What deposit or security is required for a pub commercial mortgage?

Summary (TL;DR) — Typical deposits for a pub commercial mortgage commonly range from around 15% to 40%+ of the purchase price depending on whether the property is freehold or leasehold, its trading performance, the borrower’s experience and lender appetite. Common securities include a first legal charge (mortgage) on the property, director personal guarantees, and fixed/floating charges over business assets. For a tailored view and lender matches, start a Free Eligibility Check — Get Quote Now. Note: the enquiry form is for matching purposes only and is not a loan application.

Quick answer

For a typical pub commercial mortgage expect an indicative deposit of around 15–35% for stronger freehold pubs and closer to 35–50%+ for leasehold, tied or weaker trading cases. Lenders secure loans mainly with a first legal charge on the property (or the leasehold interest), and often require additional business security such as director guarantees or debentures. Exact terms depend on lender type — high‑street banks, specialist pub lenders and alternative funders all vary in appetite and security requirements.

Why deposit & security requirements vary

Deposit and security needs for pub mortgages are not fixed. Lenders assess risk and price accordingly. Key factors that influence requirements include:

• Freehold vs leasehold — freehold is generally more secure for lenders than short or complex leases.
• Trading performance — proven, profitable trading reduces perceived risk and can lower deposit requirements.
• Tied vs free-of-tie — tied pubs (agreements with brewers) bring contract risk which can reduce LTVs.
• Borrower profile — experienced operators and strong director finances may secure better terms.
• Location & asset value — stable markets and realistic valuations improve LTV outcomes.
• Amount and purpose — purchase, refinance or refurbishment affect structure (e.g. bridging then refinance).

Typical deposit / LTV ranges for pubs

Loan-to-value (LTV) is the usual way lenders express how much they will lend against the property value. Below are indicative ranges — treat these as guidance only.

Typical deposit and security by scenario (indicative)

Scenario	Typical LTV	Indicative deposit	Likely security
Established, profitable freehold pub	60–85%	15–40%	First charge on freehold; director guarantees possible
Leasehold or tied pub with average trading	50–65%	35–50%+	Charge over leasehold interest, assignment of lease, personal guarantees
Refurbishment / conversion / development	Short-term bridging then refinance to mortgage	Higher for bridging; then refinance deposit depends on valuation	Bridging charge; additional business security or mezzanine

Note: many mainstream lenders sit nearer the lower end of LTV appetite (often 60–75% for pubs). Lenders base lending on a professional valuation — not the asking price — so factor in valuation discounts.

What security lenders typically ask for

Lenders use a mix of real‑property security and business-level security to protect loans. Common instruments include:

First legal charge (mortgage)

The most common security: a registered legal charge on the freehold title (Land Registry). This gives the lender priority to recover against the property if repayments fail.

Charge over leasehold interest

For leasehold pubs lenders typically take a legal charge over the lease. They also want to review lease length, break clauses and landlord consents. Where a lease is short or complex, deposit requirements increase.

Personal guarantees (directors)

Many lenders require personal guarantees from company directors. Guarantees can be unsecured or secured against personal property. Specialist lenders sometimes accept reduced guarantees in return for higher rates.

Debentures; fixed and floating charges

Debentures or a combination of fixed (specific assets) and floating charges (stock, goodwill, receivables) are used to secure a lender’s wider claim over business assets.

Rent deposit assignments, rent indemnities

Where the premises are leased, assignment of any rent deposit, or a rent indemnity from the outgoing tenant or landlord, provides additional protection to the lender.

Cross-company charges

Where a group structure exists, lenders may ask for charges across related companies or for intercompany guarantees.

Formal security documents are prepared by solicitors and usually registered (Land Registry, Companies House) — expect legal oversight and associated fees.

