Mixed Use Property Loans: How Lenders Split Residential and Commercial
Property Lending Hub
Mixed Use Property · Valuation · Deposit · Refinance
A shop with a flat above can look like a home purchase, a commercial purchase or both. For finance, the questions need to be separated: what is actually on the title, which valuation pathway can be used, how the lender treats the security and income, what the credit is for, and what happens if the valuation or finance timetable moves after you sign. This guide follows that customer journey from offer through settlement and refinance.
Quick Answer
A mixed use property is usually financed as commercial, because a shop and residence on one title sits outside the standard residential valuation scope. That sends the file to a commercial or specialist valuation and lending pathway. There is no Australian regulatory 50 per cent floor-area rule: APRA's separate prudential test uses predominant collateral value, while your actual LVR, deposit and structure depend on lender policy, the valuation and your circumstances. See commercial property loans.
If you are buying one, check the title, lawful uses and tenancy position before signing, and make sure the finance clause allows for the valuation and approval pathway the property actually needs. A borrowing pre-approval does not by itself approve this security.
Also called: shop top housing, a shop with a flat above, shop and residence, semi commercial property (a UK term rather than an Australian lending category).
| Where you are right now | What actually decides the next step | Do this first |
|---|---|---|
| Still looking, nothing signed | Title configuration, lawful uses, leases and whether the property needs a mixed-use valuation pathway | Check the title and actual occupancies before you make an offer, not just the agent's description. Read the pre-offer checklist |
| You have a borrowing pre-approval | Whether the proposed lender has assessed this particular property as acceptable security | Do not treat a borrowing limit as property approval. Read the pre-approval answer |
| Offer accepted, finance clause running | The valuation instruction, documents, access and the deadline written into your contract | Check the clause against the actual mixed-use valuation and approval pathway. Read the timing section |
| A home lender has already said no | Whether the security was outside the residential valuation or security policy rather than whether you failed serviceability | Find out what failed before making another application. Read the valuation section |
| You will run the business downstairs and live upstairs | Business serviceability, residential use, lawful occupation and the purpose for which the credit is provided | Separate the income, security, planning and credit-purpose questions. Read the owner-occupier income section |
| The shop is vacant or the lease is nearly finished | How the commercial component is valued without a long secure rent stream | Treat vacancy and lease expiry as valuation and serviceability issues, not as a problem the residential rent automatically offsets. Read the vacancy answer |
| The valuation came back short | Which component moved, why it moved and whether new evidence can change the report | Identify the source of the shortfall before deciding whether to add cash, negotiate, review or change lender. Read the post-valuation options |
| You already own it and want to refinance or split it | Whether separate titles actually exist and whether each proposed security is acceptable to the new lender | Check the registered title first. A proposed subdivision does not create an independent security. Read the title and refinance question |
What is classed as a mixed use property?
Mixed use property can describe a building or site that combines residential and commercial use. For this guide, the important lending case is one registered title carrying both uses, most commonly a shop at street level with a flat or apartment above it. If the shop and dwelling are already held on separate titles or strata lots, they are separate securities and the lending question changes. The first check is therefore the registered title, not the planning label or the real estate listing.
Three labels get attached to this kind of building and none of them means quite what a lender means, so it is worth separating them before anything else. Each mislabel changes the answer you get.
What should you check before making an offer?
Before you sign a contract for a shop with a residence above, try to establish the points that can change the finance before the clock starts running. This is a due-diligence checklist, not legal, tax or insurance advice.
- Title: are both uses on one registered title, or are there already separate lots that can be mortgaged independently?
- Lawful use: is the residential occupation actually approved, and does the commercial use match the approvals on the property?
- Commercial lease: who is the tenant, what is the remaining term, what options exist, what rent is passing and who pays the outgoings?
- Residential tenancy: is the flat vacant, owner-occupied or rented, and is the tenancy documented?
- Access and services: can the residence be used independently, and are access, utilities and common areas clear enough for the valuer and a future buyer to understand?
- Valuation pathway: has the property been identified as mixed use before you rely on a home-loan pre-approval?
- Contract timing: does the finance clause allow for the valuation, documents and lender assessment this property may require?
- Tax and insurance: ask your accountant or solicitor about GST and duty, and confirm with an insurer or insurance broker that the building is covered for its actual mixed occupancy rather than assuming a standard home policy fits.
