Can you get equity release on mixed use properties?

Equity release and mixed use properties

Whilst some equity release providers do accept mixed-use properties, your options may be more limited compared to standard residential homes. It ultimately comes down to the specific commercial use of your property, as what is acceptable to one lender may not be acceptable to another.

In this guide, we’ll take a look at what you need to know about arranging equity release on mixed-use properties, including:

• What is equity release?
• What is a mixed-use property?
• Can I arrange equity release on a mixed-use property?
• Why are mixed-use properties a concern for lenders?
• What do equity release lenders say about mixed-use properties?
• Talk to an equity release adviser.

We hope the following information helps you explore your equity release options. To speak to one of our selected advisers about which providers will be more likely to accept your application, call our friendly team on 0808 178 3055, or request a call back.

What is equity release?

Equity release is a financial product aimed at homeowners in or approaching retirement who want to unlock some of their property wealth. There are no mandatory monthly repayments to make, making it a popular way to borrow money in later life for some people.

The most popular form of equity release is a lifetime mortgage and is available to homeowners aged 55+. 

With this type of plan, you’ll still own 100% of your home after releasing a percentage of your home’s value. The loan plus interest is typically paid back through the sale of your home when you pass away or move into permanent long-term care.

See our blog featuring examples of equity release for further information and case studies on how equity release can help with later life finance.

Want to know how much you could unlock from your home? Check your eligibility and get your free quote now!

What is a mixed-use property?

A mixed-use property is a property that combines your living accommodation with commercial usage, such as:

• Farms.
• Hotels.
• Guest houses.
• Bed and breakfast accommodation.
• Catteries and kennels.
• Hair and beauty salons.
• Flats over takeaways or restaurants.
• Childminding.

The definition of ‘mixed-use’ can be quite broad. Even teaching music from your home, for example, could be classed as mixed-use, as minimal as it might be.

Can I arrange equity release on a mixed-use property?

It’s an unfortunate fact that mixed-use properties have typically been declined for equity release in the past. However, providers have recently become more flexible and accepting of equity release on mixed-use properties; for example, homes that are used partly for commercial reasons.

Some minor commercial usage may not have any impact on your application at all of course. 

However, as you may find it more challenging to find a lender who will arrange equity release on some mixed-use properties, seeking specialist advice can make all the difference.

Different lenders have different criteria about what may affect an equity release application. 

Our selected equity release advisers will do everything they can to find a lender agreeable to arranging a plan on your property. Please call us on 0808 178 3055 or request a call back and to arrange a no-obligation appointment.

Why are mixed-use properties a concern for lenders?

The reason that a mixed-use property can cause issues with an equity release application is predominantly to do with the future saleability of your home.

You or your estate will typically settle the equity release loan plus interest in the future when you pass away or move into long-term care. Your provider will recoup their money through the sale of your property. For this reason, they will want to avoid lending on a property that could be difficult to sell one day.

Ultimately, lenders need your home’s value to remain high enough to cover the full amount due. They will also want to be able to sell the property without unnecessary delays. This is why there are some types of properties not suitable for equity release, including mixed-use properties.

In some circumstances, such as using your home for childminding or teaching music, your lender may simply need to check you have the correct insurance in place. 

What do equity release lenders say about mixed-use properties?

As we have discussed, having a home that combines your personal accommodation with commercial usage can make it more difficult to find a provider who will accept you. Some mixed-use properties may even automatically be a ‘no’ for equity release.

However, there are lenders who are more accepting of mixed-use properties. It ultimately comes down to their individual criteria. The good news is that our selected advisers are specialists at knowing who to approach, so if you have a mixed-use property then you’re in good hands.

Here are some examples of what different equity release providers say about mixed-use properties.

• Aviva. Will consider your home if you have ‘a small amount of personal business use taking place’, including a bed & breakfast, holiday letting, or a hair/beauty salon. They will also consider properties where there is agricultural use of the land and properties adjacent to or above commercial properties.
• Canada Life. Will consider properties with a small element used for some form of business or commercial activity, for example, an office for home working. Will also consider properties adjacent to or above commercial properties. They will not accept applications for properties involved in commercial farming or with any agricultural ties.
• Pure Retirement. Will consider properties above or adjacent to commercial properties that do not affect saleability. Will also consider properties with minimal commercial use (such as childminder, music teacher). Business use of the property is not acceptable, nor are properties registered as a small holding or having agricultural ties. 
• Just. Will not accept any properties with commercial usage including bed & breakfasts, holiday lets, kennels and catteries, animal shelters,  smallholdings or other properties with agricultural ties or livestock. Also will not accept holiday homes and investment properties bought to let. They will consider properties adjacent to commercial properties that do not affect re-saleability.

Talk to an equity release adviser.

The best way to find out if you and your mixed-use property could be eligible for equity release is to speak to an equity release specialist like our selected advisers. 

They will use their years of experience in the equity release industry to search and compare plans on your behalf. They’ll also help you understand which type of plan will work best for you and your family. 

In addition, your adviser will explain all the benefits and pitfalls of equity release too, including how equity release will reduce the value of your estate and the amount of inheritance you leave.

Please call 0808 178 3055, or request a call back for a time that suits you. Alternatively, check your eligibility and get an initial indication of how much tax-free cash you could release.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn