Pub mortgages

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Mortgages for pubs

When it comes to entering the hospitality industry, buying a pub is an exciting and potentially lucrative opportunity. Whether you’re an experienced publican looking to expand your portfolio, or a first-time owner ready to dive into the vibrant world of hospitality, securing a pub mortgage is often a critical step in the journey. Understanding the ins and outs of commercial mortgages, especially those specific to the UK pub sector, can make a significant difference in your business venture’s success.

This guide will delve into the complexities of pub mortgages in the UK, tackling key topics such as eligibility, application requirements, differences between freehold and leasehold options, and comparisons between pub and restaurant mortgages. Whether you’re a UK resident or a foreign investor, this information will shed light on the process of financing your dream pub, offering a roadmap to navigating the lending landscape. Let’s start your journey towards becoming a successful pub owner.

What is a pub mortgage?

A pub mortgage is a specific type of commercial mortgage loan used to purchase or refinance a pub, bar, or similar type of licensed premise. Similar to other types of mortgages, a pub mortgage allows the borrower to pay back the loan, along with interest, over a set period of time.
In the UK, these mortgages are typically offered by banks, building societies, and specialist commercial lenders. They are designed to suit the unique needs of pub owners and operators and take into account factors like the profitability of the business, the borrower’s experience in the industry, and the location and condition of the property.

The terms of a pub mortgage can vary, but it’s common for these loans to last between 15 to 25 years. The amount you can borrow typically depends on the pub’s income and profitability, your business plan, and your credit history. It’s also usual to require a significant deposit, often in the range of 30-40% of the property value.

It’s important to note that getting a pub mortgage can be a complex process and often requires a comprehensive business plan, proof of income, and possibly valuations or surveys of the property. As with all types of loans, it’s advisable to seek professional advice before applying for a pub mortgage.

Can you get a mortgage to buy a pub?

Yes, you can get a mortgage to buy a pub. These are typically referred to as pub mortgages or commercial mortgages.

When you apply for a pub mortgage, lenders will look at various factors to determine your eligibility. It’s important to get professional advice before taking out a pub mortgage. The process can be complex, and there are many factors to consider.

How to apply for a pub mortgage

Applying for a pub mortgage in the UK involves several steps and can be a complex process. Here’s a basic guide on how to do it:

Assess your finances: You need to know how much you can realistically afford. Remember, besides the mortgage, you’ll have additional costs like the deposit, stamp duty, legal fees, and valuation fees. You should also consider the operating costs of the pub itself.

Check your credit score: A good credit score is essential for getting a mortgage. If your score is low, you might want to consider improving it before applying for a pub mortgage.

Prepare a business plan: Most lenders will want to see a solid business plan before they approve a mortgage for a pub. The plan should include details about your experience in the industry, how you plan to make the pub profitable, and projections for future earnings.

Get professional advice: Applying for a pub mortgage can be complex. It can be helpful to seek advice from a specialist commercial mortgage broker who has experience with pub mortgages. They can guide you through the process, help you find the best deals, and increase your chances of approval.

Find a lender: Once you’re ready to apply, you’ll need to find a lender who offers pub mortgages. This could be a bank, a building society, or a specialist commercial lender.

Apply for the mortgage: Each lender will have their own application process. Typically, you’ll need to provide personal information, financial information, details about the pub, your business plan, and possibly a valuation of the property.

Property appraisal and survey: After your initial application, the lender will likely arrange for a professional valuation of the property. They might also require a full survey to assess the condition of the building.

Mortgage offer: If your application is successful, the lender will make a formal mortgage offer. This will detail the terms of the mortgage, including the interest rate, the repayment schedule, and any conditions.

Legal process: Finally, you’ll need to engage a solicitor to handle the legal aspects of buying the pub, such as transferring the property title and arranging the mortgage deed.


What are the eligibility criteria for applying for a mortgage for a pub?

Eligibility criteria for a pub mortgage in the UK can vary by lender, but here are some common factors that most lenders consider:

Experience: If you have experience in the hospitality sector or in managing a pub, you may be seen as a lower-risk applicant. For those new to the industry, having a strong, comprehensive business plan can also be helpful.

Credit history: As with all types of loans, a good credit history is generally preferred. If you have a record of bankruptcy, County Court Judgements (CCJs), or defaults on other loans, this could impact your eligibility.