A house in a mixed use zone is not a mixed use property
The current Australian Banking & Finance Industry Residential Valuation Standing Instructions, Version 4.1 effective 4 December 2023, list mixed use properties, with shop and residence as the example, as unsuitable or out of scope for the PropertyPRO residential valuation product. The same item expressly says this does not refer to residential properties in a mixed use zoning or home occupations. Mixed-use zoning alone therefore does not trigger this exclusion. Source: Australian Property Institute, ABFI Residential Valuation Standing Instructions V4.1, section 2.4, read 3 September 2026. This is an industry valuation instruction, not a lender credit policy.
Shop top housing is a planning term, not a lending one
Shop top housing is the Australian planning vocabulary for a dwelling above a shop, and it is the phrase most buyers will have seen on a listing or a development application. It describes what a planning instrument permits on the land, and what counts as shop top housing has been argued over in planning appeals, which tells you how precise a planning term it is. None of that reaches the lending question. A planning authority deciding that a building is shop top housing does not make the security financeable on a home loan, because the valuation exclusion described below runs off what the title carries, not off what the planning scheme calls it. Whether the dwelling can lawfully be occupied is a genuine and separate question, and it is dealt with in the owner-occupier section below.
Semi commercial is a British term
Semi commercial property and semi commercial mortgage are British mortgage-market vocabulary. They are used here occasionally, and they describe the same building, but there is no Australian lending category of that name and no Australian rule attaches to the phrase. It matters because searching in that vocabulary returns British answers to an Australian question, and the British market treats these securities differently. If that is the phrase you arrived with, the Australian equivalents are the ones in the line above.
Commercial residential premises is a tax term, not a description
The ATO uses commercial residential premises for hotels, motels, inns, hostels, boarding houses, caravan parks, camping grounds and establishments that provide similar services. It is a defined GST term for accommodation businesses, and it is not a way of describing a building that is part commercial and part residential, which is what the words sound like they mean. Source: ATO, Commercial residential premises and GST, page last updated 1 July 2021, read 3 September 2026. Treat it as a term of art to avoid, not as GST advice on your own purchase.
Is a mixed use property residential or commercial?
A shop and residence on one title is outside the standard PropertyPRO residential valuation scope, so it commonly moves to a commercial or specialist mixed-use lending pathway. That is a valuation-scope point, not a universal rule that every lender must label every mixed-use loan "commercial". Separately, there is no published tier one Australian rule that classifies mixed use by a 50 per cent floor-area line. APRA's prudential guidance says that where a loan is secured by multiple types of collateral, an authorised deposit-taking institution categorises the loan type by the predominant collateral value used as security. Source: APRA, Prudential Practice Guide APG 112, paragraph 17, guide dated June 2024, read 3 September 2026. That test governs regulatory capital categorisation. It is not the same thing as a lender's product, credit or valuation policy.
The definition underneath it runs the same way. A residential property exposure is an exposure where the predominant security is an immovable property that has the nature of a dwelling, and satisfies the laws enabling the property to be occupied for housing purposes. Source: APRA, Prudential Standard APS 112, effective 1 July 2025, read 3 September 2026. Again, a definition for capital purposes, not a statement of lender product policy, and it should not be stretched into one.
What follows in practice is that three different bodies apply three different tests to the same building, and none of them is the floor area rule. That is the comparison the scattered versions of this question never make in one place.
| What is being decided | Who applies the test | What the test actually is | Source |
|---|---|---|---|
| The institution's capital categorisation of the loan | APRA, through the prudential framework | Predominant collateral value used as security | APG 112 paragraph 17, June 2024, read 3 September 2026 |
| Whether a residential valuation can be used at all | The industry residential valuation instructions | Mixed use, shop and residence, is excluded outright | ABFI Residential Valuation Standing Instructions V4.1, section 2.4, effective 4 December 2023, read 3 September 2026 |
| State tax status in Victoria | Commissioner of State Revenue | Sole or primary use | Victorian Department of Treasury and Finance reform information sheet, read 3 September 2026 |
Three tests, three deciders, three different answers, and none of them is a floor area rule. The nearest thing to a published worked example is APRA's own, in APG 112 Attachment A: a loan of five hundred thousand dollars secured by a residential property with a collateral value of five hundred thousand and a commercial property valued at three hundred thousand is treated as a residential property loan, and reversing the two values reverses the answer. Read that with its limitation attached. Those examples describe a loan secured by two separate properties, not one mixed use title, so they are the closest guidance in print rather than an answer to this question. Source: APRA, APG 112, Attachment A, Examples 1 and 2, June 2024, read 3 September 2026. General mechanics for the commercial side sit in how commercial property loans work.
