Hotel Mortgages & Commercial Finance for UK Hotels
Commercial mortgage support for hotel purchases, refinancing and capital requirements—structured around the property, trading performance, borrower and purpose of the finance.
Built by property investors, for property investors. Start with the hotel and the transaction, then establish the realistic finance route.
Can you get a commercial mortgage on a hotel?
Yes. Hotels are commonly financed with commercial mortgages, but underwriting is usually more specialised than for a standard residential property because the lender may assess both the real estate and the hotel's ability to generate sustainable trading income.
A hotel is both a property asset and an operating business. That means a lender may look at the purchase price or valuation alongside historic accounts, profitability, occupancy, room rates, management experience, the proposed ownership structure and the amount of equity being contributed.
The right structure therefore depends on the complete transaction. A profitable established hotel, a first-time hotel acquisition, a refurbishment project and a hotel being refinanced can each require a different lender approach.
What can hotel finance be used for?
Start with what the funding needs to achieve. That makes it easier to distinguish a longer-term hotel mortgage from a short-term or refurbishment-led finance route.
Buying a hotel
Finance may be considered for the acquisition of a trading hotel. Lenders can assess the property, purchase price, available deposit, trading history, buyer experience and proposed operating plan.
Refinancing an existing hotel
An existing facility may be refinanced to restructure borrowing, approach a different lender or move onto finance that better reflects the hotel's current trading and property position.
Releasing capital
Where sufficient equity and affordability exist, refinancing may potentially release capital for a defined business or property purpose. Available borrowing remains subject to valuation and underwriting.
Refurbishment or repositioning
When significant works are required before the hotel is suitable for longer-term lending, a short-term refurbishment or bridging route may need to be considered before a commercial mortgage.
What hotel mortgage lenders may assess
Hotel lending is rarely decided from one number alone. Different lenders can place different weight on the property's value, the strength of the business, the people operating it and the proposed borrowing structure.
There is no universal loan-to-value, interest rate or trading threshold that applies to every hotel. Terms depend on the lender and the complete risk profile.
Property and security
Location, tenure, condition, marketability, bedroom count, facilities, configuration and the property's value as commercial security can all affect lender appetite.
Trading performance
Historic and current accounts may be considered alongside hotel operating measures such as occupancy, average room rate and revenue generated from available rooms.
Profitability and debt servicing
The lender may assess whether sustainable trading cash flow is sufficient to support the proposed mortgage payments and other financial commitments.
Operator and management experience
Relevant hotel, hospitality, property or business experience can form part of the assessment, particularly where the borrower is acquiring a new operation.
Commercial valuation
Hotel valuations can consider the property together with the trading business and its income-generating potential. The valuation basis will depend on the asset and lender.
Borrower structure and equity
The application structure, deposit or existing equity, source of funds, credit profile and wider financial position may all influence the available route.
Hotel properties a lender may consider
“Hotel” covers a wide range of property and operating models. A lender that is comfortable with one type of hospitality asset may take a different view of another, so the exact property should be clear from the beginning.
Tenure and operating experience can change the case
Freehold vs leasehold hotel finance
A freehold purchase includes the underlying property interest, whereas a leasehold hotel is subject to the terms and remaining length of its lease. Both the commercial property and the legal structure matter to lenders.
- Remaining lease term and lease conditions
- Rent and other ongoing property obligations
- Restrictions that may affect operation or assignment
- Property value and marketability
First-time hotel buyer vs experienced operator
Previous hotel ownership can make the operating record easier to demonstrate, but being a first-time hotel buyer does not automatically define the outcome.
- Transferable hospitality or business experience
- Management team and operating plan
- Financial strength and available equity
- Quality of the target hotel's existing trading information
What information helps with a hotel mortgage enquiry?
Exact requirements differ by lender, but presenting the property, hotel business and borrowing requirement clearly from the start can make the initial assessment more useful.
Property and trading information
- Property address and hotel description
- Purchase price or estimated current value
- Freehold or leasehold details
- Bedroom count and principal facilities
- Historic accounts where available
- Recent management information where available
- Relevant occupancy and room-rate information
Applicant information
- Personal or company borrower structure
- Identification and address evidence
- Relevant business or hospitality experience
- Personal or company financial information as required
- Deposit or equity position
- Source-of-funds evidence
Funding requirement
- Amount you want to borrow
- Purchase, refinance or capital-raising purpose
- Details of existing secured borrowing
- Proposed works or capital expenditure
- Target exchange or completion date
- Business plan or forecasts where relevant
You do not need every document before making the first enquiry. Start with the hotel, the amount required, your borrower structure and the target date.