Deposit: A significant deposit is typically required for a pub mortgage. This can often range from 30-40% of the property value, although the exact percentage can vary.

Business plan: A detailed business plan is often essential. This should include projections for income and expenses, a market analysis, and a plan for managing the business effectively.

Profitability of the pub: The pub’s current and projected profitability are usually major factors. The lender will want to see that the business can generate enough income to cover the mortgage payments.

Affordability: Lenders will assess your overall financial situation to ensure you can afford the mortgage repayments. This could involve assessing your income, expenses, and any other outstanding loans or commitments.

Value and condition of the property: The lender will likely require a professional valuation of the property. The condition of the property may also be a factor, as significant repair or maintenance issues could affect the property’s value.

Legal requirements: You’ll need to demonstrate that you can meet all the legal requirements for running a pub, such as obtaining the appropriate licenses.

How do pub mortgages work?

A pub mortgage, a type of commercial mortgage, works somewhat like a residential mortgage but with some key differences. It’s a loan taken out to purchase or refinance a pub or a similar licensed premise. Here’s a basic overview of how they work:

Loan to value (LTV): Pub mortgages typically have a lower Loan to Value ratio compared to residential mortgages. This means you will need a larger deposit, typically around 30-40% of the property’s value.

Terms: Pub mortgages usually have terms between 15 and 25 years, but this can vary depending on the lender and the specific circumstances of the borrower.

Rates: Interest rates for pub mortgages are often higher than residential mortgages due to the increased risk associated with commercial properties. The rate you’re offered will depend on factors such as your credit score, the profitability of the pub, and your experience in the industry.

Repayment: You’ll need to make regular repayments to the lender, usually on a monthly basis. These repayments will include both the capital (the amount you borrowed) and the interest. Some pub mortgages may offer an interest-only period at the start of the loan.

Eligibility: To get a pub mortgage, you’ll typically need to meet certain criteria. This might include having a good credit score, having experience in the pub or hospitality industry, and having a solid business plan for the pub.

Fees and costs: Like all mortgages, there are costs involved in getting a pub mortgage. This can include arrangement fees, valuation fees, legal costs, and possibly broker fees.

Application process: The process for getting a pub mortgage can be complex. You’ll need to provide various documents, such as a business plan and financial forecasts, and the lender will likely require a professional valuation of the property.

Secured loan: A pub mortgage is a secured loan, which means the property itself is used as collateral. If you fail to keep up with the repayments, the lender has the right to repossess the property to recoup their losses.


How much can you borrow when taking a mortgage for a pub?

The amount you can borrow for a pub mortgage depends on various factors and can vary from lender to lender. However, generally, pub mortgages are often offered at a Loan to Value (LTV) ratio of around 60-70%, which means you would need to provide a deposit of around 30-40% of the property’s value.

The exact amount you can borrow will depend on the following:

The property value: This is usually determined by a professional valuation, which is arranged by the lender. The LTV ratio is applied to this valuation to determine the maximum loan amount.

Your financial situation: The lender will assess your income, expenses, assets, and liabilities to determine how much you can afford to borrow. They’ll also look at your credit history.

The pub’s profitability: The lender will look at the pub’s current and projected earnings. This can be a major factor in determining how much you can borrow.

Your business plan: If you have a solid business plan that shows strong potential for profitability, the lender may be willing to lend you more.

Your experience: If you have experience in the hospitality industry, especially in managing a pub, the lender may be more confident in your ability to run a successful business and be willing to lend more.

What documentation is required to apply for a pub mortgage?

Applying for a pub mortgage can be a complex process and requires providing a number of different documents. These can vary depending on the lender, but generally, you should expect to provide:

Proof of identity: This usually includes a valid passport or driver’s license.

Proof of address: This could be a recent utility bill or a bank statement.

Financial statements: You’ll typically need to provide bank statements for the past several months. If you’re currently running a business, you may also need to provide business bank statements.

Business plan: Most lenders will require a comprehensive business plan. This should include details about your experience in the industry, how you plan to make the pub profitable, and projections for future earnings.

Profit and loss statement: If you’re buying an existing pub, you may need to provide a profit and loss statement for the business.

