Mortgages for Pubs and Bars

06 Apr 2020

Mortgages for Pubs and Bars

Commercial Mortgage Lending for Pubs & Bars 

Specialist mortgage brokers such as the team at Revolution Finance Brokers can offer optimal lending for investments in bars and pubs. These are available to experienced business owners and new businesses alike. 

CAMRA figures indicate that there are around 50,000 such premises in the UK and whilst trade fluctuates, the market continues to be active. We have years of experience in securing mortgage lending in this sector!

Sector Experience

Many lenders consider experience running a similar business essential. Established business owners with at least two years experience and a successful track record are easier for lenders to approve since they have demonstrated adaptability to changes in the market. 

Our lending offers span specialist and mainstream lenders, and we can advise on the best options for your circumstances. We always recommend considering new products on the market, as your existing lender may not be the most competitive. 

For new business owners, being able to demonstrate management and leadership skills, as well as experience in the sector outside of business management, is important. 

Securing mortgage lending for dormant premises usually requires a period of refurbishment, and a more expensive bridging loan is a common option to assist with the development costs. This short-term lending is easier to secure, however, the lender will need to know the details of the refurbishment period and the longer-term business plan. 

Trading History

To fund the acquisition of an ongoing business, any lender will require access to the financial records to assess viability. 

Whether the lending is to purchase the leasehold or a freehold property, a minimum of three years financial accounts are required. This allows the lender to calculate an adjusted net profit figure, against which they can generally lend up to four times.

Selecting an Investment

  • Freehold: Many lenders prefer to lend against a well-established freehold business in a prime location 
  • Leasehold: Leasehold premises are considered, but may require security against the lending. Other options where security is not available include Enterprise Finance Guarantee Loans 
  • Brewery owned: Pubs linked to a brewery, rather than independent, can be harder to finance since the brewery will own the freehold and will usually not be willing to sell this. The business will also be tied into any cost increases imposed by the brewery
 

Mortgage Rates

Indicative mortgage rates for investment into a pub business are:

  • Interest starting at 2.7-4.5% over base rate 
  • Arrangement fees from 0-2% of the loan value
  • Loan terms of up to fifteen years combining capital and interest repayments
  • Longer terms of up to twenty years for strong established businesses, or investors with a large deposit available
  • Loan-to-value of around 55-70% with a large variance depending on the valuation of the business as a going concern 
 

The Mortgage Application Process

Generally, applications take between two and four months. 

To get your application underway, and analyse the market for the best option for your investment, we will need:

  • Financial accounts for the last 2-3 years for the pub being purchased
  • Your background experience to support the application
  • Personal bank statements for the last six months
  • An assets and liabilities statement
  • Your proof of address and ID
  • Management information against the business
  • VAT returns for the last four filing periods 
  • Any supporting information about the business and property

Contact us now to discuss your personal options, Revolution Finance Brokers specialise in commercial and residential finance in Essex, Kent, London and Hertfordshire.

webmaster

Author

Almas Uddin

Related Posts

26 Jan 2022
How Does a Remortgage Application Work?

Most homeowners know that remortgaging means switching a mortgage from an existing lender over to a new deal. However, the process isn't always obvious. If you're on a fixed-rate deal, you'll want to get ahead of the end of the term to avoid being shuffled onto a higher standard variable rate where your interest costs will undoubtedly ..

17 Dec 2021
Understanding Lender Risk on First-Time Buyer Mortgages

Finding a great mortgage as a first time buyer can feel like an uphill struggle, with a larger proportion of applicants being turned down than a year ago. Around 20% of first-time mortgage applicants are rejected, usually because of the lender risk associated with their loan. Today, Revolution Brokers explains the highest risk facto..

28 Oct 2021
Pros and Cons of First Time Buyer Buy to Let Mortgages

Investing in a rental property can be an excellent way to get onto the property ladder and earn an income. However, if you haven't owned a residence before, you might find that a mainstream bank will automatically turn you down for a buy to let mortgage. In today's guide, the Revolution Brokers team explains how you can become a ren..

FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.