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How does working from home affect your mortgage? Expert tips and tricks

The latest data from the Office for National Statistics (ONS) has revealed that homeworking has more than doubled in the UK since 2019.*

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The ONS ‘Regional patterns in homeworking’ report found that between October to December 2019 and January to March 2022 the number of Brits working from home more than doubled from 4.7 million to 9.9 million.

While working from home comes with a host of handy benefits, the effects it could have on your mortgage aren’t often talked about. That’s why the experts at money.co.uk have put together a guide on how this modern way of working could affect your mortgage. 

Claire Flynn, mortgages expert at money.co.uk, said: “If you’re running a business from the comfort of your own home, the first thing you need to do is notify your mortgage lender. 

“If not, you risk breaching the terms of your contract, with some lenders prohibiting business use as part of the terms and conditions. In the worst case scenario this could result in you having to repay the whole mortgage immediately. 

“However, in most cases homeowners are simply doing their regular job from home. If that’s the case, and you’re just at a computer, then it’s unlikely this will cause a problem and your lender will probably allow you to continue with your residential mortgage. 

“You’re much more likely to need to make a change if a significant portion of your property is being used for business purposes. This could be the case if you sell products and have stock on the premises, or run a photography studio from your residence, among other things.

“Generally speaking, if more than 40% of the property is used for work purposes, whether that’s for storage, staff or something else, then most mortgage lenders will look to implement a commercial mortgage rate. 

“Commercial mortgage rates are more expensive than residential ones as the lender is deemed to be taking on a greater risk, with the possibility of the business owner going bankrupt, for example.

“Another option that’s applicable to some is the semi-commercial mortgage rate. These are used for properties that include commercial and residential characteristics. Examples include shops with a property on top or pubs that have a living space attached.

“In order to get a semi-commercial mortgage rate, you’ll need to contact a commercial mortgage lender rather than a residential provider.

Whatever mortgage you need, the process can be long and complicated. For a comprehensive guide on buying a home, use this money.co.uk guide: https://www.money.co.uk/mortgages/a-complete-guide-to-buying-a-home.”


About James Andrews

James has spent the past 15 years writing and editing personal finance news, specialising in consumer rights, pensions, insurance, property and investments - picking up a series of awards for his journalism along the way.

View James Andrews's full biography here or visit the money.co.uk press centre for our latest news.