Mixed-Use Property Loans: Broker Requirements

A mixed-use property combines residential accommodation with commercial space, so its mortgage assessment must address both uses. A shop with a flat above can raise different questions about acceptable security, rent and valuation within the same building. Start with the title and approved uses, then choose the lender route that fits those facts.

Define the Mixed Use

Describe every residential and commercial area separately, including who occupies it and how each area connects to the building. Record the actual activity in the commercial space, such as a retail shop or professional office. For accommodation, identify whether the borrower lives there, an unrelated tenant rents it or it stands vacant.

One street address doesn’t establish one title or one independently saleable property. A shop and upstairs dwelling might share a title, an entrance and utilities. Separate strata lots can have different owners, while shared access can restrict how either part is occupied or sold.

Mixed zoning and mixed use answer different questions. Zoning describes the planning controls applying to the land. The actual combination of uses describes what the lender will take as security.

For example, Macquarie’s 10 September 2026 residential credit guidelines accept mixed-zoned properties used for residential purposes where zoning permits that use. That provision doesn’t establish acceptance of a working shop with accommodation above it. Macquarie’s separate commercial route expressly lists mixed use as a security type.

Classify the Security

Classify the security from measured areas, title rights and lawful uses before applying a lender’s lending limit. There is no universal floor-area percentage that turns every mixed-use building into residential security. The chosen product’s rules must cover the actual combination of uses.

Prepare a property schedule that lets an assessor see these differences.

Property fact	Evidence to collect	Why it changes the assessment
Residential and commercial proportions	Dimensioned floor plans with the measurement basis	Floor area and rental value can produce different proportions
Title and ownership	Current title, registered plan and relevant dealings	Shows what can be mortgaged and whether parts can be sold separately
Zoning and approved use	Planning information, development consent and occupation documents where applicable	Identifies permitted activities and conditions on occupation
Access and services	Plans, photographs and utility details	Shows shared entrances, parking rights and whether each part operates separately
Occupancy	Executed leases, tenancy schedule and vacancy details	Distinguishes investment property from space used by the borrower’s business
Alternative use	Planning advice and valuation commentary	Shows whether a proposed change of use is feasible and marketable

In New South Wales, a section 10.7(2) planning certificate reports zoning, planning controls and specified constraints. Obtain the consents governing the building’s actual use as well. An advertisement calling a room an apartment doesn’t establish approved residential occupation.

In Western Australia, Landgate explains that some property interests aren’t registered on the title. Read the title and survey alongside planning information and relevant unregistered restrictions. Use the corresponding land registry and planning authority for other states and territories.

Macquarie’s May 2026 Commercial Lending Guide lists mixed use for commercial property investors, with a maximum loan-to-value ratio (LVR) of 70%. The LVR compares the loan with the lender’s accepted security value. Macquarie assesses each loan individually, so the category listing alone doesn’t approve a particular building or borrower.

Save the policy provision, product name and assessment date in the file. Where the facts fall outside the written rule, send those facts to the lender for a property-specific decision before committing to that route.

Bulma’s Policy Advisor helps you compare security rules within its covered lenders’ policies and retain the quoted wording. Its coverage is 52+ residential lenders, with commercial lending covered only where those lenders’ policies address it.

A Hypothetical Shop and Flat

Suppose a building has a 120-square-metre shop and an 80-square-metre flat on one title. The shop occupies 60% of the measured floor area, while the flat occupies 40%. Those calculations describe the property, without deciding a lender’s classification.

The shop tenant uses the front entrance and the flat has separate rear stairs. Both share a water meter, and the shop lease gives its tenant parking rights behind the building. Record those rights and the shared cost arrangement before comparing lender routes.

Private Finance and Superannuation Funds

For private mixed-use property finance, compare the written offer against the same security schedule. Record the valuation basis, net advance after fees, loan term and repayment or refinance exit. A short settlement deadline doesn’t remove the need to establish lawful use and a workable exit.

A self-managed superannuation fund (SMSF) adds separate ownership and use questions. The Australian Taxation Office’s SMSFR 2009/1 ruling requires business real property to meet a business-use test. Ordinary residential occupation can prevent the whole property meeting that test, subject to the ruling’s specific exceptions.

The business real property test affects related-party acquisition and leasing concessions. It isn’t a blanket prohibition on an SMSF buying mixed-use property from an unrelated seller. Refer the title, residential occupation and related-party arrangements to the fund’s qualified advisers before structuring an SMSF loan.

