How to buy a hotel

new hotel room door being opened
new hotel room door being opened

For many people, owning their own hotel is a life-long dream. A dream that can bring much fulfilment, new opportunities, and happiness.

However, when it comes to tapping into the hotel sector, there is a range of factors you need to consider and address before buying a hotel, and during the purchasing process.

Here’s our guide to buying a hotel.

What type of mortgage do you need to buy a hotel?

If you’re considering buying a hotel, renovating a hotel, or expanding any commercial property, you will need to apply for a commercial mortgage.

Many lenders offer a variety of commercial mortgage deals, with the majority available as fixed and variable-rate loans. You should always shop around to find the best deal and keep in mind that most commercial mortgages have a repayment span from one to 25 years.

What deposit do you need to purchase a hotel?

Deposits for commercial properties such as hotels are generally 30 or 40 percent of the total value of the property – a lot higher than residential properties.

The amount you can borrow will depend on a number of different factors, including:

  • The price of the hotel
  • The type of hotel
  • How much deposit you have
  • Current market conditions
  • Your credit score and financial situation

Whether you are eligible to purchase a hotel, will depend on the above factors and whether or not you meet the criteria set out by the lender you choose. Ultimately, it comes down to how much of a risk you are financially and whether you are in a sound financial position to be able to pay back the money you have borrowed.

Applying for a mortgage for a hotel – what do I need?

When applying for a mortgage for a hotel, you will be required to complete the relevant paperwork and also supply a sound business plan. During the process, you will be asked questions relating to your business and financial situation so that lenders can understand how you intend to pay back your loan. An affordability check will then be completed and you will receive an agreement in principle.

Why choose Stewart Hindley?

If you’re considering buying a hotel, it’s important to speak to someone experienced in the sector to ensure that you are aware of all the funding options available to you.

Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding hotel finance or commercial mortgages.

Stewart Hindley
Specialist financial experts helping you secure commercial loans across the hospitality, leisure and commercial property sectors.

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