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Understanding Hotel Mortgages
A hotel mortgage is a specialised commercial loan designed to finance the purchase, refinancing, refurbishment, or expansion of hotel properties.
Unlike standard commercial mortgages, these loans consider the unique operational dynamics of the hospitality industry, such as seasonal revenue fluctuations and occupancy rates.
These mortgages take into account the seasonal nature of revenue, occupancy rates, and the borrower's experience in hotel management.
Common Use Cases:
- Purchasing an existing hotel
- Refinancing to release capital
- Funding renovations or expansions
- Acquiring multiple properties for portfolio growth
Businesses that typically apply include independent hoteliers, property investors, boutique hotel owners, and larger hospitality groups.
Funding renovations or extensions:
If you’re renovating or extending a hotel, the type of finance you’ll need depends on the scale of the work. For lighter refurbishments, a standard commercial mortgage may be suitable. However, for more extensive works, such as structural changes, large-scale upgrades, or full redevelopments, you’ll likely need a development loan secured against a commercial asset. The heavier the refurbishment, the more likely it is that development finance will be required.
How does a hotel mortgage work?
Hotel mortgages are structured to accommodate the unique needs of hospitality businesses:
- Loan Types:
- Repayment Mortgage: Monthly payments cover both capital and interest.
- Interest-Only Mortgage: Lower monthly payments, with the principal repaid at term end.
- Loan Terms: Typically range from 5 to 25 years.
- Loan-to-Value (LTV): Usually between 60% to 75%, requiring a 25% to 40% deposit.
Example:
Purchasing a hotel valued at £1.2 million with a 70% LTV mortgage would involve:
- Loan Amount: £840,000
- Deposit: £360,000
- Interest-Only Monthly Payment at 6.5%: Approximately £4,550
Hotel mortgage interest rates, costs and fees
Interest rates for hotel mortgages vary based on several factors:
- Interest Rates: Typically range from 6% to 9% per annum, influenced by property location, borrower's experience, and financial strength.
- Arrangement Fees: Usually 1% to 2% of the loan amount.
- Broker Fees: May apply depending on the advisor.
- Valuation and Legal Fees: Costs vary based on property size and value.
- Rate Types:
- Fixed: Stable payments over the term.
- Variable: Linked to the Bank of England base rate or lender’s standard variable rate (SVR).
Eligibility Criteria for Hotel Mortgages
To qualify for a hotel mortgage, lenders will typically assess:
- Deposit: Generally 25% to 40% of the property value
- LTV: Often capped at 60% to 75%
- Trading history: Existing businesses may need 2-3 years of accounts
- Business plan: Essential for all mortgage applications, but especially for first-time operators or turnaround projects
- Experience: Previous sector experience is often required
- Creditworthiness: A good credit profile improves your chances and terms
- Property valuation: Professional valuation is needed to determine suitability
- Location and likely footfall: Lenders consider the property's location and target market (e.g. areas with strong business travel demand vs. seasonal tourist destinations) as this directly affects occupancy rates and revenue potential.
Who can get a hotel mortgage?
Hotel mortgages are available to a wide range of borrowers, although eligibility will depend on each lender’s specific criteria (see below). Common borrower types include:
- Experienced hotel operators
Individuals or businesses with a proven track record in running hotels or guest houses often seeking to expand or upgrade existing assets. - First-time hoteliers
New entrants with a strong business plan and relevant experience (e.g. hospitality, property management) who can demonstrate a viable operational strategy. - Property investors entering the hospitality market
Investors from the commercial or residential sector entering hospitality, typically expected to partner with experienced hotel operators. - Limited companies and partnerships
Professional structures used to acquire and manage hotels; lenders assess business finances and the track record of directors or partners. - Trading businesses purchasing their own premises
Hospitality businesses seeking to purchase the premises they operate from, reducing rental overheads and increasing asset stability.
How to apply for a hotel mortgage using Brickflow
Applying for a hotel mortgage through Brickflow is a streamlined process designed for speed and efficiency:
- Enter Project Details: Input your property's specifics, type, location, purchase price, intended loan use, and exit strategy into Brickflow's platform.
- Compare Loan Options: Instantly access and compare live offers from over 100 commercial mortgage lenders, reviewing interest rates, fees, loan-to-value ratios, and borrowing limits.
- Apply via Intermediary: With your intermediary (broker), submit applications directly through Brickflow to multiple lenders. Decisions in Principle (DIPs) can be received within minutes.
