Deposits for commercial mortgages higher
Raising a deposit for a B&B, Guest House or Hotel can be challenging at the best of times, let alone in the height of a global pandemic when lending sentiment is risk adverse.
Unlike residential mortgages where a deposit can be as little as 5% of the purchase price, commercial mortgages require a higher deposit contribution which is typically 35% to 40% of the purchase price, dependent on the lender’s appetite.
In addition to the capital required for your deposit, there will be other costs to consider such as SDLT (Stamp Duty), Valuation Fees, Solicitors Fees and Broker Fees.
Don’t forget extra costs
As a rule of thumb, when you are considering purchasing a B&B, Guest House or Hotel, you’ll need to make an allowance of circa 47% of the purchase price, as your total capital contribution, which will include all costs such as SDLT, and then you won’t go far wrong.
As with all purchase considerations, there is generally a deal to be done at a 10% discount or more off the vendors’ guide price, so don’t always limit your search to your budget.
Contact us for help with your commercial mortgage
For more advice on how we at Stewart Hindley can help you achieve your life style business, with commercial mortgage solutions for bed and breakfast, guest house and hotel purchasers, offering the best terms and lowest capital contribution, then don’t hesitate to get in touch for no obligation, impartial advice.