How is a mixed use property valued for a loan?
A shop and residence on one title cannot be completed under the standard PropertyPRO residential valuation product because ABFI Residential Valuation Standing Instructions V4.1 lists mixed use properties, using shop and residence as the example, as out of scope. Source: Australian Property Institute, ABFI Residential Valuation Standing Instructions V4.1, section 2.4, effective 4 December 2023, read 3 September 2026. The lender therefore needs another acceptable valuation pathway, commonly a commercial or specialist mixed-use instruction.
Where a mixed-use valuation provides a component analysis, the residential part is commonly tested against residential sales evidence while the commercial part is read through its lease, market rent and commercial evidence. The important point is that the valuer still has to reconcile one saleable security. Simply adding a stand-alone dwelling value to a stand-alone capitalised commercial value can overstate what the undivided title could actually realise.
| Valuation question | Residential component | Commercial component |
|---|---|---|
| Valuation basis | Comparable sales of similar dwellings | Lease, market rent and commercial sales or income evidence, depending on the property and instruction |
| What drives the value | What comparable dwellings have sold for, and whether the dwelling is separately usable | The lease in place, its remaining term and the quality of the tenant |
| What a vacancy does | Vacancy usually changes the income position more than the sales-comparison basis, subject to condition, legality and marketability | Vacancy can reduce income certainty and change the assumptions the valuer uses for market rent, incentives and reletting risk |
| What the lender instructs | The whole mixed-use security is out of scope for the standard PropertyPRO residential valuation product | The lender needs an alternative acceptable pathway, commonly a commercial or specialist mixed-use valuation covering the whole title |
What if the shop is vacant or the commercial lease is about to expire?
A rented residence does not automatically cancel out a vacant commercial component. The residential rent can still contribute to the file, but the lender and valuer separately have to deal with the missing or less-certain commercial income, the market rent for the shop, the expected reletting position and the value of the commercial component without a long secure lease.
A lease that is close to expiry is also different from a long committed income stream. Remaining term, options, tenant strength, passing rent against market rent and outgoings can affect how much confidence the valuer and lender place in the income. If the commercial space will be occupied by your own business instead, the assessment moves again because the lender may need to rely on the trading business rather than an arm's-length rent. That owner-occupier path is covered in the income section.
The two spokes worth reading alongside this are what a commercial valuer does under contract and specialised security and the valuation.
How long does a mixed use property loan take?
A mixed use property loan can take longer than a straightforward residential purchase because the property may need a different valuation pathway and more property documents before formal approval. There is no honest market-wide turnaround: timing varies by lender, valuer availability, property complexity, access and how quickly the requested documents are supplied.
Does pre-approval mean the mixed use property is approved security?
No. A borrowing pre-approval or conditional approval is an indication about borrowing capacity subject to conditions; it does not by itself establish that a particular shop-and-residence title is acceptable security. Final approval can still depend on valuation and other checks on the actual property. Major lenders' own published consumer guidance makes the same general distinction, that a pre-approval does not guarantee unconditional approval and that the property valuation forms part of final approval. That is the general market position rather than one lender's rule. For a mixed-use purchase, make sure the property has been identified as mixed use before relying on a borrowing indication when you negotiate the contract.
| What changes | Residential instruction | Commercial instruction on a mixed use title |
|---|---|---|
| Who can be instructed | A broad residential panel, often allocated automatically | May require a narrower commercial or specialist panel and manual allocation |
| Who pays for it | Frequently absorbed by the lender on a standard purchase | May be quoted up front and borrower-funded before the report is ordered, depending on lender and instruction |
| What the valuer needs from you | Access to the property | Access plus property and tenancy information such as leases, rent schedule, outgoings and any material vacancy details |
| What the report looks like | A short form report against comparable sales | Often a fuller commercial or specialist report addressing the mixed-use security and relevant components |
| What stalls it | Access, mostly | Missing lease documents, an unsigned or expired lease, or thin comparable evidence on either half |
| What it means for a finance clause | A short standard clause is usually workable | A short clause can become a problem if valuation or documents are still outstanding; extension rights depend on the contract and vendor agreement |
What documents should you have ready for a mixed use valuation?