Projected financials: This includes profit and loss forecasts, cash flow forecasts, and a balance sheet forecast for the next few years.

Proof of deposit: Lenders will want to see evidence of the deposit you’re putting towards the purchase.

Credit report: While the lender will likely check this themselves, it’s good to have a recent copy of your credit report on hand.

Proof of experience: If you have previous experience in the industry, it can be beneficial to provide proof of this.

Licenses: Proof of having the necessary licenses (or eligibility to acquire them) to operate a pub.
Existing Business Owners: If you’re already operating a pub, you’ll likely need to provide business accounts for the last 2-3 years.

What is the typical deposit required for a pub mortgage?

The deposit required for a pub mortgage can vary depending on a number of factors, including the lender’s policies, the borrower’s financial standing, the value of the pub, and the profitability of the business. However, typically, lenders require a larger deposit for commercial mortgages, including pub mortgages, compared to residential ones.

In general, you can expect to provide a deposit of around 30-40% of the property’s value for a pub mortgage. This is sometimes referred to as the Loan to Value (LTV) ratio, which is the proportion of the property’s value that the lender is willing to loan. So, if a lender offers a maximum LTV of 70%, this means they would loan up to 70% of the property’s value, and you would need to provide a deposit for the remaining 30%.

However, this can vary, and it’s always best to speak with a mortgage advisor or broker or directly with potential lenders to understand the specific requirements and terms for a pub mortgage. Keep in mind that the larger the deposit, the lower the LTV, which can result in more favourable interest rates and loan terms.

Which lenders offer pub mortgages?

Several lenders in the UK offer pub mortgages, and these include both high-street banks and specialist commercial lenders. Each lender has their own criteria, interest rates, and terms for pub mortgages, so it’s important to do your research and find the best fit for your needs. It can also be beneficial to work with a mortgage broker who has experience in commercial or pub mortgages, as they can help you navigate the market and find the best deal. Here are a few lenders that offer pub mortgages in the UK:

Barclays: Barclays offers commercial mortgages for a range of business properties, including pubs.

Natwest: Natwest’s commercial mortgage options also include financing for pubs.

Santander: Santander offers commercial mortgages that can be used for purchasing pubs.

HSBC: HSBC is another high-street bank that offers commercial mortgages suitable for pub purchases.

Lloyds Bank: Lloyds offers commercial mortgages for businesses, including pubs.

In addition to these, there are also many specialist lenders and commercial mortgage brokers that can provide pub mortgages. These companies often have more flexible criteria and may be more willing to lend to applicants who are new to the pub industry or who have less-than-perfect credit histories.

Always remember to do your own research and take professional advice before deciding on a lender.

What types of mortgages are available for pubs?

There are several types of mortgages that might be available for pubs, each of which can suit different circumstances and needs. Here’s an overview of some options you may come across:

Commercial mortgage: This is the most common type of loan used to purchase a pub. Commercial mortgages are typically used for buying business premises or making significant renovations. These loans typically have a term of 15-25 years, and the amount you can borrow is usually tied to the business’s profitability and your ability to repay the loan.

Bridging loan: A bridging loan is a short-term finance solution that you might use if you need funds quickly, for example, to secure a property at auction or if there is a delay in the sale of another property. Once longer-term finance is secured or the other property is sold, the bridging loan is repaid.

Development finance: If you’re looking to undertake significant development or refurbishment work on the pub, then development finance could be an option. This type of loan is designed to fund the costs of development, with the loan usually being repaid either when the development work is complete and the pub has increased in value or when you secure a long-term commercial mortgage.

Buy-to-Let mortgage: If the pub you are buying comes with living accommodation that you plan to rent out, you may need a commercial buy-to-let mortgage. These loans are designed for properties where part of the building is used for commercial purposes and part is rented out.

Most importantly, the type of mortgage or finance that is best for you will depend on your individual circumstances, including your financial situation, your plans for the pub, and the property itself.

Typical interest rates and repayments

The interest rates and repayments on a pub mortgage can vary widely depending on several factors, including the lender’s policies, the loan term, the borrower’s financial standing, and the profitability of the business.

Typical interest rates for commercial mortgages, including pub mortgages, generally ranged from around 2% to 6% or more.

