Can You Get a Mortgage for a Flat Above a Shop?
- Ben Stephenson
- Aug 4
- 7 min read
Updated: 2 days ago
Flats above shops are common across UK high streets, often good value and in great locations. Getting a flat above shop mortgage is possible, but lenders see these as non-standard, so criteria can be tighter.
In this guide you will learn how financing works, what lenders look for, typical deposit ranges, how the business below the flat affects risk, and when a broker can add real value.
Manor Mortgages Direct has advised clients for nearly 30 years, we are highly positively reviewed, and we specialise in turning tricky cases into clear approvals.
What is a flat above a shop and can you get a mortgage on one?
A flat above a shop is a residential unit in a mixed-use building, usually leasehold, with a commercial unit at street level and the flat above. Yes, you can get a mortgage, but fewer lenders accept these properties, and those that do often apply extra conditions.
Lenders want to know how easy the flat would be to resell, they look at the commercial activity below, access, lease terms, building setup, and your own profile. With the right preparation, you can secure a straightforward residential mortgage if you will live there, or a buy-to-let mortgage if you will rent it out.
Key point, a flat above a low impact business is usually easier to mortgage than a flat above a takeaway or pub. Your deposit, your credit, and the valuer’s comments will all influence the outcome.
Why do lenders treat flats above shops as higher risk?
Lenders think about saleability, future value, and insurability. Several factors can raise risk:
Noise and hours, evening crowds or late opening can put off future buyers and tenants.
Smells and fumes, food cooking, chemicals, or solvents can affect living comfort.
Fire and insurance, hot food outlets and workshops can increase risk and premiums.
Change of use, a quiet shop today could change to a bar later, lenders worry about future impact.
Market appeal, the buyer pool can be narrower than for standard flats.
None of this means you cannot get a mortgage, it means lenders want stronger comfort elsewhere, for example bigger deposits, clean leases, good separation between the shop and the flat, and a sensible valuation commentary.
How much deposit do you need for a flat above shop mortgage?
Deposit needs vary with the business below and the lender’s policy. Typical patterns:
Low impact downstairs, retail or office, some lenders may accept 10 to 15 percent deposit, occasionally 5 percent for very strong cases.
Moderate impact, cafes or restaurants with limited hours, many lenders expect about 20 to 25 percent deposit.
High impact, takeaways or pubs, expect 25 to 40 percent deposit, the lender may cap the loan to value lower to reflect risk.
Bringing a bigger deposit improves choice and pricing. It can also offset concerns in the valuation, for example if the valuer notes minor odour or evening activity. Remember to budget for leasehold costs like service charge and ground rent, buildings insurance for mixed-use blocks can be higher, and lenders will include these in affordability checks.
Does the type of business downstairs really matter to lenders?
Yes, it is central to the decision. Lenders group business types by risk:
Takeaways and pubs, highest concern due to late hours, cooking, odours, and fire risk, usually lower maximum loan to value.
Restaurants and cafes, mixed risk depending on hours, ventilation, and neighbourhood impact, often mid-range deposit expectations.
Standard retail, lower concern, limited hours, less noise or smell, usually the easiest among above-shop cases.
Offices and professional services, often the least problematic, daytime only and quiet.
Surveyors feed this into their report. A comment like “minimal nuisance from commercial unit” helps, a comment like “strong odour noted” can prompt tighter terms. A broker can steer you to lenders whose appetite fits the exact business use and can brief you on what evidence helps, for example opening hours, ventilation details, or a long lease history without issues.
What other property criteria do lenders check for flats above shops?
Beyond the downstairs use, lenders will check:
Separate entrance, most require private access to the flat, not through the shop.
Fire separation and building layout, compliance with regulations, ideally a buffer floor helps but is not essential if other factors are strong.
Condition, the flat must be habitable, no major defects or unresolved damp, roof, or structural issues.
Lease and tenure, sufficient years remaining on the lease and sensible clauses around building maintenance and commercial operations.
Commercial proportion, some lenders cap how much of the block can be commercial by floor area, often around a quarter to a third.
Location, a stable parade with long-standing businesses tends to score better than a site with rapid turnover.
Your personal profile still matters, clean credit, stable income, and low unsecured debt counterbalance property quirks.
Can you get a buy-to-let mortgage for a flat above a shop?
Yes, you can, but expect similar property hurdles plus standard buy-to-let tests.
Typical considerations:
Deposit, buy-to-let already leans to 25 percent deposit, above a shop you may need 25 to 40 percent depending on use and lender.
Rental stress test, rent must cover a stressed interest calculation, lenders often apply coverage ratios that vary by tax status.
Experience, some lenders prefer landlords with track records for non-standard properties, first-time landlords still have options but with fewer lenders.
