Short answer: yes — but it depends (quick overview)

Yes. Many hoteliers use a short-term bridge to fund purchase, urgent completion or refurbishment, then refinance to a commercial mortgage once the property is stabilised and a lender is satisfied with valuation and trading evidence. The plan only works if you can demonstrate a clear exit route, meet the later mortgage lender’s underwriting criteria and allow time for valuation and restructuring.

Main conditions at a glance:

• Clear documented exit strategy (refinance timeline and target lender type).
• Valuation that supports mortgage LTV after works and trading stabilisation.
• Sufficient trading evidence (or credible forecasts) where lenders require it.
• Contingency funding to handle cost overruns or temporary trading shortfalls.

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What is bridging finance and when hotels use it

Definition and key differences

Bridging finance (a bridge loan) is short-term, fast-access funding used to “bridge” a timing gap — for example completing a purchase at auction, starting urgent works, or completing a refinance while longer-term capital is arranged. It differs from a commercial mortgage by being higher cost, shorter term (commonly 3–18 months), and more flexible on speed and security.

Common hotel uses

• Buying at auction or when immediate completion is required.
• Refurbishment/refit to upgrade rooms, add facilities or rebrand.
• Funding to reopen or reposition a hotel (stabilisation before long-term lending).
• Short-term cashflow while negotiating a commercial mortgage or to support conversion work.

Mechanics (brief)

• Term: typically 3–18 months.
• Interest: higher than mortgages; can be interest-served monthly or rolled-up (capitalised).
• Security: normally a first or second charge on the property and sometimes director guarantees.

How a bridge-to-refinance strategy works for hotels (step-by-step)

Step 1 — Agree a bridge facility

Secure a bridge lender willing to lend against the hotel (or site) quickly. Agree head terms including term, interest, arrangement and exit fee and whether staged payments for works are allowed.

Step 2 — Complete purchase or start works

Use bridge funds to complete the acquisition or pay contractors. Keep clear records and separate project accounts to show how funds are used — this helps later mortgage underwriting.

Step 3 — Stabilise trading

Open the hotel, improve occupancy and ADR (average daily rate) where possible, and collect management accounts, room booking data and VAT records to evidence performance.

Step 4 — Plan your refinance

Before completing all work, speak to commercial mortgage lenders/brokers to agree what evidence they will require (e.g., independent valuation after works, a 3–6 month trading run-rate, approved licences and planning).

Step 5 — Refinance and repay the bridge

When underwriting is complete and mortgage funds are approved, the bridge facility is repaid at completion and the commercial mortgage takes first charge. If refinance is delayed, you may need to extend the bridge (at cost) or consider sale/alternative exit.

Exit routes: refinance to a commercial mortgage, sale of the asset, or refinance via another short-term or mezzanine facility. Always document the preferred exit and alternative options.

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Typical lender criteria for refinancing a hotel to a commercial mortgage

Property and operational criteria

• Freehold or long leasehold — lenders prefer secure title and predictable lease terms.
• Trading type: fully operating hotel vs. empty building; many lenders require evidence of trading or proven business plans.
• Number of keys, room mix and standard — these affect valuation and lender appetite.
• Location and local market performance.
• Planning permissions, licences (e.g., HMO rules where applicable), and compliance certificates.

Financial and trading evidence

• Management accounts and historic P&Ls where available (typically 12–36 months preferred).
• Occupancy, ADR, RevPAR and EBITDA or adjusted net profit for operating hotels.
• Evidence of bookable revenue (OTA reports, booking engine exports) after reopening/refurb.

Valuation & security

Mortgage lenders will commission RICS-style valuations. Typical maximum loan-to-value (LTV) for hotels varies by lender and property quality — often between 50% and 70% LTV for strong assets, lower for higher risk or specialist venues.

Borrower requirements

• Company or SPV experience in hospitality helps; lenders assess operator track record.
• Credit history and personal or corporate guarantees may be required.
• Some lenders may require a stabilisation period of trading evidence before refinancing.

Because lender appetite varies widely in the hospitality sector, specialist hotel mortgage brokers can significantly improve refinance odds.

Costs, timings and risks to budget for

Bridge costs (typical)

• Arrangement fee: commonly 1–3% (sometimes higher for complex deals).
• Interest: higher than mortgages (rates vary by risk and lender).
• Legal and valuation fees.
• Exit fee or early repayment charge in certain facilities.