The exact amount of your repayments will depend on the following:

The loan amount: The larger the loan, the higher your repayments will be.

The interest rate: A higher interest rate will lead to higher repayments.

The loan term: Loans with longer terms will have lower monthly repayments, but you’ll end up paying more interest over the life of the loan.

Type of repayment: Mortgages can be either interest-only, where you only pay the interest each month and repay the capital at the end of the loan term, or capital and interest, where your monthly payments gradually reduce the capital as well as cover the interest.

For example, if you were to borrow £500,000 for a pub mortgage at an interest rate of 4% over 20 years on a capital and interest repayment basis, your monthly repayments would be approximately £3,025. However, remember this is an approximation, and actual payments can vary.

Always speak with a mortgage advisor or broker, or directly with potential lenders, to understand the potential interest rates and repayments for a pub mortgage. They will be able to provide a more accurate estimate based on your individual circumstances and the current market conditions.

What are the pros and cons of buying a pub with a mortgage?

Buying a pub with a mortgage is a significant financial decision that comes with both advantages and potential drawbacks. It’s important to carefully consider these factors before proceeding:

Pros of buying a pub with a mortgage:

Ownership: Having a mortgage allows you to own the pub outright, giving you full control over the business and property.

Capital appreciation: If the property value increases, you stand to benefit from the capital appreciation.

Income potential: A successful pub can be a profitable business, providing a steady income stream.

Living accommodation: Many pubs come with living accommodations included, potentially saving you the cost of a separate home.

Business expansion: Owning the premises can give you more freedom to expand or diversify the business as you see fit.

Cons of buying a pub with a mortgage:

Financial risk: If the business doesn’t perform as expected, you may struggle to meet the mortgage repayments. This could potentially result in the loss of the property.

High upfront costs: The deposit required for a pub mortgage can be substantial, typically around 30-40% of the property value.

Maintenance and repair Costs: As the property owner, you’ll be responsible for any maintenance or repair costs.

Market fluctuations: Changes in the property market could affect the value of the pub, potentially resulting in negative equity.

Time and commitment: Running a pub is often more than a full-time job and requires significant dedication and effort.

Interest costs: Over the term of the mortgage, you’ll pay back significantly more than you borrowed due to the interest charged by the lender.

Other ways to buy a pub

If you’re considering buying a pub but don’t want to or can’t take out a mortgage, there are a few other options available:

Cash purchase: If you have the funds available, you can buy the pub outright. This eliminates the need for a mortgage and can often make the buying process quicker and easier.

Leasing: Leasing a pub from a brewery or pub company is another option. This often requires less capital upfront than buying, but you’ll likely have less control over the business. There may also be stipulations regarding where you must buy your beer and other supplies.

Tenancy: Similar to leasing, a tenancy usually involves a lower upfront cost than buying or leasing. It’s typically a short-term arrangement of 1-5 years and often tied to a brewery or pub company, with similar conditions as a lease.

Partnerships: If you can find a business partner, you could share the cost of buying the pub. This could be a silent partner who invests money but doesn’t take part in running the business or an active partner who shares in the work as well.

Investor funding: Another option is to seek funding from investors. This could involve selling a share of the business in return for capital.

Crowdfunding: In some cases, it may be possible to use crowdfunding to raise the money needed to buy the pub. This typically involves many people, each contributing a small amount of money, often in return for some form of reward or ownership stake.

Business loan: Depending on your circumstances, you might be able to secure a business loan instead of a mortgage to fund the purchase of the pub.

Do I need to have experience running a pub?

While not always a strict requirement, having experience in running a pub or in the hospitality industry more broadly can significantly improve your chances of securing a pub mortgage and successfully operating the business. Many lenders consider industry experience when assessing your application as it provides evidence of your ability to manage the business and generate sufficient income to repay the loan.

Experience in running a pub can also help you understand the unique challenges of the industry, including long hours, the need for excellent customer service, compliance with licensing laws, handling suppliers, managing staff, and maintaining a profitable product mix. Understanding these challenges can help you make informed decisions and develop effective strategies to ensure the success of your business.

If you don’t have direct experience running a pub but have relevant experience in a related field, this may also be valuable. For example, experience in restaurant management, event planning, or even retail management can provide transferable skills.