The exact list is lender and property specific, but having the core property pack ready can stop avoidable delays. Common items include:
- contract of sale and current title or strata information
- commercial lease, options, variations and any rent review documents
- residential lease if the dwelling is rented
- tenancy schedule or rent roll showing current rents, expiry dates and vacancies
- commercial outgoings and who is responsible for paying them
- floor plans or area breakdowns where available
- access details and any relevant planning or occupancy approvals where the residential use is unclear
- business financial information if your own business will occupy the commercial part
Published Australian commercial lending guides ask commercial-property applicants for a tenancy schedule carrying lease dates, options, termination rights, rent, outgoings and related details, which is the same list in a different order. Treat it as the common shape of the request rather than a universal checklist, because the exact requirement is set by each lender and by the property.
Two practical consequences follow, and both are things you deal with before you sign rather than after. Request the lease and property documents at the same time as the contract, and negotiate the finance clause with the actual valuation and approval pathway in mind. Once the contract is executed, your rights to extend or terminate depend on the wording of the contract and the applicable law, so use your conveyancer or solicitor for the clause itself.
The question underneath all of this is usually about the deposit rather than the timetable. What happens to a deposit when a finance clause expires turns on the contract, on the state the property sits in, and on whether notice was given correctly and in time, so it is a question for your conveyancer or solicitor on your own contract and not one a general page can answer for you. What can be said is that the risk is real enough to plan around, and that the planning happens at offer stage because once the clause is running your options are controlled by the contract and any extension the vendor agrees to. The signing-to-settlement sequence generally is covered in the stamp duty settlement window, and the documentation path in lease doc commercial property loans.
What deposit do you need for a mixed use property?
The useful number on a mixed-use purchase is not just the deposit percentage. It is the total cash you need to reach settlement. That can include the gap between purchase price and the lender's assessed value, the contribution required under that lender's LVR policy, duty, valuation and legal costs, lender fees and any other transaction costs that are not funded.
There is no single Australian mixed-use deposit figure because lender policy and the security itself vary. APRA's prudential framework contains a separate capital calculation where commercial collateral included in the LVR of a residential property exposure receives a haircut, but that is not a borrower-facing mixed-use LVR rule. For the customer, the practical approach is to work from the actual valuation and the proposed lender's policy, then calculate the cash shortfall rather than importing a competitor's generic percentage.
| Step | What you are establishing | Why it moves the number |
|---|---|---|
| 1. Establish the value split | What each component is worth on its own basis, read off the commercial valuation rather than off the listing | The ratio between the two components is the input everything downstream runs on, and the agent's description is not that ratio |
| 2. Apply the proposed lender's security policy | What LVR or loan amount the lender will actually permit against this mixed-use security | Policy varies by lender, borrower and property, so the customer cash contribution cannot be known from a market-wide percentage |
| 3. Test the commercial tenancy | Whether the commercial space is leased, on what term, and to whom | A vacancy removes the income the commercial basis depends on, which moves the assessed value and therefore the cash you have to find |
| 4. Add what sits outside the loan | Duty, the commercial valuation fee, legal costs and any lender fees | These are cash on top of the deposit rather than funded by it, and the commercial valuation fee is normally payable before the report is even ordered |
| 5. Reopen the number after valuation | The gap, if any, between the assessed value and the price | The lend is set against the assessed value, not the contract price, so any shortfall lands as extra cash due on the same settlement date |
Do not assume lenders mortgage insurance will solve a mixed-use deposit shortfall. LMI is underwritten to insurer and lender security criteria, and a shop-and-residence title does not fit the ordinary PropertyPRO residential valuation pathway. Availability can differ by insurer, lender and the way the security is classified, so it needs to be confirmed on the actual proposal rather than treated as a general yes or no market rule.
There is one more reason the deposit does not behave like a residential one, and it is easy to miss because it is an absence rather than a rule. Lenders mortgage insurance is a residential product underwritten against residential security, and it is not generally available on a security the residential valuation product cannot be used on in the first place. On a house, mortgage insurance is the thing that lets a smaller deposit work. On a mixed use title that lever is usually not there at all, so the deposit is not simply larger, it is standing in for something that has been removed.