Refinance costs

• Commercial mortgage arrangement fee (can be 1–2% of loan).
• Valuation, survey, legal fees, lender monitoring fees, and broker fees (if used).

Timeframes

• Bridge funding: often fast — from a few days to 3 weeks depending on title and lender checks.
• Commercial mortgage refinance: typically 4–12+ weeks (depends on valuation, due diligence and lender caseload).

Key risks

• Valuation shortfall after works — lenders may value lower than forecast, reducing available refinance LTV.
• Trading weaker than projected during stabilisation period.
• Delays to planning, licences or contractor overruns creating funding gaps.
• Higher ongoing interest and fees if refinance is delayed.

Mitigation: conservative financial projections, realistic contractor schedules, contingency reserve (commonly 10–25% of refurbishment cost), professional valuers and early engagement with mortgage lenders.

Practical tips to maximise your refinance success

• Start conversations with commercial mortgage lenders or specialist brokers before or immediately after taking bridge funding.
• Keep clear, separate accounts for the hotel project and maintain up-to-date management accounts.
• Use experienced hotel valuers and produce a “stabilisation pack” showing occupancy forecasts, ADR, marketing plan and management team CVs.
• Allow a contingency of at least 10–20% for refurb works and delays.
• Choose a bridge lender comfortable with staged works and that understands hotels.
• Document the exit strategy in writing and ensure key milestones tie to refinance application timing.

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Short case studies (examples)

Example A — Auction purchase, refurb and refinance

Client bought a 20-key coastal hotel at auction for £850,000 using a bridge. They completed a phased refit (£120,000), reopened and achieved stabilised occupancy after 9 months. An appointed specialist hotel mortgage lender agreed a refinance at 60% LTV, allowing repayment of the bridge and a long-term mortgage term of 20 years.

Example B — Conversion & repositioning

A family-owned guest-house was converted into a 12-room boutique hotel using a bridge to fund conversions and furniture. After 6 months of trading and marketing, the operator provided 3 months of trading data and forward bookings; a commercial mortgage at a lower LTV than purchase was agreed while also releasing modest working capital for seasonal staffing.

Note: these are illustrative only — outcomes vary by property, market and borrower.

How UK Business Loans helps hotels secure bridge and refinance finance

UK Business Loans connects hotel owners and companies (minimum finance requests typically from £10,000 upwards) with specialist brokers and lenders who understand hospitality funding. We are not a lender — we are a lead introducer that makes it faster to find relevant partners.

How it works:

1. Complete a short enquiry form with project and contact details (this is a no-obligation eligibility check).
2. We match your request to lenders/brokers who specialise in hotel bridging and commercial mortgages.
3. Matched partners contact you directly with quotes and next steps.

To learn more about sector-specific options see our hotels business loans page on specialist hotel finance — hotels business loans.

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Important: submitting an enquiry is not an application for credit and does not automatically affect your credit file. It simply lets us match you to lenders or brokers who may contact you with options.

FAQs

Can I always refinance a hotel bridge to a commercial mortgage?

Not always. Refinance is likely if you have a documented exit plan, an independent valuation that supports mortgage lending, and stabilised trading evidence where required. If valuation or trading falls short, lenders may offer lower LTV or ask for additional security.

How long does a typical bridge-to-refinance take?

Bridge funding can be provided quickly (often within days to a few weeks). Refinancing to a commercial mortgage commonly takes 4–12+ weeks depending on lender processes, valuation scheduling and documentation.

Will using a bridge make it harder to get a mortgage later?

Not necessarily. If the bridge is used as planned, completed works are evidenced and the property is trading/stabilised, many lenders view a successful bridge exit favourably. Problems arise where works are incomplete, valuation disappoints, or trading is weak.

Do you advise which lenders to use?

UK Business Loans is an introducer — we connect you with lenders and brokers. We do not provide regulated financial advice. Our matching service speeds up finding lenders who specialise in hotel bridging and commercial mortgages.

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Ready to explore bridge → commercial mortgage options for your hotel?

Start a free, no-obligation enquiry and we’ll match your project with specialist lenders and brokers who can advise on the best route for your property. Complete a short form now — Get Quote Now.

UK Business Loans introduces businesses to lenders and brokers and does not provide loans or regulated financial advice. Funding is subject to lender criteria, property valuation and applicant circumstances. Submitting an enquiry does not guarantee an offer.