How do banks assess applications for hotel loans?

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season4
Posts: 49
Joined: Wed Jun 24, 2009 3:39 pm

How do banks assess applications for hotel loans?

Post by season4 »

Hello Home Loan Forum,

I’m from Longreach and I’m looking to purchase a small hotel here. The property is worth $570,000 and I need to take out a ‘hotel loan’ to be able to afford it.

My concern is my lack of understanding of how the bank will assess my loan application. One of my friends who bought a house this past year recommended me to make use of this forum. So can anyone in this forum please clear this up for me?

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How do banks assess applications for hotel loans?

Post by Otto Dargan »

Hi and welcome to the forums season4,

Lenders most often consider hotels to be ‘specialised’ commercial properties. The amount you may be qualified to borrow with a hotel loan may therefore be significantly reduced in comparison to other types of commercial properties.

This may be due to the fact that hospitality businesses like these operate within a small market. Thus, they tend to be more prone to poor management than any other commercial enterprise. The risk posed by the venture may well be why lenders take more caution when assessing this type of loan.

Lenders may normally take your experience in the industry into consideration before they approve your application for a hotel loan. Your income type, credit history, asset position, and industry experience may all be used when assessing your loan application.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

season4
Posts: 49
Joined: Wed Jun 24, 2009 3:39 pm

Re: How do banks assess applications for hotel loans?

Post by season4 »

Hey Otto,

Thank you so much for the swift reply. I talked to my friend, who had recommended this forum the other day, and I came to know that you guys can also help out apart from the forums. Maybe I can consider hiring your services if I know exactly how you guys can help me.

Also, can you please let me know how long it will take to reach settlement on the hotel?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How do banks assess applications for hotel loans?

Post by Otto Dargan »

Hi season4,

It may usually take around 45 - 60 days to reach settlement on a hotel. Please bear in mind that you may need to apply for a liquor and gaming licence if your hotel sells alcohol or conducts gaming. This may take another eight weeks to process and approve.

We have a strong bond with the commercial section of major lenders which gives us an edge when negotiating loans with a lender. Depending on your situation, we may be able to help you: Our mortgage brokers are experts at assessing difficult loans and getting them approved.

By applying with the right lender, you may be able to take advantage of the commercial loan features that are right for you. Please note that we normally do not charge you for our services.

You can visit our website to find out more about hotel loans and the services we offer. You can also give us a call on 1300 889 743 or fill in our free assessment form to find out how our mortgage brokers can help you with your situation.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

season4
Posts: 49
Joined: Wed Jun 24, 2009 3:39 pm

Re: How do banks assess applications for hotel loans?

Post by season4 »

Hi Otto,

Your services look very promising. I’d really like to speak with one of your brokers about the loan. I’m going to meet the owner of the hotel I’m looking to buy on Thursday. I’ll give you a call next week to further discuss the loan application process. Gratitudes for your help. Have a great day :)

geebee333
Posts: 39
Joined: Wed Jan 02, 2013 11:05 am

Re: How do banks assess applications for hotel loans?

Post by geebee333 »

Hello there,

I am also looking to take out a commercial loan to buy a hotel. I have not found a property yet but I am looking for something between $400,000 to a maximum of $500,000. I was informed by a friend that I may need to provide security for the loan.

I would like to know what sort of property is considered an ‘ideal’ security by lenders. Is there anyone in this forum who can help me?

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Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How do banks assess applications for hotel loans?

Post by Otto Dargan »

Hi geebee333,

If you are applying for a hotel loan then the lenders may consider an ideal security to be a:
  • Mortgage over hotel property (or lease, if you are getting a lease doc commercial loan).
  • Registered or floating charge or Bill of Sale over the business assets of the hotel.
  • Director’s guarantee.
  • Deed of consent between lessor/lessee and the lender.
  • Specific charge or security over the hotels’ liquor licence.
  • Related licences for gaming or off-licence packaged liquor operations (not applicable in WA and SA).
If you have further queries regarding hotel loans then feel free to visit our website or give us a call directly.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

geebee333
Posts: 39
Joined: Wed Jan 02, 2013 11:05 am

Re: How do banks assess applications for hotel loans?

Post by geebee333 »

I would like to speak with you directly if you do not mind. Thank you so much for taking the time to reply. I will give you a call by the end of the week to discuss my situation.

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