Rate margin and pricing sit outside this page deliberately. What a mixed use security does to pricing varies by lender and by file to a degree that no honest general figure exists for, and a number published without that caveat is a sales claim wearing a statistic's clothes. What can be said generally is that a mixed-use security can produce a different gearing outcome from a comparable residential dwelling because the valuation and security policy are different. That is the same starting point described in 80 per cent LVR on commercial property and commercial property loan deposits. The ratio itself is defined in the LVR glossary entry.
Can the residential part sit on a separate home loan?
A separately titled residential component can potentially carry its own home or investment facility, but separate title is only the first gate. The residential lot must also satisfy that lender's security and valuation policy. If both uses remain on one undivided title, two loan accounts do not create two independent securities: the lender can structure sub-accounts or facilities, but the mortgage can still sit over the whole title.
Where a separate facility is possible
- The dwelling is on its own strata or stratum title
- Each part can be sold and mortgaged independently
- The dwelling has its own separate access
- Services and metering are separated between the two uses
- Each title stands up to its own valuation basis
Where it is not
- One undivided title carrying both uses
- Access to the residence runs through the commercial space
- Subdivision is proposed but not registered
- The dwelling could not be sold on its own as it stands
- A cross-collateralised structure is being used to imitate a split
Can you refinance later and split the residential and commercial debt?
Yes, a mixed-use property can be refinanced, but refinancing does not turn one registered title into two independent securities. A new lender will reassess the current property value, title, leases or owner-occupier position, borrower serviceability and its own security policy. A stronger lease, established business trading, improved rent or a higher valuation can change the refinance position, but the title still controls whether the two components can be mortgaged and sold independently.
If a later subdivision or strata registration creates separate titles, the options can change because each lot can then potentially be valued, mortgaged and sold on its own, subject to lender acceptance. A proposed or unregistered subdivision does not do that yet. Where a genuine split is unavailable, the conversation is about facility structure rather than legal separation, and the trade-offs are set out in splitting security across two facilities and cross-collateralisation in commercial finance, with the term defined in the cross-collateralisation glossary entry.
How is the income assessed on each part?
Income assessment depends first on who occupies each part. A fully leased investment property presents two rent streams; an owner-occupied commercial component may present no arm's-length commercial rent at all and can shift the assessment towards the operating business. The same building therefore produces different serviceability files depending on whether you live upstairs, rent upstairs, occupy the shop, or lease the shop to somebody else.
What if you run your own business from the commercial part?
If your business occupies the shop, office or workshop, there may be no independent commercial rent for the lender to assess. The lender may instead need to establish whether the operating business can service the debt, while separately considering the residential component according to whether you live in it or receive residential rent. The property can be identical to a leased investment next door but the income evidence and loan-purpose analysis can be completely different.
| Who occupies the commercial part? | Who occupies the residence? | What the lender needs to understand |
|---|---|---|
| Your own business | You live there | Trading-business serviceability, your residential use, the credit-purpose split and whether the dwelling is lawfully occupiable |
| Your own business | Residential tenant | Trading-business serviceability plus verifiable residential rent |
| Arm's-length commercial tenant | You live there | Commercial lease income plus owner residential use; living upstairs does not by itself turn the whole security into a home-loan security |
| Arm's-length commercial tenant | Residential tenant | Two documented income streams with different lease terms, risks and assessment treatment |
What if the shop is vacant but the flat is rented?
A rented flat does not automatically carry a vacant shop. The residential rent remains relevant, but the commercial component still has to be valued and assessed with no current arm's-length commercial rent. Depending on the lender and borrower, attention can shift to market rent, reletting assumptions, the borrower's business income if it will occupy the space, and the overall strength of the security. The valuation effect is explained in the vacancy and lease-expiry section.
Which tenancy law governs each half
The two tenancies on one title are not governed by the same legislation, and that is a document question before it is a legal one. A residential tenancy and a retail or commercial lease sit under different Acts in every Australian state and territory, with different notice periods, different rules on outgoings and different termination rights. A lender assessing a mixed use security is reading both, and the two produce different kinds of certainty about the same building. Which Act applies to the flat above a shop on your particular title is a question for a commercial solicitor rather than something to settle from a general page. What matters for the file is narrower: both tenancies need to be documented, because an undocumented tenancy on either half is read the same way, as income the assessor cannot verify.