Tenant appeal, strong location can offset above-shop concerns, realistic rent evidence helps.
For investors, yields can be attractive because purchase prices are often keener than similar flats on residential streets. A broker can match the property to lenders that are comfortable with both the mixed-use risk and your portfolio profile.
Case study, how did a buyer finance a flat above a takeaway?
The buyer, Jane, a first-time purchaser in Bristol, found a two-bed flat above a bakery and a takeaway. Price was about 15 percent below nearby residential-only flats. Her bank declined due to the takeaway. Jane had a 20 percent deposit, excellent credit, and the flat had a separate side entrance and a long lease.
The approach, our adviser identified a lender with flexible criteria for above-shop properties where there is some separation and limited late activity. We informally checked appetite with the underwriter, then proceeded. The valuer noted the takeaway but confirmed the flat’s separation and area demand.
The outcome, approval at 80 percent loan to value, rate a touch above the very lowest mainstream deals, but competitive. Jane completed successfully, the numbers still beat the cost of a comparable flat elsewhere, and she is happy with the trade-offs. The lesson, present the strengths clearly, pick a lender with the right appetite, let the valuation address concerns, and a non-standard case can proceed smoothly.
How should you decide if a flat above a shop is right for you?
Ask yourself six practical questions:
What is downstairs now, what are the hours, and is a change of use likely.
Do you have a separate entrance, is fire separation adequate, and is the lease robust.
How big a deposit can you bring, bigger deposits widen lender choice and sharpen rates.
What does the surveyor see, small issues can be mitigated, major issues may require a rethink or a price adjustment.
What is your plan, own-occupy long term, rent out now or later, resell in a few years, align the mortgage and term to your plan.
Do the numbers balance, include insurance, service charges, and buffer for rates.
If the answers line up, buying over a shop can be a smart move, often more space for the price and a lively location.
Why does using a mortgage broker help in this scenario?
A broker adds value in five ways:
Criteria knowledge, mapping your case to the right underwriting appetite first time, saving searches and delays.
Packaging, presenting separate access, lease terms, and valuer context up front, reducing back and forth.
Cost comparison, weighing larger deposits against rate and fee trade-offs so you see the true cost.
Process management, coordinating lender, valuer, solicitor, and freeholder for mixed-use specifics.
At Manor Mortgages Direct we have nearly 30 years of experience, we are highly positively reviewed, and we specialise in non-standard properties. Our aim is clarity, speed, and a mortgage that fits your long-term plan.
Why choose Manor Mortgages Direct if you are buying a flat above a shop?
Specialist experience, decades handling mixed-use quirks, we spot issues early and solve them.
Personal advice, a dedicated CeMAP-qualified adviser who tailors options to your goals and budget.
Efficient delivery, rapid agreements in principle, clear document lists, proactive case chasing.
Long-term support, help with future remortgages or portfolio plans, we build relationships, not one-off transactions.
Our clients rate us highly because we combine whole-market reach with friendly, straight-talking service. If you want the keys to a flat above a shop, we will map the route and walk it with you.
FAQs
Can first-time buyers get a mortgage on a flat above a shop? Yes, but expect tighter criteria and possibly a larger deposit. A clean credit file and a separate entrance help.
Will my interest rate be higher than a standard flat? It depends on lender and loan to value. Some specialist options can price slightly higher, a bigger deposit often narrows the gap.
Is a buy-to-let mortgage harder above a shop? Criteria can be stricter, but it is achievable with the right lender, deposit, and rental coverage. Location and tenant demand matter.
Do I need a commercial mortgage for the flat itself? No, if you are buying only the flat you use a residential or buy-to-let mortgage. A commercial or semi-commercial loan is only needed if you buy the shop as well.
What if the shop changes use after I buy? Your current mortgage remains, but future remortgage or resale could be affected if the new use is higher risk. Your solicitor can check lease use clauses during purchase.
Are flats above shops harder to sell later? They can take longer, and buyer pools can be smaller. Price sensibly, maintain well, and use agents who know how to market mixed-use locations.
Will insurance and service charges be higher? They can be in mixed-use blocks, especially over food businesses. Build this into your budget and affordability checks.
Conclusion, what is the smartest way to proceed?
A flat above shop mortgage is very doable when you pick the right lender, align deposit and criteria, and let the valuation support the property. Low impact businesses below, separate access, robust leases, and sensible pricing all help.
For many buyers, these flats offer excellent value and prime locations. The key is to plan, compare, and present your case well. That is where a broker earns their keep. With nearly 30 years of experience and a highly positive review profile, Manor Mortgages Direct is ready to help you finance a flat above a commercial premises with clarity and confidence.
Written by Ben Stephenson, CeMAP-qualified Mortgage Broker, Manor Mortgages Direct.