- Prepare Your Application: Ensure your application includes comprehensive details such as property information, your experience in property investment or development, intended use of the loan, a clear exit strategy, budget, and cash flow projections.
- Underwriting and Approval: Lenders assess your application, conduct valuations, and perform legal checks. Brickflow keeps you informed throughout this process.
- Receive Funds: Upon approval and completion of legal work, funds are released directly to your bank account.
Tips for Securing Approval
- Build a Strong Deposit: A larger deposit reduces lender risk and can lead to better terms.
- Demonstrate Experience: Showcase a track record in hospitality or partner with experienced operators.
- Provide Realistic Forecasts: Include conservative revenue projections and account for seasonal trends.
- Refine Your Business Plan: Clearly outline your target market, unique selling proposition, and operational strategies.
- Work with Specialists: Engage brokers familiar with hotel financing to navigate lender expectations.
Alternative funding options
A hotel mortgage may not be suitable if:
- You need fast funding for an auction or short-term project
- The property isn’t currently generating income
- You’re converting a building into a hotel
Alternative options include:
- Bridging loans: For fast purchases or renovation projects
- Development finance: For ground-up builds or major conversions
- Commercial refinancing: To release equity or restructure debt
How to find the best hotel mortgage for you
Brickflow is the easiest and most effective way to find the right hotel mortgage.
It’s the UK’s leading online comparison platform for commercial property finance, giving you access to live mortgage offers from over 100 lenders in one place.
Whether you're purchasing a new hotel, refinancing, or funding an expansion, Brickflow gives you full visibility of the market.
Why choose Brickflow?
- Instantly compare hotel mortgage products from across the market
- Access specialist lenders that traditional banks may overlook
- Connect with expert brokers who understand the hospitality sector
- Save time with a fully digital application process
If you're looking for the best hotel mortgage in the UK, Brickflow is the smartest place to start. Compare mortgages and speak to a specialist today
1. What is a hotel mortgage, and how does it work in the UK?
2. Can I get a mortgage to buy or renovate a hotel?
Yes, you can get a mortgage to buy, renovate, or expand a hotel in the UK. Smaller refurbishments may be covered by a standard commercial mortgage, while major works (like structural upgrades or conversions) often require development finance. Brickflow helps borrowers access both types of finance from over 100 lenders.
3. How much deposit do I need for a UK hotel mortgage?
Most lenders require a deposit of 25% to 40% of the property's value. The typical Loan-to-Value (LTV) ratio ranges from 60% to 75%. A larger deposit can improve your chances of approval and may help you secure better interest rates.
4. What are the current interest rates for hotel mortgages in 2025?
As of 2025, interest rates for hotel mortgages generally range from 6% to 9% per annum, depending on the property's location, your experience, and the financial strength of your business. Rates can be fixed or variable, and are subject to market changes.
5. How do I apply for a hotel mortgage through Brickflow?
You can apply via Brickflow by entering your project details into the platform. You’ll instantly compare live mortgage offers from 100+ lenders. With support from a broker, you submit applications directly, track progress online, and complete your deal faster with minimal paperwork.
6. Is a hotel mortgage the same as an Airbnb or holiday let mortgage?
No. A hotel mortgage finances a business with multiple rooms, staff, and services. In contrast, Airbnb or holiday let mortgages are for individual properties let on a short-term basis, often with less operational complexity. They have different lending criteria and mortgage types.
7. Can first-time hoteliers or property investors qualify for a hotel mortgage?
Yes, but lenders will assess your business plan, relevant experience (e.g. in hospitality or property), and management team. First-time operators are more likely to succeed if they partner with experienced hoteliers or demonstrate a clear operational strategy.
8. What documents do I need to apply for a hotel mortgage?
Typical documents include:
- 2–3 years of business accounts (if available)
- Financial forecasts and cash flow projections
- Business plan and exit strategy
- Personal and company ID
- Property details and a valuation report
Brickflow helps you upload and manage all documents in one place.
9. What are the best ways to increase your chances of getting approved for a hotel mortgage?
To boost approval odds:
- Build a strong deposit (25% or more)
- Show relevant hotel or property experience
- Provide realistic financial forecasts
- Present a clear, compelling business plan
- Work with a broker who specialises in hotel finance, like those available via Brickflow
10. What’s the fastest way to compare hotel mortgage lenders in the UK?
The fastest way is by using Brickflow, the UK’s leading comparison site for commercial property finance. In minutes, you can compare hotel mortgage products from over 100 lenders, assess interest rates and fees, and apply directly through the platform with a specialist broker.