In the absence of direct experience, developing a comprehensive and convincing business plan can be especially important. This plan should detail how you intend to run the pub, your marketing and growth strategies, and your financial projections. It may be worthwhile to seek advice from industry consultants or experienced pub operators when developing your business plan.

Lastly, many pub companies or breweries offer training programs for new operators, which can be a good option if you’re new to the industry but are committed to learning and developing your skills.

Will I need to provide company accounts?

When applying for a pub mortgage, especially if the pub is currently trading, lenders will often request to see company accounts or financial statements. This provides them with evidence of the pub’s profitability and your ability to repay the loan.

Typically, lenders may want to see the following:


    1. Profit and loss statements: These show the revenues, costs, and expenses during a particular period. They provide the lender with a clear picture of the operating profitability of the pub.

    1. Balance sheet: This shows the company’s assets, liabilities, and shareholder’s equity at a specific point in time. It gives lenders a snapshot of the company’s financial health.

    1. Cash flow statements: These show how changes in the balance sheet and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

If the pub is a new venture and does not have historical accounts, you may need to provide a robust business plan with detailed financial projections instead. This should show the lender how you plan to make the business profitable and repay the mortgage.

However, each lender has its own requirements, and these may vary. It’s always best to speak directly with potential lenders or work with a broker or financial advisor to understand what documentation you will need to provide when applying for a pub mortgage.

Preparing your business plan

A well-prepared business plan is a crucial part of any business venture, including buying a pub. It helps you understand your business, your market, and your strategy. Additionally, it demonstrates to lenders, investors, or other stakeholders that you have a well-thought-out plan for success. Here are the key sections you should include in a pub business plan:


    1. Executive summary: This section provides a concise overview of your entire business plan. It should briefly touch upon your business concept, key objectives, ownership structure, and brief financial highlights or projections.

    1. Company description: Detail the concept of your pub, its unique selling points, and the experience you aim to provide for your customers. This is also where you’d discuss the legal structure of your business (i.e., sole proprietorship, partnership, limited company, etc.).

    1. Market analysis: Demonstrate a deep understanding of your target customers, local competition, and the wider pub and hospitality industry. Provide data on market trends, growth rates, and other industry dynamics.

    1. Organisation and management: Describe your team’s structure, including management, staff, and any external advisors or consultants. Highlight key team members’ experience and skills, particularly those relevant to running a pub.

    1. Services and products: Describe the products and services you will offer, such as food, beverages, live entertainment, events, etc. Highlight any unique or special offerings that set your pub apart from the competition.

    1. Marketing and sales strategy: Outline your marketing strategy, including branding, pricing, advertising, promotions, and public relations. Also, describe your sales strategy, customer service policies, and any loyalty programs.

    1. Financial projections: Provide detailed financial forecasts for at least the next three years. This should include profit and loss statements, cash flow forecasts, and balance sheets. Also, outline your funding requirements, if any.

    1. Funding request (if applicable): If you’re seeking a loan or investment, detail how much funding you need, how you will use the funds, and the proposed repayment terms.

    1. Exit strategy: Though it might seem premature, investors and lenders often want to see your plan for eventually selling the pub or otherwise exiting the investment.

    1. Appendix: This is optional, but it’s where you would add any additional supporting documents, like legal agreements, product pictures, or more detailed market research.

Each section of your business plan should be clear, concise, and professional. It should demonstrate both your understanding of the pub industry and your vision for your own business. Remember, this document may be the first impression potential lenders or investors get of your business, so it’s worth investing time and effort to get it right.

Credit history and guarantees

When applying for a pub mortgage, lenders will typically review your credit history as part of their assessment. A strong credit history can demonstrate to lenders that you’re reliable and likely to repay your loan on time. Here’s how credit history and guarantees typically factor into the process:

Credit history:

Lenders use your credit history to assess the risk involved in lending you money. Your credit history includes details about previous loans, credit cards, and other forms of credit, as well as your record of repayments. If you have a good credit history (i.e., you’ve consistently made repayments on time), lenders may view you as a lower risk.

A poor credit history, however, doesn’t necessarily prevent you from getting a pub mortgage, but it might make it more challenging. You might face higher interest rates or stricter terms, or you might need to provide additional security.


