To attract visitors, hotels need to offer first class accommodation and service. Many older hotels need to spend money on refurbishments and this can be expensive. Remortgaging the hotel can raise the necessary funds.
A commercial mortgage can often be found at lower interest rates than a business loan, and the payments can be spread over a long time – up to 25 years. Lenders will have a minimum amount that they will loan, which will be around £25,000. In theory, there is no maximum loan amount providing the business can afford the repayments and has sufficient equity in the building to cover the loan. Most lenders will loan 65% of the combined value of the property and the business. Without the business valuation, loans of around 75% of the value of the building are normal.
The lowest interest rates for commercial mortgages are around 2.25%, but most lenders will charge between 3% and 5%. It can take between six to eight weeks for the funds to become available.
A property survey and a valuation report are required and there are legal processes. Lenders will often charge for these services before the loan has been completed. If the loan application is unsuccessful, these fees will probably not be returned.
If you are a hotel owner that wants to upgrade their property, talk to a commercial mortgage broker who can talk you through the process of applying for a commercial mortgage and then find the best loan deal for your particular financial needs.