How to get a Hotel Mortgage

The “how to get FUNDED” guides are to help show you what we do and improve your chances of getting the commercial mortgage you need for your hotel business!

Why follow a “get a hotel mortgage” guide?

With more than 25 years arranging commercial mortgages for hotel purchases of all sizes, we’ve funded the impossible! When other brokers and banks have rejected cases our FUNDED methodology has helped us to gain a detailed understanding of cases on an individual basis and to arrange the best funding for their situation.

Before you apply for a hotel mortgage

  • Maintain your credit file – Although your business (or company) may be purchasing the hotel, your lender is still going to look into credit profile of those behind the business – so the partners or directors and major shareholders. If they have poor credit or a string of failed businesses behind them then that’s going to reflect in who will lend on the application and the terms on offer.
  • Have some form of deposit – Unlike a residential mortgage a hotel mortgage is generally to a maximum loan to value of 70% (although in some cases more will be available). That means that the applicant company or business owner might have a significant amount to find as a deposit and to cover the fees and costs of arranging the mortgage and the legal transfer of the property. There are exceptions to this, so please discuss with your broker. Some exceptions are;
    • Sitting tenants of a businesses who have an existing lease, especially where the applicant is showing a good track record with the business. We are often able to arrange a mortgage of up to 90% of purchase price in this situation.
  • Be able to afford the repayments – Your lender is going to want to know how you can repay the commercial mortgage, ideally you’ll be able to show that you can afford it already, but in some instances we can work on projections to prove it.

5 steps to hotel mortgage success;

1 – Formulate a Strong Business Plan:

A comprehensive and well-structured business plan is important when applying for a hotel mortgage.

Clearly outline your hotel’s concept, target market, income projections, and strategies for profitability.

Highlight your experience in the hospitality sector and showcase how you plan to make the venture successful.

The business plan does not need to cover hundreds of pages, but needs to be “as long as it needs to be” . So, if the hotel is successful already, identify what’s good and where it can be improved upon. If it’s struggling, what can you do to make it work?

2 – Understand Your Financials:

Lenders will closely scrutinize your financials, so ensure they are accurate and up-to-date. Include detailed financial projections, historical performance data, and a breakdown of operating expenses. Demonstrating a clear understanding of your hotel’s financial health will instill confidence in mortgage lenders.

Identify costs which are high or where savings could be made and highlight these in the business plan showing how you would fix each problem.

3 – Network with Industry Professionals:

Building relationships with professionals in the hotel and hospitality industries can provide valuable insights and potential connections for all sorts of problems.

Attend industry events, join networking groups, and seek guidance from experienced individuals to enhance your application’s credibility.

4 – Be Open to Different Financing Options:

Working with commercial mortgage experts, we understand the various financing options available for hotel finance. These could include traditional commercial mortgages, bank loans or alternative lending sources.

Each option has its own requirements and benefits, so we’ll work with you to assess which one aligns best with your needs.

5 – Negotiate Terms and Rates:

Don’t hesitate to negotiate with lenders to secure favorable terms and interest rate or work with a reputable business mortgage broker like who will do this on your behalf. A lower interest rate can significantly impact your repayment obligations over the life of the mortgage. Use your research and financial projections to make a strong case for better terms.

Remember that applying for a hotel mortgage is a meticulous process, and attention to detail is key. Following these tips can help us to improve your chances of securing the best financing for your hotel venture.

Getting your Hotel Mortgage Application started

When you are ready to get your hotel mortgage underway, you’ll need to provide us with quite a lot of information to get the application underway, this is likely to include the following;

  • Accounts for your business or the hotel you’re buying, to show affordability.
  • Projections if the accounts don’t show sufficient profit for affordability.
  • Bank statements to show your “conduct” for the last 3 – 6 months. Generally making sure that payments are not returned and there’s not a heavy reliance on overdraft.
  • Details of the property and a rationale for the purchase if that’s not already obvious.
  • For each partner, director or major shareholder;
    • Proof of identity – generally a copy of your passport or driving licence.
    • Proof of address – typically a recent utility bill.
    • A statement of Assets, Liabilities, Income and Expenditure. (That’s on our application form)
    • For some lenders, personal bank statements will also be required.
    • If you have any questions around your credit file then please provide a copy. We do not credit search our clients until the lender does so.

Why would we tell you how to get a hotel mortgage?

We’ll be successful with your application faster if the information we need is ready for us.

We’ll waste less time with the wrong lenders because we understand your case faster.

You’ll get the funding you need – when you need it!