Alternatives & specialist routes

If a standard commercial mortgage deposit is unaffordable or the deal is time-sensitive, consider alternative routes:

• Bridging finance — short-term, rapid completion; higher costs and lower LTVs but useful to secure a purchase or complete a refurb quickly.
• Mezzanine / second-charge finance — fills funding gaps but is more expensive and typically junior to first charges.
• Vendor finance / deferred consideration — seller-funded element; helpful where the seller is flexible.
• Asset finance — finance equipment, fixtures or fit‑out rather than the property itself.
• Specialist pub & hospitality lenders — lenders who understand tied agreements, seasonal cashflows and pub valuations may be more flexible.

For sector-specific options and specialist lenders, see our dedicated pubs finance resource on pubs business loans.

How to prepare to reduce deposit or get better terms

Improving your presentation and paperwork materially affects deposit levels and security demands. A practical checklist:

• Three years of accounts (where available) and up-to-date management accounts.
• Clear CVs showing pub/hospitality experience for operators and directors.
• Detailed business plan and 12–24 month cashflow forecast showing seasonality.
• Recent RICS valuation or market valuation, and a copy of title/lease documents.
• Quotations for any planned refurbishment, fit‑out or capex.
• Address any historic tax or creditor issues before applying.
• Consider a larger deposit, or a partner/investor, to access better rates and reduced security.

Using a broker who specialises in hospitality can help present your case to lenders in the best light and negotiate security structures.

Fees & other costs to budget for

Beyond the deposit, budget for:

• Valuation and survey fees (RICS survey, structural reports).
• Solicitors’ fees for preparing and registering charges.
• Lender arrangement fees and any commitment fees.
• Broker fees (if applicable) and exit fees for bridging/mezzanine.
• Stamp Duty Land Tax (SDLT) where applicable on commercial purchases.

Remember: a Free Eligibility Check via our enquiry form is not an application and does not commit you to costs. Lenders will disclose fees before an offer.

Short example scenarios

Example 1 — Buying a profitable freehold: Lender offers 75% LTV after valuation. Buyer provides a 25% deposit; lender takes first charge on the freehold and a limited director guarantee. Want to see if you’d qualify? Get Quote Now — Free Eligibility Check.

Example 2 — Taking on a tied leasehold: Lenders require a larger deposit (35–45%), assignment of the lease, and personal guarantees due to tied contract risk. Specialist pub lenders often have tailored solutions.

Example 3 — Refurbishment then refinance: Short-term bridging with high initial costs pays for refurbishment. After stabilised trading, borrower refinances to a longer-term mortgage with a first charge and possibly reduced personal security.

Start your Free Eligibility Check

Want to know which scenario is most like yours and which lenders might help? Complete a short, free, no‑obligation enquiry and we’ll match your business to specialist lenders and brokers.

Suggested form fields we collect: name, business name, phone, email, postcode, loan amount required (we arrange loans and facilities from around £10,000 and upwards), and property type (freehold/leasehold).

Get Quote Now — Free Eligibility Check

Submitting the form is an information step only — it is not an application. We are an introducer and will share your details with selected lenders and brokers who may contact you to discuss options.

Frequently asked questions

What deposit is typically required for a pub commercial mortgage?

Deposits typically range from about 15% to 40%+. Strong trading freeholds can be as low as around 15–25% deposit (LTV up to 85% in rare cases), while leasehold, tied or weaker trading pubs often need deposits of 35% or more. The final requirement depends on valuation, lender policy and borrower strength.

Is a personal guarantee always required?

Not always, but often. Many lenders ask directors to provide personal guarantees, particularly for smaller businesses or where company balance sheets are weak. Some specialist lenders accept limited or no personal security but usually at higher interest rates or with additional business charges.

Will lenders take business assets or stock as security?

Yes — lenders commonly take fixed and/or floating charges over business assets (stock, equipment, fixtures, goodwill). These are typically in addition to a property charge and help lenders secure recovery against trading assets.

What’s the difference between freehold & leasehold for security?

Freehold gives lenders a direct legal charge over the land and buildings, making it simpler and often cheaper to lend against. Leasehold lending depends on lease length, landlord consents and covenants; shorter or onerous leases usually mean higher deposits and more conditions.