Assess Income and Servicing

Separate residential rent, commercial lease income and the borrower’s business income before calculating serviceability, the ability to meet repayments. Each stream needs its own evidence and lender treatment. A property’s accepted security classification doesn’t establish that all its income will count.

For residential rent, match the tenancy agreement to the rental statement or bank credits. For the shop, read the executed lease and variations alongside actual rent received. Record the lease expiry, options, rent-free periods and which party pays each outgoing.

If the borrower runs the business downstairs, verify business income through its financials and tax documents. A transfer described as rent between related entities doesn’t create a second source of group income. Reconcile the business’s rent expense with the property owner’s rent receipt to avoid counting the same money twice.

Macquarie’s 10 September 2026 residential guidelines show why rent needs separate treatment even on a residential loan application. They count 75% of verified residential rent and 65% of verified non-residential rent, according to the borrower’s ownership share. For residential expenses above 20% of gross rent, the calculation deducts actual expenses plus 5% from gross rent.

Those are Macquarie’s residential servicing rules, including income from other properties. They don’t establish that a mixed-use building qualifies as residential security or supply its commercial loan servicing method.

Vacancy removes current rent from the affected area. Use projected rent only where the selected lender accepts the evidence supporting it. A lease near expiry or a tenant already in arrears also needs to appear in the assessment, even when the headline annual rent looks sufficient.

Prepare an income calculation showing gross receipts, the lender’s adjustments and costs borne by the owner. Include insurance and unrecovered outgoings using the chosen lender’s method, and avoid deducting the same cost twice. The commercial property loan guide covers the broader borrower and business assessment once the mixed-use security route is established.

Plan the Valuation

Give the valuer the approved uses, title details and separate tenancy information so the valuation addresses the building being offered as security. Include current photographs and floor plans. Explain shared access and services, and identify any fit-out owned by a tenant.

The valuation needs to address marketability: who would buy the property and how readily it could sell. Comparable sales must reflect relevant use and location differences. Current rent, lease durability and owner-paid costs also affect an income-based assessment.

Alternative use requires evidence of what is legally and physically possible. A vacant shop that could become another dwelling needs planning and conversion evidence before that possibility supports a valuation assumption. A residential sale nearby doesn’t establish the same value for a shop-and-flat building.

Macquarie’s May 2026 Commercial Lending Guide requires an approved Business Banking panel valuer for its commercial investor route. Establish the selected lender’s valuation instructions before ordering a report. An agent’s appraisal doesn’t fulfil a requirement for a lender-appointed valuation.

Record disagreements in a short schedule showing the claim, conflicting document and resolution. If the purchase contract describes two dwellings but the consent allows one dwelling and an office, obtain the correct consent or legal explanation. Resolve the mismatch before presenting the accommodation as approved residential space.

Build the Mixed-Use File

Build the file with separate residential and commercial schedules, followed by the documents supporting each fact. Keep income and security conclusions distinct so the assessor can apply the relevant rules. Collect this evidence before submission.

• Current title, registered plans and documents governing easements or other restrictions.
• Dimensioned floor plans, approved uses and relevant planning or occupation documents.
• Photographs showing the dwelling, commercial premises, entrances, parking and shared facilities.
• Executed leases and variations, tenancy schedule, rent receipts and arrears or vacancy information.
• Borrower financials, tax records and evidence of other income and liabilities required by the selected route.
• Valuation instructions and report, with any discrepancies resolved in writing.
• Insurance schedule, premium evidence and certificate of currency meeting the lender’s requirements.

Building Insurance for Both Uses

Mixed-use property insurance must address the building’s residential and commercial occupation. Give the insurer or insurance adviser the full use schedule, including the shop’s activity and any vacancy. Record the owner, tenants, shared areas and interests the lender requires to appear on the certificate.

Ask the insurance adviser to explain the relevant building cover, exclusions and responsibilities under the leases. Match the insured address and property description to the security documents. Where a strata policy covers the building, identify what remains the owner’s or tenant’s responsibility.

QBE’s commercial property insurance information directs property owners to its policy terms and an insurance broker or authorised representative. A commercial policy label alone doesn’t establish cover for the upstairs dwelling. The insurance adviser must assess cover for the actual combination of uses.

Mixed-use property insurance cost comes from the quote for that building and its occupancy. Use the verified annual premium, including applicable taxes and charges, in the operating-cost allowance. Record who pays it under the lease and how much the owner can recover.

For the hypothetical shop and flat, allocating the entire premium to the shop would overstate recoverable costs if its lease covers only part. Match the recovery to the lease, then carry the unrecovered amount into the lender’s assessment. Submit once the property description, accepted security route, income calculation and insurance evidence agree.