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Can I use a Commercial Mortgage to Buy my House

Commercial Mortgage can be used for a Buy to Let Property

Surprisingly the answer to this question is Yes, but only for the purchase of a Buy to let property. In fact, purchasing this way may be the only way to buy your house investment. This applies to both commercial and buy to let property’s. Obviously if you are planning to buy an office or a shop you will need to use a commercial mortgage, this is because they are treated as a business and the lender will want to see projected figures or 3 years previous figures to judge how viable your ability is to repay the loan.  So you can only use a commercial mortgage to buy a commercial property however you can use either a BTL mortgage or Commercial Mortgage to purchase a a buy to let property investment.

Why would I need a Commercial Mortgage for a BTL investment?

Over the years Buy to Let lenders have become strichter with their criteria. During the recession they’ve placed more and more limits that make it ever increasingly difficult for an investor to buy the house they want.  From the total amount of propertys you can buy, the combined value of your portfolio to even limits on the amount of properties you own in one area. The reason being is that the lenders have chosen to reduce their exposure risk. For example they don’t want you to buy too many properties in one area just in case that area falls in value. In other words they don’t want you to have all your eggs in one basket.

Now here’s why a commercial mortgage may be the only option. During 2011 the large majority of  BTL lenders restricted the maximum value of a property that they will lend against to £350,000.  Previously this figure commonly stood at £500,000. So what do you do if you wish to buy a property investment that’s worth more than £350,000. You are then playing in the big league and will need to apply for a commercial mortgage. Similar criteria will be used, as being a property investor can viewed as a business in the same way as someone who invests in shops, offices, restaurants etc.

 

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