Commercial Mortgages
Pub Mortgages: How to Finance a Freehold Pub
A pub mortgage funds buying or refinancing a freehold pub. Lenders lend on the trading figures, so turnover, the split between drink and food, profit and your licensing experience all matter.
Written and reviewed by Davi Thakar, CeMAP qualified mortgage and protection adviser Updated
A pub mortgage is a commercial loan to buy or refinance a freehold pub. Lenders treat a pub as a trading business, so they want to see a pub that pays its way from profit, run by someone who knows the trade.
Fewer lenders work with pubs than with shops or offices, and the ones that do are choosy. How you present the figures makes a real difference to who says yes and on what terms.
This guide covers what lenders check, how pubs are valued, deposits, costs and refinancing. For the bigger picture, see our commercial mortgage guide.
Can you get a mortgage to buy a pub?
Yes, for a freehold pub, from specialist commercial lenders. Expect to put down 30% to 40% and to show three years of accounts with steady profit. Free of tie pubs with a good food trade and living accommodation are the easiest to finance. Leasehold and tied pubs are a different market and most mortgage lenders will not lend on them.
What do lenders look at?
| Factor | Why it matters |
|---|---|
| Turnover and profit | Three years of accounts showing steady or rising EBITDA |
| Wet and dry split | A strong food trade spreads the risk beyond drink sales |
| Tie | Free of tie pubs are easier to finance than tied ones |
| Licences | A premises licence, and a designated premises supervisor with a personal licence |
| Experience | Your record running pubs, bars or restaurants |
| Location | Local competition, footfall and other possible uses |
| Living accommodation | Adds value and gives the lender another way out |
GOV.UK explains premises licences, personal licences and the designated premises supervisor role in its alcohol licensing guide.
Which situations do lenders see most?
These are illustrative situations, not Option Finance client outcomes.
Tenant buying the freehold
You have run the pub as a tenant and now want to buy it. Your own trading record is your best evidence.
Your accounts do the talkingFirst-time licensee
You have bar or restaurant experience but have never owned a pub. Lenders want a strong plan and often more deposit.
Show relevant experience clearlyPub that needs work
The pub is closed or trading poorly. Most mortgage lenders will wait until it is trading again.
Bridging first, then refinanceGrowing the food trade
You want money for a new kitchen or dining room. Lenders look at current profit and your plan.
Show how the works lift incomeHow is a pub valued?
Pubs are valued on a trading basis by specialist valuers. They look at the profit a reasonable operator could make, apply a multiple and check against recent sales. They will also note what the property would be worth if the pub closed. That can depend on whether it could be converted, which needs planning permission and is not guaranteed.
Illustration only
An experienced licensee buys a freehold pub with a four-bedroom flat for £650,000. Turnover is £600,000, half from food, and EBITDA is £110,000. A lender offering 65%, £422,500 over 20 years at 7.5%, would expect payments of about £40,800 a year. Profit covers that about 2.7 times.
How much deposit do you need?
- Loan-to-value: usually 60% to 70%. First-time licensees may need more deposit.
- Term: commonly 15 to 25 years.
- Rates: above residential rates, priced on trading strength and experience.
What documents will you need?
- Three years of accounts and recent management accounts
- Sales split between drink, food and accommodation
- Premises licence and personal licence details
- Your CV and business plan
- Details of any planned refurbishment
Staff usually move across to you on their current terms. GOV.UK explains this in its guide to business transfers and TUPE.
What costs should you plan for?
- Stamp Duty at non-residential or mixed-use rates in England and Northern Ireland: 0% up to £150,000, 2% to £250,000 and 5% above. On £650,000 that is about £22,000. See GOV.UK’s non-residential rates.
- Specialist trading valuation
- Arrangement fee, often 1% to 2% of the loan
- Legal fees, including licensing and employment advice
- Stock and working capital for the handover
Can you refinance a pub?
Yes, if profit covers the payments. Owners refinance to get a better rate, release money for works or buy out a partner. Lenders look at current trading. See our commercial remortgage guide. If the pub needs heavy work before it can trade, see our refurbishment finance guide.
Frequently asked questions
Can I get a mortgage to buy a pub?
Yes, for a freehold pub, from specialist commercial lenders. Leasehold and tied pubs are much harder to finance.
How much deposit do I need for a pub?
Usually 30% to 40%. It depends on the pub’s trading record and your experience.
Do I need pub experience?
Most lenders want hospitality experience or an experienced manager in place. Without it, expect to need a bigger deposit.
Does a food trade help?
Yes. A strong food trade spreads the risk, and lenders see it as a sign of a well-run pub.
Can I get a mortgage on a closed pub?
Most mortgage lenders will not lend until it is trading. Bridging can fund the purchase and works, then you refinance.
What Stamp Duty applies to a pub?
Non-residential or mixed-use rates in England and Northern Ireland: 0% up to £150,000, 2% to £250,000 and 5% above.
Can I live in the flat above the pub?
Yes, and many owners do. The flat adds value, and the lender will include it in the valuation.
Speak to Option Finance about your pub
Tell us about the pub, the price and the trading figures. We will tell you straight which lenders are realistic, how much deposit you will need and how to present the numbers.
Book a free initial consultation using the enquiry form below. See also our commercial mortgage advice and hotel mortgage guide.
Talk through your mortgage options
Tell us about your plans and circumstances. Your initial consultation is free.
Some buy-to-let and commercial mortgages are not regulated by the Financial Conduct Authority. Regulation depends on the mortgage type and circumstances.
Talk through your mortgage options
Tell us about your plans and circumstances. Your initial consultation is free.
Written and reviewed by Davi Thakar
Director & Senior Mortgage Broker
CeMAP Qualified Mortgage and Protection Adviser
Davi founded Option Finance with a vision to deliver transparent mortgage advice from a wide panel of lenders. With over 10 years in financial services, he specialises in complex cases including adverse credit, self-employed borrowers with limited trading history, and large buy-to-let portfolios. He works directly on complex cases and explains each option clearly.
Meet Davi Thakar
