Commercial Mortgages for Hospitality Businesses: Pubs, Hotels & Restaurants

A hospitality commercial mortgage is not assessed the way a standard property loan is. The lender who backs a well-run pub or hotel is almost always a trading-property specialist, not a high-street bank, because the valuation method is different from the outset. Instead of pure bricks-and-mortar, they use fair maintainable trade (FMT): the sustainable turnover a competent operator could achieve at that site. That figure drives an EBITDA multiple, which in turn sets the lending ceiling. A pub doing £800k gross turnover with sensible margins can support more debt than its vacant possession value suggests, and a good specialist lender knows that.

What this means in practice: if the business is trading well and you have two to three years of accounts that show it, you are not just buying a building. You are borrowing against a proven income stream. As a broker, we place these cases with lenders who run hospitality credit teams, people who have read enough wet-led pub accounts to know the difference between a seasonal dip and a structural problem. The deposit requirement is typically 25 to 35% of the purchase price, term up to 25 years, with fixed or variable rates depending on how much certainty you want in the monthly payment.

One thing no broker can promise is the rate. The lender decides that, based on the trading accounts, the site, the operator's experience, and the loan-to-value. What we do is put the case to the right lenders first time, rather than burning your time with banks who do not touch licensed trade.