Ascot Mortgages is one of the UK’s experts in arranging commercial mortgages for our business customers, whether they are acquiring new businesses, or re-financing existing ventures.
Securing commercial mortgages for restaurants, hotels and pubs requires a great deal of care and experience in the commercial mortgage market as lenders may apply stricter lending criteria and demand lower loan to value ratios than some other types of commercial mortgages. Understanding what the lenders are looking for, and what information we can use (if any) to ensure the application is accepted with favourable terms is one of our key priorities.
Ascot Mortgages utilise our in-depth knowledge of the commercial mortgage products available, together with our vast experience gained by working with the commercial lenders, to find and secure the most suitable funding solution for you.
Time is precious to everyone, but especially for our customers who need a commercial mortgage. Often clients are running a business and looking to move to bigger premises, or are looking to move from rented to owned premises, meaning that they are simultaneously running a business and attempting to arrange a mortgage. Ascot Mortgages can save you the hassle of trying to do both these tasks by finding a mortgage that suits you.
For clients wishing to borrow money to buy a pub, they are often buying the business, any fixtures and furnishing, and the goodwill of the business, if the pub is bought as a going concern. Due to this the amount that lenders will finance is often over fifty per cent of the value of the business, although this depends on an individual’s accounts.
Very occasionally it is possible to arrange a commercial mortgage for a pub without accounts, such as if you have a fifty per cent deposit and an outside income that will be maintained, but this is the exception and not the norm. There is also often the option to receive ‘top up’ funding from the brewery and some people use their house, or other freehold property, as collateral security, in which case there is often the option to borrow the full price of the business.
For clients wishing to get a commercial mortgage for a pub there is often the option with many lenders to have an interest only period of repayment for the first twelve months, and mortgages can usually be taken over 15 to 25 years. It is common to find that mortgages can be repaid early, or in lump sums, without penalty. It is important to know the accounts, and financial strength, of the business that you intend to buy as this can be important in negotiating the best rate for your mortgage. Again using a broker like Ascot Mortgages means that you can rest assured that we will do this for you.
Many clients are attracted to the idea of buying a hotel, whether as a retirement venture or a new career. There are over 50,000 hotels in the UK* and so there is a lucrative market in providing commercial mortgages for these clients.
Often mortgages are available not only for purchasing but also for refinancing, debt consolidation, and refurbishment of the hotel. Due to the amount of hotels, and the attractiveness of buying one, lenders are typically keen to see a business plan with clear forecasts of profit. In addition lenders would want to see some, if not all, of the following: proof of identity; three months’ personal bank statements; three months’ trading bank statements; a business plan; and proof of experience. These variables, like with a pub, often determine the LTV ratio of your mortgage offer.
For clients wishing to buy a hotel, the repayment options are numerous. There is the option to have fixed rate or variable loans, and also the chance to pay back over a period ranging from 15 to 25 years. The important thing is, like with a pub, to have a clear understanding of why you believe that the hotel you are buying it profitable and to have a clear business plan which will clearly show lenders how you intend to meet the mortgage repayments.
*According to The Catering and Hotel Keeper Report published on their website.
Restaurants, guest houses and B&Bs are another popular option. The rise in demand for these freehold properties has meant that lenders are generally happy to lend to clients wishing to open a guest house, or B&B, because they provide good security. The LTV ratio of this sector has increased because lenders also believe that guest houses have strong residual residential value, and so it is often possible to secure high amounts of money through this type of mortgage. Although it varies across lenders, clients typically could expect to achieve 70 -75 per cent LTV, with borrowing terms across 15 to 25 years.
Like all commercial mortgages there are variables that may impact on how much you can borrow. Buyers with cash deposits of over thirty per cent are particularly attractive to lenders as are those with additional security, such as a mortgage-free home or other business. A business plan, some experience of the industry, and a good credit history also help clients to get the best mortgages. Like lenders for pubs and hotels, mortgage providers like to see good account records, or projections of income that is based on realistic criteria. The same criteria applies to applicants who wish to re-finance their mortgages, whether to consolidate debts or achieve a mortgage at a lower rate, or move a mortgage onto a fixed rate.
Whatever your lending needs, Ascot Mortgages are the first port of call in ensuring that you get the best advice and options for your situation. It is easy to get bogged down in the details of mortgage applications and products, but Ascot Mortgages can do that for you. In addition our great relationship with lenders means that we can match you to the right lender, saving you wasted applications that might taint your credit file.
The Financial Conduct Authority does not regulate some forms of Commercial Mortgage