Hi Wishes
If it's used to borrow for your family home and secured on it, it's a housing loan. As such, it is covered by the Consumer Credit Act. For example, they can't charge you early repayment penalties.
When people applied to the Irish Nationwide for a home loan, they were often asked to lump in a commercial property that they might own and thus it would be a commercial loan. They were charged higher interest rates, early repayment penalties and 20% penalty interest on arrears.
It's very odd that you are being asked to do that these days. Did the lender recommend this to you directly, or is a broker telling you that the lender recommended this?