Rangewell

Hotel Commercial Mortgage

Fund your hotel project with the right commercial mortgage to suit your needs. Learn more about hotel mortgages with Rangewell.

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Funding options

£

Tailored

  • Payments geared to your turnover
  • Adverse Credit – no problem
  • No Income Proof Required
  • Repayment and interest-only available

Finance For Property

  • Terms up to 20 years
  • £50,000 – No Maximum
  • Rates from 2% over base rate
  • Up to 80% Loan to Value available

Versatile

  • Answers for all types of challenges
  • Solutions tailored to your needs
  • Arrangements tailored to your circumstances
  • Assets, cashflow, growth capital

Talk to Rangewell - the hotel finance experts

Secure the right commercial mortgage for your hotel

At Rangewell we recognise your professional status, and we work harder to find you better solutions - which can include 100% finance for many of your needs.

Call us020 4525 5312
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Emailfundingenquiry@rangewell.com

Hotel Commercial Mortgages

Specialist hotel mortgages for new and experienced hoteliers

Find and secure the right commercial mortgage for your hotel project with Rangewell.

Table of Contents

A commercial mortgage is vital to the majority of hotel projects. As the core pillar of your capital stack, a mortgage is a significant long term finance product that typically covers a large chunk, if not the majority, of your hotel's value. Both freehold and leasehold hotel developments require mortgages - but often the type of mortgage, terms and amount all vary depending on a number of factors. For that reason, it's important for business owners to work with knowledgeable advisors to find and secure this type of loan.

So, if it's a hotel mortgage you need and you're ready to kick off your application - or you simply have some questions about the process - then get in touch with Rangewell and our helpful team will support you through the process and ensure the end result meets your needs both for now and the future.

Why do you need a commercial mortgage for your hotel?

A commercial property requires a significant upfront investment, typically this comes as a deposit and mortgage. There may also be other types of loans in the mix, such as hotel development finance or ongoing cash flow support like merchant cash advance.

A hotel mortgage is secured against the value of your property and is repaid on a long-term basis. Typically, this is between 3-30 years, however, each loan is different and your lender will provide with you a number of options available to you.

Unless you have the cash up front to purchase a hotel outright then you'll need a commercial mortgage. Finding the right product to suit your needs depending greatly on your application including the information you provide and your past experience in the industry. These factors alongside the wide variety of commercial mortgage products available on the market mean that applying for a hotel mortgage can be time-consuming and confusing without proper guidance and support.

Here at Rangewell, we work with hotel owners and developers from application stage through to the release of funds, and even when it comes time to refinance. As independent brokers, we have access to the whole of market including a number of specialist lenders who work with hotels of all sizes. 

So, whether this is your first hotel project or you require a mortgage for another addition to your portfolio, then speak to Rangewell today and begin your application the right way. Or, visit our comprehensive guide to learn more about hotel commercial mortgages.

How do hotel mortgages work?

Mortgages might be a familiar concept for both residents and commercial property owners, but hotel mortgages come with their own guidelines to consider.

When it comes to mortgaging a hotel, your lender will consider your application against certain criteria. This may include an assessment of your background in the hospitality industry, operational performance of any relevant businesses in your name, your hotel's projected performance and even any occupancy rates and other figures provided by the previous owner. The application process for a hotel mortgage is very in-depth as it is usually for a significant amount of money, even if you are only purchasing a small B&B or guesthouse then you will require a large sum from the lender. 

First-time buyers may be subject to even more stringent processes, as lenders determine their funding based on risk and if this is your first project of this type or scale then you may be seen as a bigger risk than an experienced developer. That's not to say first-timers can't secure a good commercial mortgage, however. It simply means that you need to ensure your application is the best it can possibly be and you have included a comprehensive business plan that shows you understand any potential risks and are taking measures to negate them.

Hotel bridging loans

Since the application process for a hotel mortgage may take a while, you may find it useful to tap into another type of business loan, such as a hotel bridge loan, to cover any short term financing gaps. To gain access to the best short term finance to keep your hotel purchase on track, speak to Rangewell's advisors today and we'll help to assemble a jigsaw funding package tailored to your needs.  

Hotel lending guidelines

Back on the subject of commercial mortgages, you'll need to make sure you have a fully comprehensive business plan that takes into account all aspects of your hotel business. This should include financial accounts, growth projects, operational structure and an overview of your sales and marketing strategy. Not only is this document important for you as a business owner, but it will also show the lender that you have taken the time to understand your market and you are entering this project on strong foundations. 

While we recommend speaking to one of our advisors about the specifics of your project, it's still beneficial for you to become acquainted with the questions that the lender might ask, such as:

  • Is this a new or existing hotel? If the latter, how long has it been operational for?
  • Will the hotel remain open or will you need to close for renovations?
  • What level of renovations or refurbishment is required?
  • How many staff are currently working at the hotel?
  • Will the commercial mortgage meet all of your finance requirements or do you require other funding to cover a shortfall or development gap?
  • What deposit can you afford? Remember, a hotel mortgage usually requires a significant deposit (around 40% or more).