What follows from that is a documentation point rather than a policy one. If the commercial half is what carries the income, the lease is what carries the commercial half, and a file that arrives without it is asking the assessor to value an income stream from a rent roll line. How that read is done is set out in the lender lease read, and the income test itself in the commercial income test.
Can you live in the flat above your own shop?
You may be able to live in the residence above your shop, but ownership alone does not make the occupation lawful and living there does not settle the lending classification. Planning approval, valuation/security treatment and credit purpose are separate questions. If the dwelling is not lawfully approved for residential occupation, that is a planning and legal issue first. If it is lawfully occupiable, the lender still has to assess the mixed-use title under its own security and valuation policy. It is also where the vocabulary shifts: a building you live in is your principal place of residence, and people search for it in exactly those words, but a lender reading a shop and residence title does not stop treating it as commercial security because it has become somebody's home.
The lending side: living there does not make it a home loan
Moving into the flat does not bring the whole shop-and-residence title back inside the standard PropertyPRO residential valuation scope. The lender still needs an acceptable mixed-use valuation and security pathway. Living upstairs also does not by itself decide whether the National Credit Code applies; that turns on the predominant purpose for which the credit is provided. The purpose test is covered in the regulated credit section below.
The planning side: whether the dwelling can lawfully be occupied
Whether the flat can lawfully be lived in is a question for the local council and for the approvals already on the title, not for a lender and not for this page. Many older shop-top dwellings were built or converted under approvals that no longer match how the space is used, and a lender's valuer will note a dwelling that cannot lawfully be occupied. If the answer is unclear, it is a question for a planner or a commercial solicitor before the contract is signed, not after. The approval itself is defined in the development approval glossary entry.
Is a mixed use property loan regulated credit?
Whether a mixed use property loan is regulated credit depends on the predominant purpose of the credit, not on whether the security is labelled mixed use, residential or commercial. The National Credit Code applies where credit is provided wholly or predominantly for personal, domestic or household purposes, or to purchase, renovate or improve residential property for investment purposes, or to refinance credit provided for that purpose. Section 5 then defines the predominant purpose as the purpose for which more than half of the credit is intended to be used, or, for goods or services used for different purposes, the purpose for which they are intended to be most used. Source: National Consumer Credit Protection Act 2009, Schedule 1, National Credit Code, section 5, current compilation read 3 September 2026.
If more than half of the credit is for a business or commercial purpose, that can place the credit outside the Code. If the credit is predominantly for a purpose covered by section 5, the answer can be different even though the property is mixed use. Do not infer the legal regime from the lender's product label or from the building alone. This is general information about how the statutory test is framed, not legal advice on your particular transaction. The finance product itself sits on commercial property loans.
What does the split do to duty, GST and land tax?
A mixed use split changes when cash is needed for duty, GST and land tax, not only how much of it. Each of the three taxes reads the split its own way, on its own timing, and the one that catches people is not the largest figure but the one that lands earliest. This section deliberately carries no state-by-state figures or thresholds, because those change on their own schedules and a number carried here would be stale before it was useful. Check each against the live source at the time of your transaction.
Victoria is the one jurisdiction with a published worked example on exactly this point. Its commercial and industrial property tax reform applies a sole or primary use test to properties with a mixture of qualifying and non-qualifying uses, and gives a street level shop with a residence above as the illustration. Primary use is ascertained by the Commissioner of State Revenue by reference to the land or floor area of each use, the relative intensity and economic and financial significance of each use, and the length of time of each use. If the test says the property is qualifying, the tax applies to the entire mixed use property. Source: Victorian Department of Treasury and Finance, Commercial and Industrial Property Tax Reform, read 3 September 2026, with the administering authority's own guidance at the Victorian State Revenue Office, determining qualifying use. This is Victoria only and must not be read across to other states, which apply their own tests.
