Pub Mortgages

A pub mortgage is a specialist commercial mortgage used to buy or refinance a public house, and the valuation method decides how much can be borrowed. Depending on the property and trading structure, lenders rely on going-concern valuations, investment valuations, vacant possession (VP) values, or restricted 90-day and 180-day assessments, so a pub mortgage needs to be structured correctly from the outset to avoid valuation mismatches and declines.

We arrange pub mortgages for experienced operators and first-time buyers, on trading and non-trading pubs, freehold and leasehold, across England, Scotland, Wales and Northern Ireland.

What are pub mortgages?

A pub mortgage is assessed on a going-concern basis: lenders consider both the freehold property value and the sustainable trading income, because a pub's value is driven as much by its profitability as by its bricks and mortar. On the cases we arrange, pub mortgages run at 70% to 75% loan-to-value against a going-concern valuation. Lenders review historic accounts, net profit, turnover trends and operating experience, and strong trading, a credible business plan or a proven operator can materially improve the terms.

Many pubs carry mixed-use elements such as restaurants, letting rooms or small hotels. Lenders usually include these income streams in the valuation and affordability assessment, and they often support higher leverage.

Pub mortgages have largely replaced brewery loans. Breweries historically offered landlords low-interest loans over 10 to 15 years, but the trade-off was a tie: a contract obliging the landlord to buy beer, and often wine, spirits and other drinks, direct from the brewer at full price. These arrangements are now uncommon. A pub mortgage leaves the landlord free to source stock on the open market, which can materially cut running costs, and free-of-tie ownership is one of the main financial reasons buyers choose a mortgage over an operator or brewery arrangement.

How much can you borrow on a trading pub?

Lenders assess a trading pub's affordability on EBITDA (earnings before interest, tax, depreciation and amortisation) rather than personal income, and on the cases we arrange they advance up to 5.0 to 5.5 times EBITDA. EBITDA strips out finance costs, tax and non-cash accounting items to measure the pub's underlying cash flow, which is what services the debt.

In an illustrative worked example, a pub generating £100,000 of sustainable EBITDA could support borrowing of approximately £500,000 to £550,000 at those multiples, provided the valuation supports that level. The multiple is a guideline: the final loan also depends on the going-concern valuation, LTV limits, trading history, location, competition and operator experience, all evidenced by verifiable accounts.

Commercial valuations for pubs

The valuation method applied to a pub directly determines the loan-to-value, the affordability and lender appetite, and it follows the pub's trading status.

• A trading, profitable, owner-occupied pub is valued as an MV1 going concern: the freehold plus sustainable trading performance, assessed from historic accounts, fair maintainable trade and net profit. This is the standard basis for funding a trading pub.
• A pub leased to a third-party operator is valued as an MV1 investment: its investment value is derived from the rental income, lease terms, covenant strength and yield rather than the operator's trading.
• A pub that is not trading, is loss-making or is bought for an alternative use is valued on a vacant possession (VP) bricks and mortar basis, sometimes on a restricted 90-day or 180-day sale assumption that reflects a limited marketing period.

Non-trading pubs: 65% LTV against a 90-day value

Where full trading accounts are unavailable, lending on the cases we arrange is capped at around 65% LTV against a 90-day valuation. A 90-day valuation estimates what the pub would achieve if sold within a restricted 90-day marketing window. It is a deliberately conservative figure that anchors the loan to a quickly saleable property value rather than to unproven business performance. This structure keeps a purchase or remortgage viable without accounts, but it reduces the borrowing and raises the deposit requirement.

How experience changes the terms

Experience is not a strict requirement for a pub mortgage, but it sets the tier of lending. On the cases we arrange, first-time operators are capped at around 65% LTV, and experienced operators can access 70% to 75%, with the most competitively priced products at around 70%. Greater experience also improves pricing and can open up longer terms: on the commercial cases we arrange, terms run from 15 to 40 years. Lenders read experience as evidence that the borrower can manage licensing compliance, staffing, stock control and cash-flow volatility, the operational risks behind trading failure. New entrants can still succeed where other strengths compensate, such as a credible business plan, financial backing, a profitable trading history under previous ownership or a prime location.

An established, well-trading pub can be priced competitively on the high street, but high-street lenders generally demand more operator experience. Specialist lenders ask for less experience and have become increasingly competitive on rate, so the choice between a high street or specialist lender follows the borrower's profile.

For buyers at or after retirement age, many pub mortgage lenders apply higher maximum age limits than residential lenders, so a pub purchase after retirement can be possible with the right lender match.

Freehold pub mortgages

A freehold pub mortgage funds ownership of both the building and the land, the strongest security a lender can take on a pub, and the terms reflect it. With no lease expiry or reversionary risk, freehold pubs attract longer terms and more stable pricing than leasehold pubs, in our experience at 70% to 75% LTV depending on the valuation basis, profitability and experience. Freehold also gives the operator full control to adapt the business model, subject to planning and licensing. Underwriting focuses on historic accounts, EBITDA, management capability and a clear repayment strategy. Values range widely with location and trade, and lenders price sustainable income rather than headline turnover.

Listed pub mortgages

Many traditional pubs are Grade II or Grade II* listed, and listing changes the lending in four ways. First, conservation controls restrict alterations, extensions and changes of use, and any works need listed building consent, which limits future development and raises maintenance costs, so lenders price the constraint. Second, the valuation needs a specialist heritage commercial valuer, on a going-concern MV1 basis where the pub is trading or adjusted bricks and mortar where it is not. Third, listed building lenders apply more conservative LTVs, sometimes requiring additional security or stronger trading. Fourth, specialist buildings insurance covering heritage reinstatement and traditional materials is a lending condition, at higher premiums than standard cover.

Pub mortgages across the UK

We arrange pub mortgages in England, Scotland, Wales and Northern Ireland, at up to 75% LTV throughout, and there are two regional differences worth knowing. In Scotland, pub licensing runs under distinct Scottish legislation and transactions follow Scottish conveyancing, so valuation and legal work must be instructed accordingly. Northern Ireland operates a surrender-based licence system, under which a new pub licence is generally granted only when an existing licence is surrendered (article 7 of the Licensing (Northern Ireland) Order 1996). That affects a pub's value and saleability, and lenders underwrite the licence alongside the property. Beyond licensing and legal process, the underwriting is the same everywhere: trading performance, valuation basis and operator strength. We arrange pub finance across the UK's major markets, including London, Bristol, Cardiff, Manchester, Edinburgh, Glasgow and Belfast.