Commercial Property: Hotels

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Commercial Property: Hotels

Applying for a commercial mortgage for a hotel is not as simple as applying for a residential mortgage where the lender will be mostly interested in the applicant's salary.

Usually a lender can be willing to lend up to 75% of the total value of the business, leaving a substantial 25% as a deposit. There may be some flexibility if borrowing with the support of a business or relationship partner.

A loan application for a hotel will require from an applicant a comprehensive business plan, detailing why and how the business will work. Typically, a lender will ask for a business plan to address:

• Location for example how near the property is to a strong tourist centre.
• How close it is to major main roads for ease of access.
• If it is an existing business, the lender will want to know how successful the business has been, and how to build on or improve on this success.
• A full set of accounts for at least three years
• The existing state of repair of the property and how much might be needed to spend in addition to meet minimum standards of comfort.

Any application will benefit hugely from time taken to present the business proposal well, clearly laid out with a succinct plan showing attention to detail and ways to develop the business. Any loan is based on confidence in the applicant and their business plan. Lenders simply want assurance that the business can really work.

Depending on the business, running a guest house or hotel can be personally tax efficient as many of the costs would be tax deductible.

If you are looking to borrow money for any type of property for any purpose, or for business or mortgage advice, please complete a Mortgage Enquiry Form and we will arrange for one of our specialist mortgage advisers to contact you. Alternatively, you can call us on 0845 108 0505.