Obtaining A Pub Mortgage

Overview

A Pub mortgage is a commercial mortgage or loan to be used specifically for the purchase or re-mortgage of a Public House.

Pub mortgages are available for purchasing either Freehold or Leasehold property.

Commercial mortgage lenders define a Pub as a business trading primarily in retail alcohol sales.

Qualifying For A Pub Mortgage

To qualify for this mortgage the revenue to product ratio of the business must be either ...

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.

Public House Lending Conditions

Some mortgage lenders have tightened their lending criteria in recent months (2007) following the introduction of new legislation from the UK Government concerning Smoking Bans and Government led encouragement to curb binge drinking.

However, there are still opportunities to borrow money for the purchase or re-mortgage of a Public House.

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.

Commercial Mortgage Lender Options

Self-Cert Pub Mortgages

Budgetary Self-Cert Mortgage Rates:

Around 2% above base with accounts, true self-cert more like 4% over base with reasonable credit history, and 6% over base if you have CCJs or a satisfied Bankruptcy on your credit file.

High Street Pub Mortgage

The High Street lending criteria can be quite rigid, although there is some level of flexibility for larger purchases (chains etc), or where the applicant has a strong track record in the Pub industry.

Mortgage Criteria

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

Additional options exist to build structured pub finance for Pub refurbishment projects, or special situations.

Budgetary High Street Mortgage Rates

Rates amongst the Banks vary for pub mortgages, but start at around 1%-1.5% over Bank of England Base Rate, and scale up to around 6% over Base depending on the perceived risk of the venture.