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Commercial to residential purchases

ended 28. April 2021

4 responses from the Newspage community

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Aaron Strutt
Product and Communications Director at Trinity Financial
"With so many empty shops and offices, more developers will be looking at commercial units and thinking about turning them into homes, especially if they can get them at a good price. "Converted office blocks and industrial estates can be difficult to finance through the big mortgage lenders, while shops can also be tricky, especially when they are close to takeaways or betting shops. "A converted property will typically be treated as a new build so it is likely to be subject to restricted borrowing limits. This means it is difficult for many first-time buyers, particularly if they have a smaller deposit. "We regularly get enquiries from clients who want to turn once large houses converted into flats back into family homes, and while there are options, not all lenders are keen to provide finance."
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Toby Fields
Director at Langley House Mortgages
"It is definitely harder to obtain a mortgage if the converted property is above or adjacent to a commercial property. "A lot of lenders will deem this type of property to be less desirable and therefore harder to sell in the event of a repossession. "Also, if a property has been converted within the past two years, some lenders will consider this property a new build. "In this scenario, lenders will typically require a much higher deposit to be provided compared to an older property. This can therefore be very restrictive for some buyers."
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Paul Elliott
Managing Director at Propp
"Checking build warranties will be especially important given that mortgage lenders will want to ensure these are in place. "Some lenders may also restrict the Loan to Value (LTV) because they will class the property as new build, meaning buyers may need access to more cash upfront."
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Dean Esnard
Director at Magni Finance
"If a property is to be lived in its current state for the first time, it will be classed as a new build by the lender. "Therefore, borrowers will normally have to put down a deposit of 15% or more, which will be an issue for some. "High rise buildings and properties above or adjacent to commercial premises are also generally more problematic, which are obviously common in the City. "But I am sure lenders will be keen to adapt their criteria to suit current trends and Government initiatives, so we should see improvements in this space shortly."