Can I use a bridging loan and then refinance?

Yes — bridging loans are often used for fast purchases or refurbishments and subsequently replaced by a commercial mortgage when trading stabilises. Expect higher short-term costs and ensure the refinance plan is realistic to avoid rolling expensive debt.

Does SDLT apply to buying a pub?

Yes, Stamp Duty Land Tax can apply to commercial property purchases. Rates and thresholds change, so check current guidance at GOV.UK or discuss with your solicitor. (gov.uk/explore/tax)

How quickly can I get a decision?

An initial eligibility match via UK Business Loans is quick (usually hours to a day). Lender decisions vary — a credit-approved offer can take 2–6 weeks depending on valuation, survey and legal work; bridging offers can be faster.

How does UK Business Loans help me?

We act as an introducer — we don’t lend. Our free service matches your enquiry with lenders and brokers experienced in pub finance. Completing the form lets us connect you to partners who can provide detailed quotes and next steps.

Closing summary

Deposits and security for pub commercial mortgages vary widely: expect 15–40%+ deposits depending on freehold vs leasehold, trading strength, and lender type. Lenders typically take a first charge on the property plus additional security such as guarantees or debentures. For a quick, no‑obligation view of what you might need, complete a short Free Eligibility Check — Get Quote Now and we’ll match you to the specialist lenders and brokers best placed to help.

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Important: UK Business Loans is an introducer — not a lender or financial adviser. Submitting an enquiry is free and does not commit you to proceed. We share your details with selected lenders and brokers who may contact you. Lenders and brokers will disclose fees, terms and any credit checks before an offer.

1. How much deposit do I need for a pub commercial mortgage? — Deposits typically range from 15%–40%+ depending on whether the pub is freehold or leasehold, trading performance and lender appetite (LTV varies accordingly).

2. What security do lenders usually require for a pub loan? — Lenders normally take a first legal charge on the freehold or a charge/assignment of the leasehold interest and often require additional security such as director personal guarantees, debentures or fixed/floating charges over business assets.

3. Are personal guarantees always needed for a pub commercial mortgage? — Personal guarantees are common—especially where company finances are weak or the borrower is a small operator—but some specialist lenders may accept reduced or no guarantees at higher cost.

4. Can I get finance for a tied pub and how does the beer tie affect lending? — Yes, tied pubs can be financed but the beer tie increases lender risk so expect lower LTVs, higher deposits and close review of the tenancy agreement.

5. Can I use a bridging loan to buy or refurbish a pub and refinance later? — Yes—bridging finance is frequently used for fast purchases or refurbishments and then refinanced to a longer‑term commercial mortgage, though bridging is more expensive and has lower initial LTVs.

6. What steps can I take to reduce the deposit or improve mortgage terms? — Improve terms by supplying 3 years’ accounts/management accounts, a clear business plan and cashflow forecast, operator CVs, a recent RICS valuation, stronger personal finances or a larger deposit and by using a specialist broker.

7. What fees and costs should I budget for when arranging a pub mortgage? — Expect valuation and survey fees, solicitors’ and Land Registry costs, lender arrangement and commitment fees, broker fees (if used), possible bridging exit fees and Stamp Duty Land Tax where applicable.

8. How quickly can I get a decision or offer for a pub commercial mortgage? — A free eligibility match via UK Business Loans is usually returned within hours to a day, while full lender credit decisions and legal completion commonly take 2–6 weeks (bridging can be faster).

9. What documents will lenders ask for when assessing a pub mortgage application? — Typical requirements include company accounts (or management accounts), tax returns, lease or title documents, business plan and cashflow projections, operator CVs and a professional valuation or RICS report.

10. How does UK Business Loans’ Free Eligibility Check work and is it a loan application? — UK Business Loans provides a free, no‑obligation eligibility check that matches your details with suitable lenders and brokers for pub finance, and submitting the form is information-only — not a loan application or credit search.