. Although you’ll likely have less choice of mortgages available to you for this type of property compared to a standard residential home, there are lenders that offer both residential and buy-to-let options.
Here, we look at how to get a mortgage for a flat above a shop or restaurant, what to consider when planning this type of purchase, and how to find the best deal available to you.
Can you get a mortgage for a flat above a shop?
Yes, it’s absolutely possible to get both residential and buy-to-let mortgages for flats above, shops and other commercial premises. However, most lenders have preferences in terms of which class of commercial business they are willing to approve mortgage applications on.
Lenders will be particularly concerned with the business class of the property that the flat is above, as this will help them determine the risk in lending. The various categories of non-service industry commercial properties are:
-
Category A1: General stores such as food shops and newsagents
-
Category A2: Professional services like banks and estate agents
Certain business classes are deemed riskier than others, and those with more substantial risks are often the least desirable. Typically those with a higher number of business classes tend to be deemed most risky, for example, properties above commercial businesses that produce heavy footfall, strong smells, high noise levels, and that are open during anti-social hours.
That being said, not all lenders will refuse this type of application, it may be that they just have stricter criteria to meet and larger deposit requirements to balance the risk to their investment. It’s also important to note that not all lenders assess risk in the same way, so a business deemed too risky by one lender may be approved by another.
What about restaurants?
Lenders can be less keen to lend on property above restaurants and other service industry businesses, such as pubs and bars, as they tend to be seen as a higher risk to their investment. However, there are certain lenders who are willing to support mortgage applications for properties above the following business categories:
-
Category A3: Restaurants, cafes, food and drink establishments
-
Category A4: Pubs, bars and other establishments serving predominantly alcohol
-
Category A5: Hot food takeaway outlets, chip shops etc
Who will offer these mortgages?
Not all lenders will consider this type of property, both because of the risk profile and because of the complexity of the application. The majority of flats are also leasehold properties, which adds another layer of risk for lenders to assess.
That said, there are lenders who will accept residential mortgage applications for flats above shops and restaurants, such as:
While many of the larger high street lenders are most comfortable with applications for flats above A1 commercial premises, there are some specialist lenders available who will consider applications from any business category.
It's also worth noting that some lenders, such as Santander, will only accept applications via a broker. Therefore, it’s highly recommended that you speak to a broker to ensure you have the highest chance of your application being successful.
Use our rates tool below to view the latest mortage deals available and make an enquiry with one of our brokers when you've found a product you like.
Compare Rates
Showing Top Result Results
No results matching your criteria
Lender Details
Product Details
How do you get a mortgage for a flat above a shop?
Although there are fewer lenders available in this niche, there are certainly ways you can maximise your options by minimising their perceived risk in lending on flats above commercial property. As well as having good general affordability through a stable income and a strong credit file, these include:
-
Speaking to a broker early on - as well as searching the market for you to find the most suitable lender, they can also suggest tweaks to your application like those on this list, that can improve your appeal as a borrower
-
Maximising your deposit - It’s likely you’ll need at least 15% deposit and a larger deposit the higher the business class of the commercial premises below. For example A5 applications will usually require at least 25% deposit, but the more you can put down, the more chance you’ll have of securing a mortgage
-
Opting for a lower business class property where possible - Lenders are likely to prefer flats above quieter professional businesses that operate in the daytime, rather than retail outlets that serve hot food or alcohol and stay open long hours. This means that flats above A1 business class properties are typically easier to secure finance for than A5
-
Desirable attributes of the property - As flats are known to lose value more quickly than houses, lenders will likely be keen to confirm that the property has successfully resold in the past. They will also tend to prefer flats with a separate entrance, rather than those accessed via the business, and freehold properties, although this is fairly unusual for flats. ‘In-demand’ locations and self contained properties, as well as those with separate deeds from the business premises will also be easier to secure a mortgage for
-
Ensure the flat meets minimum size requirements - Most lenders usually refuse to lend on mortgage applications for flats under 30 square meters. If the property you’re hoping to buy is smaller than this, you’ll likely need to find a specialist lender via a broker
Begin your mortgage journey
What if you are buying the flat and commercial premises?
