Mortgage on Live/work units | Complete Guide

A live or work unit or mixed-use property is a type of property that has been validated by the planning authority as part live and part work. It could be a home, flat or maisonette. The region’s planning authority handles the complete planning process for a Live/Work Unit. It is also important to note here that if you are using the workspace entirely as a residential space, you may face some difficulties as you could breach planning regulations.

In most cases, we usually find that, when working out the plans for converting or building a property, the local authority will require a certain floor space to be dedicated to use by the occupier. After that, the remaining space is used for residential purposes. The main reason behind this is to motivate business owners who own smaller companies to relocate their companies to a more convenient location. Live Work Units can be purchased by anyone from any background, including lawyers, doctors, nurses, teachers, engineers, plumbers, electricians, musicians, actors, writers, chefs, programmers, web designers, painters, carpenters, and gardeners.

In some cases, it may not matter if an apartment building is considered live work because they can designate a certain percentage of their floor space as live work, but they don’t define how much of the total square footage must be dedicated to working versus living.

Most lenders have different criteria in considering live/work units as suitable security for a mortgage application. Some street lenders won’t consider live/work units, whereas others would consider this property type; however, they stipulate that a maximum of 20% of floor space is to be used for work purposes.

At NeedingAdvice.co.uk Ltd, we can help you with the most suitable mortgage deal as per your profile. Our mortgage brokers appreciate every situation and look at every enquiry on a case-by-case basis.

You can also check our other article on Mortgage on Studio Flats

Post Topics

Definition of live and work units

Types of Properties

Explanation of live and work units as a property type

Benefits of live and work units for entrepreneurs and small business owners

Getting a Mortgage on Live/Work Units | Steps

Examples of common types of live and work units

Next Steps

FAQs-Mortgage on Live/Work Units

Definition of live and work units

Live/work units are properties that are designed to accommodate both living and working spaces. These units are typically designated as live/work properties by local zoning regulations, allowing residents to operate a business from their homes.

The concept of live/work properties has a rich history, dating back to the early 20th century when artists and craftsmen began combining their living and working spaces in urban areas. This trend has since evolved to incorporate various professions and industries, with live/work units becoming popular among entrepreneurs, freelancers, and small business owners.

Getting a mortgage for a live/work property follows a similar process to obtaining financing for a traditional home. Lenders will assess the borrower’s creditworthiness, income, and other financial factors to determine eligibility.

As for the impact of COVID-19, it has led to a growing interest in live/work properties as more individuals seek flexible and remote work arrangements. This trend may result in increased demand for live/work units, potentially driving growth in this segment of the real estate market.

Types of Properties

When it comes to investing in real estate, there are various types of properties to consider. Understanding the different categories and their unique characteristics can help investors make informed decisions and diversify their portfolios.

From residential properties such as single-family homes and condos to commercial properties like office buildings and retail spaces, each type offers its own set of advantages and challenges. In addition, there are also specialised properties such as industrial, agricultural, and mixed-use properties that cater to specific needs and industries.

By gaining a comprehensive understanding of the types of properties available, investors can tailor their strategies to align with their financial goals and risk tolerance. Whether you’re a new investor or looking to expand your real estate holdings, exploring the different types of properties is essential for making sound investment choices.

Explanation of live and work units as a property type

Live work units are a type of property that combines residential and commercial use, allowing individuals to both live and work in the same space. The Planning Authority typically sets a minimum floor space requirement for the work area, ensuring that it is suitable for conducting business activities.

These units are popular among creative professionals, freelancers, and entrepreneurs who prefer the convenience of having a workspace within their residences. The live work concept allows for a better work-life balance and reduces the need for commuting to a separate office.

When it comes to securing a mortgage for live-work units, lenders have differing views. Some are open to considering them as suitable security, while others may have stricter criteria or may be hesitant due to the mixing of residential and commercial purposes. It’s important for potential buyers to carefully consider lender considerations and seek out mortgage options that are open to live work units.

Benefits of live and work units for entrepreneurs and small business owners

Live work units offer entrepreneurs and small business owners the flexibility to combine residential and workspace, providing a convenient and cost-effective option. By eliminating the need for a separate office space, entrepreneurs can save on rent, utilities, and commuting expenses. This setup also allows for a seamless transition between work and personal life, making it easier to manage business responsibilities and household tasks.

Additionally, live-work units enable individuals to create a professional business environment within a home setting. This is particularly beneficial for professionals such as architects, accountants, solicitors, health practitioners, and artists who require a dedicated workspace to meet with clients and conduct business activities. By integrating their business operations with their living space, they can efficiently manage their business while reducing overhead costs.

Overall, live-work units offer entrepreneurs and small business owners the opportunity to streamline their work-life balance, lower expenses, and establish a professional presence without the need for a separate commercial space. This arrangement allows for increased productivity, convenience, and affordability, making it an appealing option for a wide range of professionals.