In some cases, lenders may ask for a personal guarantee, particularly for smaller businesses or for applicants with a less-than-perfect credit history. A personal guarantee means that if your business is unable to repay the loan, you become personally responsible for the debt. It’s important to understand that giving a personal guarantee can put your personal assets, like your home, at risk.

If you’re asked to provide a personal guarantee, it’s a good idea to seek independent legal advice so you fully understand the implications. Remember that if you have business partners, each partner might need to provide a guarantee.

The specifics can vary between lenders and loan products, so it’s always a good idea to speak with potential lenders, a mortgage broker, or a financial advisor to understand what requirements you’ll need to meet. They can provide advice based on your specific circumstances and the current lending market.

What costs should I consider when planning to get a mortgage for a pub?

Obtaining a mortgage to buy a pub involves several costs beyond just the purchase price of the property. Here are some key costs you should consider:

Deposit: This is a percentage of the purchase price that you pay upfront. The deposit for commercial mortgages, including pub mortgages, is typically between 30% and 40%, but it can vary.

Mortgage fees: These can include arrangement fees, valuation fees, legal fees, and possibly brokerage fees if you use a broker. Some of these may be added to your mortgage, but this will increase the amount you owe and the interest you pay.

Stamp duty land tax: In the UK, you have to pay Stamp Duty Land Tax (SDLT) on commercial properties, including pubs, over a certain price. The rate depends on the price of the property.

Surveyor’s fees: Before buying a property, it’s advisable to have it surveyed. The cost can vary depending on the level of detail in the survey.

Legal fees: Conveyancing (the legal work associated with buying a property) must be done by a solicitor or conveyancer, which will involve fees.

Renovation and repair costs: If the pub requires any immediate repairs or you plan to renovate or remodel, these costs should be factored into your initial budget.

Operating costs: These are ongoing costs of running the pub, including stock, staff wages, utilities, business rates, insurance, maintenance, and more.

Licensing fees: You’ll need a premises license to sell alcohol and possibly additional licenses for entertainment, late-night refreshments, etc. The cost for these licenses varies.

Contingency fund: It’s also a good idea to have some funds set aside for unexpected costs or changes in circumstances, such as an unexpected decrease in revenue or an increase in expenses.

Can I remortgage a pub I already own?

Yes, you can remortgage a pub that you already own. Remortgaging refers to the process of switching your existing mortgage to a new deal, either with your current lender or a different one.

Here are some key points and potential benefits of remortgaging:

Better interest rates: If your current mortgage deal has ended or is about to end, you might find that remortgaging offers you a better interest rate. This could reduce your monthly repayments or the overall amount of interest you pay over the term of the mortgage.

Changing mortgage terms: Remortgaging can allow you to change the terms of your mortgage. For example, you might want to switch from an interest-only mortgage to a repayment mortgage, or you might want to extend or shorten the term of your mortgage.

Releasing equity: If the value of your pub has increased since you bought it, you might be able to release some of this equity by remortgaging. This could provide you with a lump sum of cash that you could use for a variety of purposes, such as refurbishing the pub, investing in other properties, or consolidating other debts.

Consolidating debts: If you have other, higher-interest debts, you might be able to save money by consolidating these into your mortgage. However, it’s important to note that this will likely increase the size of your mortgage, and you should consider the potential risks and seek advice before doing this.

Changing lenders: If you’re unhappy with your current lender for any reason, remortgaging can allow you to switch to a different lender.

Before deciding to remortgage, it’s important to consider any potential costs, such as early repayment charges on your current mortgage or arrangement fees for your new mortgage. You should also bear in mind that your new lender will likely want to carry out a valuation of your pub, and they may have different eligibility criteria to your current lender.

Can I get a mortgage for a pub if I have bad credit?

Obtaining a mortgage for a pub with bad credit can be challenging, but it’s not impossible. Here are a few factors to consider:


    1. Lenders often see borrowers with bad credit as a higher risk, so they may charge a higher interest rate on the mortgage. This can result in higher monthly repayments.

    1. You might need to put down a larger deposit to secure a mortgage. The exact amount will vary depending on the lender, the specifics of your credit history, and other factors.

    1. Some lenders specialise in providing mortgages to people with bad credit. These specialist lenders often have more flexible criteria than mainstream lenders, but they may charge higher interest rates or fees.