Send the deal details ↗How the hotel mortgage process works
The exact stages vary by lender and transaction, but a properly prepared hotel finance case normally moves through a series of clear commercial, valuation, underwriting and legal steps.
Share the transaction
Explain the hotel, required amount, purchase or refinance position, borrower structure, available equity and target completion date.
Review lender fit
The property, trading position and applicant can be considered against lenders whose criteria may suit the proposed transaction.
Prepare the application
Relevant property, financial, business and borrower documentation is organised so that the lender has a clear picture of the case.
Valuation and underwriting
The lender assesses the application and valuation, raises any additional questions and confirms whether its lending requirements can be satisfied.
Offer, legal work and completion
After an acceptable offer is issued, the transaction proceeds through the required legal work and lender conditions before funds can complete.
Hotel mortgage, bridging or refurbishment finance?
The fact that the property is a hotel does not mean a commercial mortgage is automatically the correct product. Timing, condition and the intended end position matter.
Hotel commercial mortgage
Generally considered for a hotel that is suitable for longer-term commercial lending, including purchase and refinance transactions.
Commercial bridging finance
May be relevant where timing is central, a transaction needs to complete before longer-term lending is available or another defined short-term requirement exists.
Explore bridging finance →Refurbishment finance
May be considered where the hotel requires significant works, repositioning or improvement before an appropriate longer-term exit can be achieved.
Explore refurbishment finance →Hotel mortgage rates, fees and transaction costs
There is no single hotel mortgage interest rate. Pricing and available terms depend on the lender's assessment of the property, borrower, leverage, trading performance and overall transaction.
Lockwell Finance broker fees
All applications have a non-refundable booking fee of £599.
For commercial mortgages, the published completion fee is £3,499 for loans under £350,000 or 1% of the loan amount for loans over £350,000.
Booking fees are payable on submission. Completion fees are payable after the mortgage completes, or if you opt not to proceed with a mortgage offer that you previously accepted.
Hotel mortgage FAQs
Exact lender requirements depend on the hotel, its trading position, the applicant and the proposed borrowing structure.
How much can I borrow for a hotel mortgage?
There is no single borrowing limit or loan-to-value that applies to every hotel. The available amount may depend on the lender's valuation, trading performance, debt-service position, borrower strength, available equity and the wider transaction.
What deposit do I need to buy a hotel?
The required equity contribution varies according to the lender, property and borrower profile. A stronger deposit position can reduce leverage, but the lender will still assess the hotel and its ability to support the proposed borrowing.
Can I get a hotel mortgage as a first-time hotel buyer?
Potentially. Lenders may look at your wider business or hospitality experience, management arrangements, financial position, deposit and the strength of the hotel's existing trading record. Criteria vary between lenders.
Can I refinance an existing hotel mortgage?
Hotel refinancing may be possible where the property, valuation, trading performance and borrower meet the proposed lender's criteria. Start with the current mortgage balance, estimated property value, reason for refinancing and recent trading information.
Do lenders look at hotel occupancy and RevPAR?
Hotel lenders may consider occupancy, ADR, RevPAR and other operating measures alongside the accounts and profitability. The relevance and weighting of individual measures varies by lender and hotel.
Can a leasehold hotel be mortgaged?
Leasehold hotel finance may be possible, but the remaining lease term, rent, lease conditions, assignability, operating structure and valuation can affect lender appetite.
Can I finance a hotel that needs refurbishment?
Potentially, although a standard commercial mortgage may not be the appropriate starting point when significant works are required. A refurbishment or bridging facility may need to be considered before moving to suitable longer-term finance.
How long does a hotel commercial mortgage take?
There is no single completion timeframe. Timing depends on documentation, lender underwriting, the commercial valuation, legal work, property complexity and how quickly any outstanding conditions are satisfied.
What should I send Lockwell Finance first?
Start with the hotel address and type, purchase price or current value, amount required, borrower structure, available deposit or equity, purpose of the finance and target completion date.
Where available, include recent hotel accounts or trading information so that the commercial position can be understood from the beginning.
Tell us about the hotel you are buying or refinancing.
Share the property, required amount, borrower structure, available equity, trading position and target completion date. Lockwell Finance can then review the case and explain the most realistic next step.
Mortgage and finance availability is subject to status, affordability, valuation, lender criteria and underwriting. Your home or property may be repossessed if you do not keep up repayments on your mortgage or another debt secured against it.
The information on this page is general and does not constitute legal, tax or financial advice. The advice we give is not FCA regulated.