Mixed Use Property Loan

What Is A Mixed-Use Property?

A mixed-use property is one property that’s used for more than one purpose, usually combining residential living space with business, commercial, industrial or rural use.

Common examples include:

• A shop with an apartment above it
• A terrace or house partly used as an office
• A warehouse with living quarters
• A rural property with a home and business activity

For lending purposes, banks assess how the property is used, its zoning, and the split between residential and non-residential use. This helps determine whether it can be treated like a standard home loan or needs a different lending approach.

How Much Can I Borrow for A Mixed-Use Property?

• If the property can be used as a home: If the property is a normal house and the zoning allows the property to be converted back for residential use, then you may be able to borrow up to 90% of the property value.
• If you rent out the attached residence: You can borrow up to 80% of the property value with a commercial loan.
• If you live in the attached residence: You can borrow up to 75% of the property value with a special type of commercial loan.
• If you use the property for your business: You can borrow up to 75% of the property value, depending on the strength of your business financials.

Ultimately, you must meet all standard bank criteria regarding affordability and asset position but your loan will be priced using a commercial risk matrix.

Do you need help financing your property?

Call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will let you know your options.

How Do Banks View Mixed-Use Commercial And Residential Properties?

Banks generally see mixed commercial and residential properties as higher risk than standard homes, mainly because of how they are used and how easy they are to sell or lease.

Banks will usually consider:

• How the property is occupied: Whether it is owner-occupied, tenanted, or partly vacant
• Income risk: Whether the loan relies on business income, rental income, or both
• Resale demand: How easy would the property be to sell if needed
• Property layout: Whether the residential and commercial areas are clearly separated and usable

Because of this, lenders may require a larger deposit, apply a lower loan-to-value ratio, or assess the loan under commercial lending criteria.

What Do Banks Assess For A Mixed-Use Property Loan?

When assessing a mixed-use property loan, lenders look at the property, the borrower and the income supporting the loan. This can include the property location, your financial position, tenant strength, lease terms, rental yield, cap rate, and the bank valuer’s recommendations.

Does Zoning Affect How Much I Can Borrow For A Mixed-Use Property?

Yes. Zoning can affect how much you can borrow for a mixed-use property, depending on how it impacts the property’s use, valuation, market demand, and lender assessment.

If the property can be used entirely as a residential home, some lenders may view it more favourably. Zoning usually becomes an issue only when it restricts use, reduces buyer demand, or lowers valuation.

What Types Of Properties Are Considered Mixed Use?

Retail properties with an apartment upstairs are the most common type of mixed property.

Converted terrace houses now used as offices or retail showrooms can also fit into this category.

However, there are many converted warehouses that are used as creative spaces with residences within them. In most cases, these properties have exposure to a main road and rear-lane access, making them suitable for both residential and business use.

What Financial Documents Do I Need For A Mixed-Use Property Loan?

The documents you require will depend on the purpose of the real estate being purchased.

If you’re planning to use the property as an investment then you’ll need to prove that a current lease is in place and other evidence of the rent that is being generated.

For an owner-occupied property, you’ll need to provide financials for your business or other evidence that it is trading profitably.

If you have your own PAYG job then the income from that job is also taken into account if you provide payslips.

Get Approved For A Mixed-Use Property Loan

Our mortgage brokers specialise in mixed-use property loans and can assess your situation, identify suitable lenders, and structure your application in a way that gives you the best chance of approval.

Call us today on 1300 889 743 or complete our free online assessment form to find out how we can help you.