Once the lender is well-acquainted with your application and has a full understanding of what you hope to achieve, they will determine whether you are eligible for a commercial mortgage and what terms they can offer.

To find out which commercial loans you can access and how it can best work for you, speak to Rangewell today.

Hotel mortgage rates

Commercial lenders see mortgages as a good investment as they are secured against a physical asset, however, there are other factors to consider to ensure you get the best rates. Often, the best mortgages rates are offered by the largest commercial lenders to the most experienced developers. However, even if you lack specific experience, a strong application and accompanying business plan can support your application and open the door to better rates for your hotel development.

Here are some factors that impact commercial mortgage rates: 

  • Your experience in the sector - whether you have delivered similar projects before or even worked as a lead within another developer's hotel project.
  • Your business plan - make sure to include as much information as possible about the hotel, including financial accounts and operational structure.
  • The economy and the lenders themselves - here are a lot of external factors that will impact what a lender is able to offer you at this time.
  • Past performance and occupancy rates - if you are buying an operational business, the hotel's past performance may impact the lates
  • Your investment - the capital you can put into the project, along with the capital stack of all finance in the hotel, will make a significant difference.

Since there are so many factors at play, it's important that you work with experts on your finance application to ensure you get the best possible rates for your project. Speak to Rangewell today to get started with your hotel mortgage application. 

Hotel commercial mortgages from Rangewell

From supporting with the application process through to determining which type of loan is right for you, we've got you covered. At Rangewell, we are finance experts, including commercial mortgage brokers, so we understand the challenges facing hoteliers applying for commercial mortgages in the current climate.

The hotel industry is always changing, so you'll need experienced advisors on your side to make sure you get the best possible deal for your hotel mortgage. Start your commercial mortgage application today, get in touch with Rangewell.


Last update: 29 September 2022

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Contact our team today to find out your options

Call us020 4525 5312
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Emailfundingenquiry@rangewell.com

Frequently asked questions

Have a question?

How do I get financing for a hotel?

Hotel mortgages will be assessed on a case by case basis, but typically the following factors will determine how favourable a lender will view a commercial hotel lending application.

Industry experience 

A lender will want to know how much experience you have, specifically working in the hotel environment; the more experience you have, the more favourable your application will be. 

If you plan to leave your hotel's day-to-day management to someone else, your lender will scrutinise your hiring strategy and may adjust your loan to value amount accordingly. 

The lender will also want to see that all the appropriate food hygiene and licenses are in place and up to date. 

Occupancy rates

The business's profitability will rely on the occupancy rate if the revenues per available room (RevPAR) and average daily rates (ADR) are positive for lenders.

Trading accounts

Most lenders are likely to want to see at least two years of trading history. 

Business and marketing plans 

Most businesses won't survive in an online world without a solid marketing strategy. 

Location

Location can plan a massive part in the success of a business. If your hotel is close to transport hubs, office buildings, and entertainment centres) then this could plan a significant factor in its profitability. 

Out of all of the things above, the experience could play the biggest party. The more knowledge you have in the hospitality field, the more you'll show you can influence profitability.

How much deposit do I need to buy a hotel?

For commercial hotel finance, most lenders will require a deposit of around 40%; some may require 30, very few will require 25%. But, again, they'll look a the strength of your business trading accounts, future profit, and the borrower's credit history to decide on the deposit amount.

How can I get a hotel with no money?

Secured Bank Loans 

Traditional bank loans may be able to offer practice loans to businesses that can meet their strict criteria. However, it can be challenging to qualify for hotel funding, especially in the first stages. Getting a lower interest rate and a higher amount may prove challenging. Still, for the entrepreneur starting out, it may be impossible to get a high credit score, which is essential for security against the loan. 

Crowdfunding

By advertising your desire to start up a hotel on crowdfunding websites, you'll stand chances of having to wait months for the funds to be gathered. In some instances, the project won't be funded at all. 

Private Investors

Seeking out a private investor is an excellent way to get hotel funding. While you can often get the funds you need quickly, investors will often want to have a say in the business, and this may not be ideal.

Business credit cards and overdrafts

If you're struggling to get a bank loan, then you might be able to access a business credit card or an overdraft facility. Most credit cards will have a limit on how much can be withdrawn, and often credit cards and overdraft facilities have limitations and high-interest rates.  

Business loans for medical facilities

At Rangewell, we can offer you brokered business loans for your hotel. In addition, we offer unsecured loans, so you won't be required to secure the funding your receive against any collateral. Opting for an unsecured business loan may suit smaller businesses just starting and can support you with the extra support and flexibility when you need it the most. It will help with expansion costs or simply aid you in the maintenance and upkeep of your business. 

Can I get a mortgage on a hotel?

It will be an excellent idea to speak to a specialist commercial mortgage broker who can look at the whole situation and provide solid advice for getting a commercial mortgage for a hotel.

Speak to Rangwell to learn about your hotel loan options. 

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