| The tax | What the split changes | Where to check |
|---|---|---|
| Transfer duty | Duty is assessed by the state on the value of what is transferred, so how a mixed use title is valued and characterised feeds the assessment. It falls due near settlement, which is the earliest of the three cash calls. | Your state revenue office, read at the time of the transaction. In Victoria, the State Revenue Office page on valuation of land for duty purposes |
| GST | The commercial and residential parts are not treated alike, and commercial residential premises is a defined term for accommodation businesses rather than a description of a part commercial building. The label you use changes the question you are asking. | The ATO material on commercial residential premises and GST, and the ATO GST and property material, read at the time of the transaction |
| Land tax and state property tax | Whether the property is taxed at all, and on how much of it, turns on a state test applied to the mixed use. In Victoria the sole or primary use test can bring the entire property in. | In New South Wales, Revenue NSW land tax. In Victoria, the Department of Treasury and Finance reform information sheet. Both read at the time of the transaction |
None of this is tax advice, and none of it tells you what to do. It describes how each tax reads a split so that you know which questions to put to your own adviser, and when. The wider comparison sits in commercial against residential as an investment.
Why do mixed use files get declined?
In the mixed-use files we see, one recurring decline driver is that the residential component does not stand up cleanly as an independently usable and marketable part of the security. Separate access, lawful residential occupation, comparable sales evidence, lease documentation and the overall saleability of the one title can all matter. Other files fail for completely different reasons, including borrower serviceability, lender security policy or the commercial tenancy, so the first job after a decline is to identify the actual failed test rather than assume every lender will reach the same answer.
From our broking, indicative
Across the mixed use files we have placed, the pattern is consistent enough to describe, though the numbers behind it belong to individual deals rather than to a published band, so they are not stated here.
- The two halves rarely support the same gearing, and the position that lands is a blend of the two rather than the better of them, which is why the deposit conversation usually has to be reopened.
- A mixed use file typically takes longer to reach formal approval than a straightforward commercial file, because the valuation has to be instructed on a commercial basis and reconciled across two components rather than run off one product.
- One of the most expensive avoidable mistakes we see is a finance clause negotiated before anybody has identified that the property may need a different valuation and approval timetable.
- What gets a mixed use file declined, in practice: no separate access to the residence; a dwelling that is unlettable or non-compliant; a commercial tenancy operating with no lease in place; a valuer unable to find comparable sales for the residential half; and a borrower structure that puts a family home into a commercial security without advice first.
Indicative only, based on deals we have placed, as at September 2026. Not a quote and not an offer. No figures are stated because none has been verified as a published band. Actual terms depend on lender policy and your circumstances at the time of application. Not financial advice.
What to do if the valuation came back short
The first thing to establish is which part of the valuation moved and why. A shortfall tied to the commercial component may involve vacancy, lease expiry, market rent, incentives or commercial evidence. A shortfall tied to the residential component may involve comparable sales, condition, lawful use or marketability. The remedy is different depending on the reason, so ask for the valuation rationale before deciding whether there is useful evidence to challenge.
From there the options are finite: put in more cash and reduce the loan against the assessed value, go back to the vendor on price, request a review with evidence the valuer did not have (a signed lease, a rent review, a comparable sale that settled late), approach a lender on a different valuation panel, or use the finance clause while it is still running. The last of those is the reason the clause length matters so much, and it is why it belongs in the negotiation rather than in the paperwork. A file that has already been declined elsewhere is walked through in what happens after a bank declines a commercial property loan.
One item on the decline list is worth stopping on. Putting a home into a commercial security is a decision with consequences well beyond the interest rate, and it is not a decision to make because a structure was convenient for one application. If that is the structure being put in front of you, take advice on it separately from the loan, and take it before the contract rather than after.
A mixed-use transaction is easiest to understand when the questions are kept separate. The registered title tells you whether the security can genuinely be split. ABFI V4.1 tells you that shop and residence is outside the standard PropertyPRO residential valuation scope. APRA's predominant-collateral-value test is a separate prudential rule. The National Credit Code asks what the credit is predominantly for. Planning law asks whether the residence can lawfully be occupied, and state revenue law applies its own tax tests. For the customer, those distinctions matter at every stage: before the offer, when the valuation is ordered, when cash-to-settle is calculated, if the valuation comes back short, and later when the property is refinanced or subdivided.
