Mortgage guide
Hotel operators are assessed on trading performance and profitability. The guide covers affordability, non-trading properties and finance for refurbishment or development.
For hotel operators seeking a commercial mortgage for a hotel, trading performance is a primary underwriting factor. Most hotel mortgage lenders assess affordability using a loan-to-EBITDA ratio, meaning the hotel’s accounts must demonstrate sufficient profitability to service the proposed borrowing.
Operators with well-performing hotels may access more competitive hotel mortgage rates, higher loan amounts, and more flexible terms. Consistent EBITDA and stable trading reduce lender risk and expand available product options.
Where a hotel is non-trading or closed and profitability cannot yet be evidenced, lending options are more limited. In these cases, commercial mortgages for hotels are typically assessed against the property’s underlying value, with lenders offering up to 70% loan-to-value based on a 90-day bricks-and-mortar valuation.
Borrowers developing hotels may use short-term funding of up to 36 months, often without exit fees, to complete refurbishment works and stabilise trading before refinancing onto a long-term hotel commercial mortgage.
Whether refinancing, expanding, or acquiring a new site, hotel finance must reflect operational complexity. Specialist lenders assess hotels differently from standard commercial assets, requiring bespoke mortgage structures aligned with business performance and future plans.
Speak to a Mortgage Lane adviser about your circumstances and the next steps.