    1. Before applying for a mortgage, it might be worthwhile to take steps to improve your credit score. This could involve paying off debts, ensuring you’re on the electoral register, or correcting any errors on your credit report.

    1. If you have bad credit and you’re considering a mortgage for a pub, it can be helpful to seek advice from a mortgage broker or financial advisor. They can guide you through your options and help you find the most suitable mortgage for your circumstances.

    1. If you’re unable to secure a mortgage due to your credit history, you might consider a guarantor mortgage. This is where a third party (usually a close relative) agrees to cover your mortgage payments if you can’t. It’s a significant commitment for the guarantor, so it’s important that both parties understand the implications.

Using a broker vs approaching a lender directly

When seeking a mortgage for a pub, you can choose to use a broker or approach a lender directly. Both options have their pros and cons:

Using a Broker


Wide range of options: Brokers have access to a variety of lenders, including some that don’t deal directly with the public. They can compare deals across many lenders to find the one that suits you best.

Time-saving: Brokers can save you time by doing most of the legwork. They can navigate the application process, liaise with the lender, and handle a lot of the paperwork on your behalf.

Expert advice: Brokers are experts in mortgages and the lending market. They can provide valuable advice and guidance, especially if your situation is complex, such as having a poor credit history or needing a high loan-to-value mortgage.

Negotiation: Brokers may have the experience and industry knowledge to negotiate better terms or rates on your behalf.


Cost: Brokers charge fees for their services, although some may offer free services because they receive a commission from the lender. Make sure you understand how much you will pay and when.

Limited options: Some brokers don’t cover the entire market. They might have a select group of lenders they regularly work with, which could limit your options.

Approaching a Lender Directly


Potential cost-saving: By bypassing a broker, you could save on broker fees. This might make your mortgage slightly cheaper.

Direct communication: Dealing directly with the lender might allow for more straightforward communication, and you’ll have direct control over the process.


Time-consuming: It can be time-consuming to research and compare all the various mortgage products on the market. The application process can also be lengthy and complex.

Limited options: When you approach a lender directly, you only see the products that lender offers. You might miss out on better deals available elsewhere.

Complexity: Without expert advice, you might find it harder to navigate complex mortgage terms and conditions. It could be difficult to choose the best deal for your specific circumstances.

Your choice will depend on your individual circumstances, your level of knowledge and experience, the complexity of your situation, and how much time you’re willing or able to dedicate to the process. Both brokers and lenders can be useful in different situations, so it’s about finding what works best for you.

What are the common reasons for a pub mortgage application to be rejected?

Several factors might lead to a pub mortgage application being rejected. Some of the most common reasons include:

Poor credit history: If you have a history of missed payments, defaults, or bankruptcies, lenders may see you as a high-risk borrower and may be less likely to approve your application.
Insufficient income: Lenders will look at the profitability of the pub and your personal income to ensure you can afford the mortgage repayments. If your income or the pub’s income is deemed insufficient, this may lead to rejection.

Inadequate business plan: If you’re buying a pub as a business, lenders will want to see a comprehensive and realistic business plan. A weak or unrealistic business plan can lead to your application being denied.

Lack of experience: Some lenders may prefer borrowers with experience in the pub or hospitality industry. If you’re new to running a pub, this could potentially impact your application.

Low deposit: The deposit for commercial mortgages, including pub mortgages, is typically between 30% and 40%. If you’re unable to provide a sufficient deposit, lenders may be less likely to approve your application.

Property issues: If the property is in poor condition or if there are any legal issues associated with it, this can also cause your application to be rejected.

Incomplete or inaccurate application: If your application is not filled out correctly or if you fail to provide all the necessary documentation, this could also lead to rejection.

Lack of collateral: Lenders may require you to put up collateral as a security for the loan. If you’re unable to provide sufficient collateral, this could impact your application.

These are just some examples, and the exact criteria can vary from lender to lender. It’s always a good idea to speak with potential lenders or a mortgage broker before applying to understand what requirements you’ll need to meet. They can provide advice based on your specific circumstances and the current lending market.