If you are looking to buy both a shop or similar commercial premises and the flat above it, you’ll need a semi-commercial mortgage. This would be particularly helpful if you’re planning to let out the property above the commercial business.
If you want to live in the flat above your commercial property, it might be beneficial to consider two separate mortgages in order to separate the title deeds. You’d need a commercial mortgage for the shop/commercial element, and a residential mortgage for the flat.
Keep in mind that no matter which of the above options you choose, both your commercial and personal finances would need to be assessed in this instance.
What about BTL (buy-to-let) mortgages?
If you’re looking for a buy-to-let mortgage to buy a property above a commercial premises it can sometimes be easier than securing a residential mortgage for this type of home. This is down to this type of residence drawing appeal from certain younger renters. Flats above shops and restaurants are often found in desirable and convenient central locations and have lower rents than suburban homes.
While lenders may be more flexible with rental homes above commercial premises, they will still assess the same factors as those outlined above. However, buy-to-let mortgages are typically based on the potential rental income, rather than your personal income.
Other things to consider when buying a flat above a shop
There are lots of things to consider when buying a flat above a shop, and some of these will vary depending on whether you’re purchasing the property for home or business use.
The lease situation
If you’re buying the property above a commercial premise it’s likely it would be a leasehold purchase. In this case you’ll want to confirm that the freeholder has granted the lease and how long the lease is. You will also want to be aware of the lease type the shop owner holds, and what types of restrictions they have. For example, could they change a relatively low footfall professional business into an ‘open all hours’ venue service alcohol or hot food?
It’s a good idea to ensure your conveyancing solicitor has experience with the purchase of residential flats above shops. Your broker should be able to recommend a suitable conveyancer for this purpose.
It’s also important to be aware of the freeholder’s obligations in terms of maintenance. The Leasehold and Freehold Reform Act 2024, from 3 March 2025 increased the non-residential allowance of a property from 25% to 50% - meaning you can now exercise your ‘Right to Manage’ the residential element of a mixed use property so long as no more than 50% of it is commercial if you deem that the freeholder is not fulfilling their responsibilities.
Factors impacting your lifestyle
It’s important that living above a commercial premises does not impact your lifestyle, particularly if you’re buying a flat above as your home. A few things to consider are:
-
Access - your access in and out of the property, whether the shop or their customer’s access areas that are problematic to you. It’s also important to be clear what rights you have to any communal areas, such as storage, gardens etc
-
Post - Whether or not your post is received separately and private from the business should also be considered
-
Parking - If required, does the flat have a private parking space and could customers mistake this for their use?
Additional costs to consider
There can be additional costs to flat ownership generally when compared to houses, but this can be more costly for those properties above commercial premises, for example:
-
Insurance costs - While getting property insurance shouldn’t be a problem, it is a requirement of the mortgage, so you’ll need to arrange this before you get approval. Keep in mind that properties above higher risk businesses such as those with cooking facilities or liable to induce anti-social behaviour may have higher premiums
-
Service charges - There are usually service charges when you live in properties with communal areas, and this can be higher when it comes to mixed use buildings, such as flats above shops. Ensure this is fairly shared between you and the freeholder
Why choose Teito for your mortgage needs?
It is always a good idea to speak to a broker before you apply for a mortgage, particularly if the property is located above or near to a commercial premises. There are brokers on our team who specialise in these properties and they can often access exclusive deals.
Here are just some of the reasons people choose us for their mortgage needs:
-
Our brokers have extensive knowledge of complex property types
-
They can access exclusive rates and deals
-
We have 5-star rated on leading review websites
-
You can secure an agreement in principle in minutes
Ready to take advantage of a free, no-obligation chat with a broker who specialises in complex property mortgages to find out what your options are? Get started here.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.