Key takeaway: identify the title, actual uses, occupancies and valuation pathway before you sign. Then match the finance clause, cash contribution and lender to the property that legally exists, not the way the listing describes it.Frequently Asked Questions
Mixed-use property can describe a building or site that combines residential and commercial use. For lending, the critical distinction is whether both uses sit on the same registered title. This guide focuses on one title carrying both, such as a shop at street level with a flat above. If the shop and dwelling are already on separate titles or strata lots, they are separate securities and the finance question changes.
A shop and residence on one title is outside the standard PropertyPRO residential valuation scope, so it commonly needs a commercial or specialist mixed-use valuation and lending pathway. That does not create a universal rule that every lender must label every mixed-use loan commercial. APRA's separate prudential test uses predominant collateral value for regulatory categorisation, not a 50 per cent floor-area rule. The general mechanics sit in how commercial property loans work.
No tier one Australian source states a 50 per cent floor-area rule for mixed-use property. APRA publishes a predominant-collateral-value test for prudential categorisation, while ABFI V4.1 separately excludes mixed use properties, with shop and residence as the example, from the standard PropertyPRO residential valuation scope. Those are different tests and neither is a market-wide 50 per cent floor-area rule.
Mixed-use zoning is a planning control, not a lending classification. ABFI V4.1 expressly says its mixed-use PropertyPRO exclusion does not refer to residential properties merely in mixed-use zoning or to home occupations. Mixed-use zoning alone therefore does not make an otherwise residential property out of scope under that item. What a particular NSW zone permits on your land is a question for the relevant planning authority.
There is no single Australian mixed-use deposit percentage. The useful number is the total cash required to settle: the contribution required under the proposed lender's LVR policy, plus any valuation shortfall, duty, valuation and legal costs, lender fees and other costs outside the loan. Work from the actual mixed-use valuation and lender policy rather than a generic market percentage. The wider starting point is covered in commercial property loan deposits.
Do not assume lenders mortgage insurance will be available on a mixed-use purchase. LMI is subject to insurer and lender security criteria, and a shop-and-residence title is outside the ordinary PropertyPRO residential valuation pathway. Availability therefore needs to be confirmed on the actual lender, insurer and security rather than treated as a universal yes or no rule.
There is no single Australian turnaround. A shop-and-residence title cannot use the standard PropertyPRO residential valuation pathway, so the lender may need a commercial or specialist valuer, a property inspection and more tenancy or property documents. Timing then depends on the lender, valuer availability, access, property complexity and how quickly documents are supplied. A short finance clause can become a problem if the valuation or formal approval is still outstanding.
What happens depends on the contract, the state or territory, the wording of the clause and whether any required notice was given correctly and in time. A general finance page cannot tell you whether your deposit is protected. The practical lesson for a mixed-use purchase is to negotiate the clause with the actual valuation and approval pathway in mind and speak to your conveyancer or solicitor before the deadline if finance or valuation is still outstanding.
Potentially, but separate title is only the first gate. If the residence is on its own registered strata or other separately mortgageable title, it may be able to carry its own home or investment facility if that lender accepts the security. If both uses remain on one undivided title, separate loan accounts do not create two independent securities and the mortgage can still cover the whole property. The structuring options are set out in splitting security across two facilities.
Ownership alone does not make a shop or a flat above it lawful to live in. If there is an approved residential dwelling above the shop, you may be able to occupy it, but planning approval and finance are separate questions. Living upstairs does not bring the whole shop-and-residence title back inside the standard PropertyPRO residential valuation scope, and the National Credit Code question still depends on the predominant purpose of the credit. Check lawful occupation with the relevant council, planner or solicitor.
Whether a mixed-use property loan is regulated credit depends on the predominant purpose of the credit, not the label attached to the security. Under section 5 of the National Credit Code, the predominant purpose is the purpose for which more than half of the credit is intended to be used. If more than half is for a business or commercial purpose the credit can fall outside the Code; if it is predominantly for a purpose covered by section 5, the answer can be different. This is a legal-purpose test, not a residential-versus-commercial valuation rule.
A mixed-use property can be refinanced, but refinancing does not turn one registered title into two independent securities. A lender can create separate loan accounts or facilities while still holding the whole title as security. A genuinely independent residential facility normally requires a separately mortgageable title or strata lot that the lender accepts. If subdivision or strata registration later creates separate titles, each component can potentially be valued, mortgaged and sold separately, subject to lender and legal requirements.
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