Getting a Mortgage on Live/Work Units | Steps

As we have discussed above, there are different lenders with various lending criteria for Mortgages on Live/Work Units. The best way to get a mortgage on Live/Work Unit is to approach a lender directly. However, if you want to know what kind of loan terms are available on such properties, then you need to go through the following steps:

1) Find out which lenders offer mortgages on Live/Work Units.

2) Determine the criteria for such loans

3) Check whether your property meets those criteria.

4) Apply for a mortgage on Live/work Units.

5) Get a quote from the lender.

6) Negotiate with them to get the best possible deal.

7) Once you have agreed to the terms, apply for the loan.

8) Pay off the loan once all conditions are met.

9) Enjoy your new property!

Read about our article on Mortgage on High Rise Flats.

Examples of common types of live and work units

Common types of live and work units include houses, flats, and maisonettes. Houses typically offer more space for work areas, such as a home office or studio, as they often have separate rooms and even outdoor space that can be converted for work purposes.

Flats, on the other hand, may have limited space for work and may require creative use of the available area, such as converting a corner of a living room into a workspace.

Maisonettes, which are typically two-story flats with their own separate entrance, offer the opportunity to designate one level for living and the other for work.

Next Steps

Securing a mortgage for live/work properties can be challenging due to the varying views of lenders. Some lenders may be hesitant to approve mortgages for live/work units, particularly if the property is being used for commercial purposes. However, there are lenders who specialise in live/work properties and are more open to providing financing for these types of units. It’s important for buyers to research lenders who are willing to consider live/work properties and be prepared to provide detailed information about their business and how it will operate within the property to improve their chances of securing a mortgage. We would suggest you contact a mortgage broker.

FAQs-Mortgage on Live/Work Units

What is a Mixed-Use Property Mortgage?

A mixed-use property mortgage, often referred to as a semi-commercial mortgage, is designed for properties that combine both residential and commercial elements. These mortgages cater to the unique nature of the property, balancing the residential mortgage aspects with the commercial activity involved.

Who Can Apply for a Mixed-Use Mortgage?

Applicants for a mixed-use mortgage typically undergo a formal mortgage application process. Eligibility depends on personal circumstances, including income sources (employment, self-employment, pension, investment, rental income, etc.). Mortgage brokers can assist in navigating the application process, offering bespoke mortgage solutions based on individual circumstances.

How Do I Calculate My Monthly Repayment for a Mixed-Use Mortgage?

To estimate your monthly repayment, use a mortgage calculator. Factors affecting this include the mortgage term, interest rate (which could be a variable rate or a fixed rate), deposit requirement, and any repayment charges. The maximum loan amount and the competitiveness of the deal depend on the lender and your financial profile.

Are Mixed-Use Properties Limited to Certain Types of Buildings?

Mixed-use properties are not confined to ex-industrial buildings. They can be found in various forms, including apartments, townhouses, and detached homes. This dispels the common misconception that mixed-use properties are only old commercial buildings.

Can I Avoid Stamp DutyA tax paid by the buyer when purchasing a property. on a Mixed-Use Property?

In some cases, purchasing a mixed-use property might reduce or eliminate the need to pay stamp duty, particularly in areas like Northern Ireland. This depends on the planning authority’s regulations and the property’s designated use.

Is a GuarantorA person who guarantees to repay a mortgage if the borrower ... Necessary for a Mixed-Use Mortgage?

If borrowing more than a certain percentage of the property’s value (often 80%), a guarantor might be required. This is subject to the lender’s terms and the applicant’s financial circumstances.

Will the Demand for Mixed-Use Properties Increase Post-COVID?

The pandemic has shifted work patterns, potentially increasing the demand for properties that accommodate both living and commercial activities. This could be particularly relevant for those seeking to balance home and work life in a single location.

What’s the Difference Between a Mortgage on a Residential Property and a Mixed-Use Property?

A residential mortgage is secured against a property used solely for living purposes, while a mixed-use property mortgage covers both the residential element and the commercial activity. The latter often requires a more comprehensive assessment by the lender, considering the commercial mortgage aspects.

Are There Restrictions on Business Types in Mixed-Use Properties?

While you can conduct various businesses in a mixed-use property, suitability depends on the type of mortgage, the lender’s criteria, and local planning regulations. Some businesses, like retail stores or restaurants, might be more compatible with a mixed-use setup.

What Should I Know About the Mortgage Application Process for Mixed-Use Properties?

The application process for a mixed-use property mortgage can be more complex than a standard residential mortgage. It may involve a non-refundable mortgage application fee, and the assessment will consider the property’s income potential. Working with an experienced mortgage broker or an expert mortgage advisor can help navigate this process, ensuring you find a competitive lender rate and a deal that suits your circumstances. Remember, lenders will assess your income, including difficult income streams like variable rental income and your ability to maintain the mortgage payment, considering factors like the Bank of England’s base rateThe interest rate set by the Bank of England, affects the in... and any applicable changes.