- BTL use
- Standard residential let to tenants
- Commercial use
- Business premises or mixed/semi-comm
- BTL rates
- Typically lower than commercial
- Commercial underwriting
- More bespoke, case-by-case
What defines a buy-to-let mortgage
BTL mortgages fund standard residential property let to tenants under an assured shorthold tenancy, priced largely on rental yield covering the mortgage payment at a set stress rate. Lenders in this space work to fairly standardised criteria, which usually makes pricing and process quicker.
What defines a commercial mortgage
Commercial mortgages fund property used for business purposes — shops, offices, industrial units, or mixed-use buildings with a commercial element — and are underwritten on the specific business, trading history or covenant strength rather than a standard rental stress test. Each case is priced more individually.
When each option wins
The right product usually follows the property's actual use, but structure can matter too.
- BTL applies where the whole property is residential and let to tenants
- Commercial applies where any meaningful part of the building is used for trading
- BTL wins on rate and speed for standard residential lets
- Commercial is unavoidable for owner-occupied trading premises or semi-commercial buildings
Mixed-use and semi-commercial property
A shop with a flat above, for example, typically falls under semi-commercial lending rather than pure BTL or pure commercial rules, and not every lender offers this category. Getting this classification wrong at the outset is one of the most common reasons applications stall or get declined late in the process.
Frequently asked
Can I get a BTL mortgage on a shop with a flat above?
Usually not — this typically needs a semi-commercial mortgage, a distinct category not all lenders offer.
Are commercial mortgage rates always higher than BTL?
Generally yes, reflecting more bespoke underwriting and often higher risk, though strong covenants can narrow the gap.
Does a limited company change which mortgage type I need?
Not directly — the property's use determines the category; the ownership structure (personal vs SPV) affects tax and underwriting separately.
How is a commercial mortgage affordability assessed?
Usually on the trading business's accounts, projected income, or in the case of investment property, achievable commercial rent.
Can I convert a BTL mortgage to commercial later if the use changes?
Yes, but you'll need to refinance onto a commercial product since continuing on a BTL mortgage after a use change typically breaches its terms.
Not sure which category your property falls into?
Describe the property and its use and we'll confirm whether it's BTL, commercial or semi-commercial before you apply.
Related reading
Situations this applies to
Looking for local coverage? Commercial Loans by town · All areas we cover