Re-mortgaging a bed and breakfast can offer many advantages, including giving owners the option to secure cost savings with a better rate. With most mortgages you’ll be on a competitive introductory rate for the first 2-5 years before being switched to a higher rate. This makes switching more attractive and means you could save a great deal in the process too if you get it right.
The practise is also a good option if you want to release equity to reinvest in the business, particularly if you have paid off some or all of the original loan. Once the business is up and running you’ll have more financial information to call on to help with your lending, including cash flow statements and occupancy rates. Your experience of the industry will have grown in this time too, making you a more attractive proposition for lenders.
When you do remortgage a property, whether it is your home, a B&B, hotel or an office, you need to consider the cost of doing so. Some lenders will provide fee-free services to attract you, but others will not. You may also incur early repayment charges on your original mortgage. It is always best to look at all of the various costs you will need to pay to work out the best option to take.
To secure bed and breakfast or hotel finance, it is likely you’ll need to go over your business plan with the lender so they can get a better idea of your operations. This is more common now because lenders are being extra careful. Many have changed their views on this type of lending and started to look at the business itself rather than just the property. You should ensure your plan is clear, well presented and includes a wealth of information. It should also let your experience shine through as most lenders are more likely to offer finance to experienced people.
At Stewart Hindley and Partners LLP we offer support and advice for people seeking bed and breakfast and hotel finance as well as funding for any other kind of hospitality business. We are experienced brokers and strive to connect clients with the right lender for their needs. We regularly help people to arrange remortgages so they can either get a better rate or unlock funds. As part of the service we will ensure you are clear on the costs and take the best course of action for your bottom line.