In recent years, the popularity of pubs has grown leaps and bounds in the UK – in a survey run by the British Beer and Pub Association in 2009, there are more than 57,000 public houses throughout the country.
With the frequency of these businesses growing, it should be no surprise that the public house business has moved from a primarily owned property market to a leased property market and because of this, lenders are becoming more flexible when it comes to providing financing for these businesses.
The professionals at Euroguide understand that when a public house is purchased it is not just being able to pay for the property – it encompasses licenses, fixtures, goodwill, and so much more.
What Factors May Affect a Public House Loan Application?
When applying for a commercial mortgage or loan for a pub, it is important for the borrower to make their application as appealing as possible in order to make sure the loan is approved. There are a number of different factors that should be included in the application to make it attractive and Euroguide can help borrowers create a portfolio that will get lender’s attention.
For example, when a borrower can show he or she is capable of paying a 30 percent deposit on a mortgage, provide additional security, have a sound business plan, and prior experience in the industry, it can greatly increase the likelihood of the finance request being approved with the best possible terms.
Building type, location, borrower qualifications, and any costs associated with re-opening a previously closed pub will also play a role in the approval.
Are Both Leasehold and Freehold Options Available?
There are both leasehold and freehold options available when it comes to mortgages and other financing for public houses. Luckily for your, both of these options can be arranged by the professionals at Euroguide. Leasehold mortgages are often unrecognised for this type of business in the eyes of lenders, usually due to issues with the loan’s security.
Euroguide, however, has successfully arranged these types of loans and can help borrower’s work through the sometimes confusing application process. Euroguide is able to work leasehold mortgages by using supplementary security that the borrower may already own or an additional option is to utilise the Government’s Enterprise Finance Guarantee Scheme.
While freehold mortgages may be easier to arrange, it is important to note that the terms and details of these loans will vary greatly between one lender and the next. The knowledgeable team at Euroguide has extensive experience with commercial financing and has the ability to match a borrower with the ideal lender who can meet his or her unique financing needs.
In general, freehold mortgages are scaled 60 to 70 percent Loan to Value ratio, or LTV, of the property being purchased with a standard repayment period of between 15 and 30 years. Although this is the normal LTV and repayment for the industry, Euroguide may be able to arrange different terms for borrowers based on their circumstances.