Commercial mortgage rates for hospitality, and what actually drives them
There is no single commercial mortgage rate. This guide explains how the price is actually built, why a trading hospitality asset is priced differently from a let investment, and the levers that move your margin.
Commercial mortgage rates are not advertised headline numbers; each one is priced to the deal as a margin over a reference rate such as the Bank of England base rate or a SONIA-linked rate. For hospitality the margin is usually a little higher than for a simple let commercial investment, because the debt is carried by the trade rather than a contracted tenant, and it moves with the loan to value, the strength of the accounts, the borrower's experience and whether the rate is fixed or variable. Owner-occupied trading assets, holiday lets and closed premises are all priced differently. Any figure is indicative and varies by lender and trading history, so the way to get a real number is to have the case priced by the right lenders.
At a glance
- How rates are setMargin over a reference rate
- Hospitality marginUsually above a let investment
- FixedCertainty, priced off swap rates
- VariableTracks the reference rate up and down
- Main driversLTV, accounts, experience, asset type
- Real numberOnly from pricing the actual case
Why there is no single rate
A residential borrower can compare advertised product rates. A commercial borrower cannot, because a commercial mortgage rate is built for the individual deal. The lender starts from a reference rate, adds a margin for the risk it sees, and the result depends on the property, the trade, the loan to value and the borrower. Two hospitality businesses of the same size can be priced very differently if one has three years of strong accounts and the other is a first-time operator.
The finance we arrange is unregulated commercial lending, and Hospitality Property Finance is not authorised by the FCA. Any rate we mention is indicative, varies by lender and trading history, and is never an offer of credit. The core service is at /services/commercial-mortgages/.
How the price is built
A commercial mortgage rate is a reference rate plus a margin. The reference rate is usually the Bank of England base rate or a SONIA-linked rate for a variable facility, or a swap rate for a fixed one. The margin is where the lender prices the risk, and it is the part a well-presented case can improve. The all-in rate is then the reference rate plus that margin, so when the base rate moves, a variable facility moves with it while a fixed one does not.
| Component | What it reflects |
|---|---|
| Reference rate | Base rate or SONIA for variable, swap rate for fixed |
| Margin | The lender's view of the risk in the deal |
| Loan to value | Lower leverage, keener margin |
| Trade strength | Stronger accounts, keener margin |
| Asset type | Trading asset priced above a let investment |
Fixed versus variable
A variable rate tracks the reference rate, so the payment falls when rates fall and rises when they rise. A fixed rate is priced off swap rates and holds steady for the fixed period, giving certainty at the cost of flexibility, and it usually carries an early repayment charge if you redeem within the term. In a seasonal hospitality business the choice is really about cash-flow certainty: a fix protects the budget through a rate cycle, while a variable rate keeps you flexible if you expect to refinance or sell.
Christie & Co and the wider hotel market expect improving debt costs to support 2026 investment volumes, which is why the fixed-versus-variable decision is timing-sensitive. Fixing locks in today's expectation; staying variable keeps the upside if rates ease. Neither is right in the abstract, only against your hold plan and your appetite for payment movement.
What moves your margin
The margin is the negotiable part, and a handful of factors move it more than anything else. Presenting them well is most of what turns an indicative quote into a keener one.
- Loan to value: more deposit and lower leverage earns a keener margin
- Trading accounts: two or three years of strong, verifiable figures beat a projection
- Experience: a proven operator is priced below a first-time buyer
- Asset and tenure: a freehold trading asset is priced differently from a leasehold one, covered at /guides/freehold-vs-leasehold-hospitality/
- Interest cover: more headroom on debt service supports a lower margin
Holiday lets and serviced accommodation are priced on their own specialist terms, set out at /guides/holiday-let-mortgage-guide/ and /guides/serviced-accommodation-finance-guide/, while a closed or unmortgageable property is usually funded with short-term bridging first, at /guides/bridging-loans-for-hospitality/.
How we get you a real rate
We do not quote a number off a rate card, because there is not one that means anything for a trading asset. We build the case, present the accounts and the trading story the way a specialist credit team reads them, and put it to the lenders whose appetite fits, so the pricing that comes back is real. We then compare the offers on margin, fees, term and flexibility, not just the headline rate. We are an arranger, not a lender, and every case is priced and negotiated by Matt Lenzie personally.
Commercial mortgage rates for hospitality, and what actually drives them: common questions
What is a typical commercial mortgage rate?
There is no single typical rate, because each is priced as a margin over a reference rate to the individual deal. A trading hospitality asset is usually priced a little above a simple let commercial investment, and the all-in rate moves with the base rate or swap rate underneath it. The only reliable number is one produced by pricing your actual case, and it varies by lender and trading history.
Are commercial mortgage rates higher than residential rates?
Generally yes. Commercial lending carries more risk for the lender and is priced with a margin over a reference rate rather than an advertised product rate, so the all-in cost is usually above a residential mortgage. A trading hospitality asset, where the debt depends on the business, tends to be priced above a straightforward let commercial investment.
Should I fix my commercial mortgage rate?
It depends on your hold plan and appetite for payment movement. A fix gives budgeting certainty through a rate cycle but usually carries an early repayment charge, while a variable rate keeps flexibility and falls if the base rate falls. In a seasonal hospitality business, cash-flow certainty often argues for fixing, but only against your specific plan.
Will interest rates come back down?
No one can promise a level, but the hotel market and Christie & Co expect improving debt costs to support investment into 2026. That is a market expectation, not a guarantee, so the practical decision is whether to fix today's rate for certainty or stay variable to keep any upside if rates ease. We do not forecast rates; we structure around your plan.
What income do I need to get a commercial mortgage?
A commercial mortgage is sized on the property's trade and the interest cover it supports, not a personal salary. The lender wants the trading income to cover the debt service with headroom, usually measured through a debt service cover ratio, plus a deposit of 25 to 40 percent and relevant experience. Strong, verifiable accounts matter far more than any single income figure.
Do holiday lets and serviced accommodation have different rates?
Yes. They are funded by specialist lenders on their own terms, priced on projected or actual letting income rather than a standard trading covenant. Rates and criteria differ from a hotel or pub mortgage, which is why they have their own guides at /guides/holiday-let-mortgage-guide/ and /guides/serviced-accommodation-finance-guide/.
Ready to take a deal to market?
Send us the scheme and the numbers and we will come back with a view on fundability and likely terms within one working day.