Commercial Mortgages for Hospitality Premises
Finance your restaurants,
hotels, and guest houses
What is a commercial mortgage for hospitality premises?
A commercial mortgage for a hospitality premises is a loan that allows you to purchase, refinance, or renovate properties like:
- Bed & Breakfasts (B&Bs)
- Guest Houses
- Hotels
- Restaurants
Due to the nature of these types of businesses, your lender will consider seasonal income, occupancy rates, and industry experience when evaluating your mortgage application.
How much deposit do I need?
Similar to other types of commercial mortgages, most lenders require you to provide a 25-40% deposit. This will depend on the lender and the perceived risk of the hospitality business. Our expert brokers will source the right lender for you.
What types of mortgage products are available for hospitality premises?
Lenders offer two options of term mortgages for hospitality properties:
Repayment: monthly capital and interest repayments. At the end of the mortgage term, you will have repaid all the debt.
Interest-only: monthly repayments of only the interest charged on the loan. This option typically has a lower monthly repayment and is used to increase cashflow flexibility. At the end of the mortgage term, you will still owe the original amount you borrowed to purchase the property.
The typical terms include loan durations of 5-25 years.
What do lenders look for?
Lenders will be looking for several factors that could all help strengthen your mortgage application, including:
- Strong trading history and accounts (usually 2-3 years of financials)
- Experience inhospitality or business management
- Property location and footfall
- Target market (e.g., tourist or business clientele)
- Debt-to-earnings before interest, taxes, depreciation, and amortisation (EBITDA) ratio to assess financial health
- Reputation and online reviews of the property
- Seasonal profits projections
The hospitality sector post-COVID
Both the hospitality and retail sectors struggled significantly in the wake of the COVID-19 pandemic. Whilst the high street has seen diversification opportunities in terms of commercial to residential conversions, there’s been less focus from the government on revitalising the hospitality sector.
Consequently, many lenders are acting more risk-adverse towards lending in the hospitality sector. Therefore, it’s more important than ever to work with a broker if you’re interested in investing in this industry. Discuss your property finance plans with one of our experts here.
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Why choose MFB for your commercial mortgage?
- With over 35 years’ experience, we’re the experts in commercial finance
- Our team are all bank-trained in this sector, giving us the expertise we need to find the best solution for you
- Our longstanding relationships with leading commercial mortgage lenders mean we’ll find you the best deal on the market
- Our team are all experts in their field and understand the market’s complexities
Meet your mortgage makers.
Talk to a commercial mortgage broker
We handle all types of commercial mortgages, from commercial investment and owner-occupier to semi-commercial. Our expert commercial mortgage brokers are eager to help with your future aspirations. Just get in touch through our channels.
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