Getting the help of a commercial mortgage advisor

Utilising the services of a commercial mortgage advisor can be very beneficial when you’re looking to get a mortgage for a pub or any other commercial property. Here are some of the advantages and aspects to consider:

Expert advice: Commercial mortgages can be complex, and an experienced advisor will have the knowledge to navigate the process efficiently. They can provide advice tailored to your specific circumstances and guide you through each stage of the application process.

Wide range of options: Commercial mortgage advisors typically have access to a wide variety of lenders, including those not available to the general public. This means they can present a range of options and find the most suitable mortgage deal for you.

Time-saving: Applying for a commercial mortgage can be a time-consuming process. An advisor will handle much of the legwork, such as liaising with lenders and handling paperwork, saving you time and effort.

Better negotiating power: Advisors often have strong relationships with lenders, which can lead to better negotiating power. They might be able to secure a better interest rate or more favourable terms on your behalf.

Understanding complex criteria: Commercial lenders may have complex eligibility criteria. Advisors understand these and can help ensure your application meets all necessary requirements, improving your chances of approval.

Cost analysis: They can provide a full cost analysis, including interest rates, fees, and other charges, to ensure you understand the total cost of the mortgage.

While there are many advantages, it’s essential to also consider the cost of hiring an advisor. Some charge a fee for their services, while others may offer a free service and receive a commission from the lender. Be sure to clarify the cost structure before engaging their services.


Can I buy a pub and live in it?

Yes, you can buy a pub and live in it, but it depends on the specific property. Many pubs in the UK come with living quarters above or adjacent to the business premises, and these are often used by the pub owner or manager. However, you’ll need to check the terms of the property sale and local zoning laws to ensure residential use is allowed.

Can I get a pub mortgage with no deposit?

It is very unlikely. Lenders typically require a significant deposit for commercial mortgages, including pub mortgages. The exact amount can vary, but it’s typically between 30% to 40% of the property’s value. In some cases, a lender might accept a smaller deposit, particularly if the borrower has strong financial credentials or significant industry experience, but a no-deposit mortgage would be extremely rare and high risk for the lender.

What are the typical repayment terms for pub mortgages?

Repayment terms for pub mortgages typically range between 15 and 25 years, though this can vary depending on the specific lender and the borrower’s circumstances. The mortgage may be set up on a repayment basis (where you pay back both the principal loan amount and the interest) or an interest-only basis (where you only pay the interest and repay the principal at the end of the term). The exact terms, including the interest rate and repayment schedule, will be set out in your mortgage agreement.

What should I know about leasehold and freehold options when applying for a pub mortgage?

When purchasing a pub, you’ll encounter two types of property ownership: leasehold and freehold. The choice between them can affect your mortgage options and the overall cost and responsibilities of owning the pub.

Leasehold: When you buy a leasehold pub, you’re buying the right to operate the business and use the property for a set period (the term of the lease), which is often several decades. However, the property itself is still owned by the freeholder (or landlord).

Leaseholders typically pay rent to the freeholder and may have other obligations, like maintenance or insurance costs, depending on the lease’s terms.
When applying for a mortgage for a leasehold pub, lenders will consider the remaining term of the lease. Mortgages usually require a lease that extends at least a few years beyond the end of the mortgage term. Additionally, the rent and other costs of the lease will be considered alongside your mortgage repayments when the lender assesses affordability.

Freehold: When you buy a freehold pub, you’re buying the business and the property itself outright. You have full control over the property and won’t have to deal with a landlord or worry about the lease term.
Mortgages for freehold pubs can be easier to secure because the property can serve as collateral for the loan. However, freehold properties are generally more expensive than leasehold ones, so you may need a larger mortgage.

Is it easier to get a mortgage for a pub or a restaurant?

Whether it’s easier to get a mortgage for a pub or a restaurant can depend on various factors, including your personal financial situation, your experience in the hospitality industry, and the specific pub or restaurant in question.

In general, lenders will consider the profitability of the business, the location and condition of the property, the strength of your business plan, and your experience in managing a similar business. If you have strong credentials in these areas, it could increase your chances of getting a mortgage, whether for a pub or a restaurant.

However, some lenders may perceive pubs as riskier than restaurants, or vice versa, depending on current market trends and the performance of similar businesses in the area. Therefore, it’s always a good idea to speak with a broker or advisor who is familiar with the hospitality industry and can provide guidance based on your specific situation and goals.

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