Rate and Term for Mixed Use Mortgages
Understand the Rate and Term for Mixed Use Mortgages
Mixed use properties are characterized by multiple uses, normally retail and residential. However, in underwriting mixed use property, the lender analyses each part separately before making a decision. Lending terms for mixed use mortgages vary from loan to loan, and from lender to lender.
New Vs. Established Premises
If you are borrowing against a new construction, the lender prefers a pre-leasing commitment of 75 percent and above. On the other hand, the lender expects the retail portion to have its occupancy level at 85 percent or more for an existing establishment.
Loan-to-value (LTV) Ratio
This evaluates the available equity in your home. Lenders offering mixed use property finance require a maximum LTV of 80 percent for you to qualify for the loan. You can still get the loan at a higher LTV, but you will have to pay higher interest and fees.
Debt Service Recovery Ratio (DSCR)
This refers to the net operating income (NOI) available to pay off the mortgage. For instance, a DSCR of 0.90 would mean the net operating interest could cover only 90 percent of the annual debt payments. Lenders need a DSCR of 1.1 or more for you to qualify for a mixed use mortgage.
The Loan Term
You can get a permanent loan of up to 40 years for purchasing or refinancing a mixed use property. You can also get a construction loan for 12-36 months with extensions available for large projects.
What Options Do you have?
At Mixed Use Mortgage, we have mixed use lenders who are willing to give you purchase or refinance loans, construction loans, bridge loans and hard money loans. Our expert loan officers can match you with the best lender for your needs. all you need to do is give us a call and tell us your needs and expectations.
Don’t hesitate to give us a call and discuss your options, consultation is free and never a fee.