During the pandemic, those who were able to work remotely continued working from home without any disruption. Now that the height of the virus has passed, a significant number of people have chosen to keep working from home or keep a hybrid schedule, splitting time between a home office and their workplace. In fact, according to The Office for National Statistics (ONS), the number of Britons working from home more than doubled in the period between October to December 2019 to January to March 2022, jumping from 4.7 million to 9.9 million.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Read the fine print
While working from home can give you a better work/life balance, there are some things you need to ensure you don’t breach the terms of your mortgage. Running a business from your home will require you to notify your mortgage lender because some providers won’t allow you to use your home for business.
If you don’t disclose this information and your provider becomes aware of your business, you might be required to repay the entirety of your mortgage. If you are simply working your job from your home, then it shouldn’t be an issue, but be on the safe side and either go over the terms of your mortgage or reach out to your provider for confirmation.
Residential versus commercial
If you are running a business from home, it is more likely you’ll need to make a change with your mortgage. If a major portion of your residence is used for work, whether it’s for something like stock, staffing, or for services, generally, if it takes up more than 40% of your property, most lenders will want to change you to a commercial mortgage rate as opposed to a residential mortgage. Commercial mortgage rates are more expensive than residential rates as they are classed as riskier products because the risk associated with a business is far greater than an ordinary homeowner.
There is another option, though. If you are set on running your business exclusively from home, then your lender could offer you a semi-commercial mortgage rate. These are used for properties that include both residential and commercial aspects. These include properties with flats on top of businesses such as pubs or restaurants. If you might be interested in this option, you will need to contact a commercial mortgage lender as opposed to a residential mortgage provider.
If running your business out of your home appeals to you, keep these things in mind:
- Let your lender know! There might be some limits on what kind of businesses can be run from your property or stipulations about what kind of mortgage will be required if you do so. Any changes made to the property in an effort to support the business may require lender approval.
- You might need to obtain more or different insurance coverage.
- Running a business from your home may increase the wear and tear on your residence, which could affect mortgage payments.
- Running a business from home may also impact your tax situation. Be sure to discuss this change with your financial adviser so they can ensure you’re taking advantage of any deductions or credits you’re entitled to.
Need more information about making your home your office?
Whether you’re already working from your home or are interested in making your home pull double duty, there are many financial implications to be aware of. For more information about mortgage requirements, tax liabilities, and more, get in contact with the experts at Dental & Medical Financial Services today.