Mortgage to buy Pub – how to Finance?

How to finance a pub buy? Mortgage for public house is a commercial mortgage or loan to be used specifically for the purchase of pub. Commercial mortgage lenders define a Pub as a business trading primarily in retail alcohol sales. Pub mortgages are available for purchasing either Freehold or Leasehold property.

Pub Mortgage Requirements

How to qualify for A Pub Mortgage? To qualify for this mortgage the revenue to product ratio of the business must be either:
100% alcohol sales
Primarily alcohol and partial food
Primarily alcohol and partial overnight accommodation
Primarily alcohol and partial overnight accommodation and partial food

Conversely, if the primary revenue of the business comes from food sales and partial alcohol sales, the business is classified as a restaurant. In this case applicants should apply for a restaurant mortgage.

What are the lending conditions for public house mortgages?

There are still opportunities to borrow money for the purchase or re-mortgage of a Public House. Mind that mortgages for pubs are available from both High Street and specialist lenders, for applicants with good and bad credit histories, mature businesses with strong accounts, or start-up businesses with no accounts. Options are also available for commercial mortgages on leasehold premises, although the length of the lease, and remaining years on the lease at the end of the loan period, is often a major determining factor in whether a Commercial Mortgage Offer will be forthcoming.

High Street Pub Mortgage options

Considering mortgage to buy pub the High Street lending criteria can be quite rigid, although there is some level of flexibility for larger purchases, or where the applicant has a strong track record in the Pub industry. Mortgage to buy Pub criteria are:

Typical maximum 80% LTV
Require Valuations (property and business)
Extended LTVs available (conditions apply)
Business Plans and accounts will be required
Additional security may be required (more here)

Additional options exist to build structured pub finance for public house refurbishment projects, or special situations. What are the High Street Mortgage Rates for pub financing? When granting commercial mortgages for pubs – rates amongst the banks vary, but start at around 1.5% – 2%, and can scale up to around 7% over base depending on the perceived risk of the venture.

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