United Kingdom. Licensed trade property
Pub mortgage: what a lender is actually lending against
A pub mortgage is not a mortgage on a building. It is lending against a trading business that happens to own premises, and the two are valued in completely different ways. This calculator shows both: the going concern value from fair maintainable trade, and the bricks and mortar value if the pub stopped trading. The gap between them is the part of your loan supported by the business, and it is the part a lender is most careful about.
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What this is based on
- Rates are built as the Bank of England's Bank Rate plus a margin. Bank Rate has been 3.75% since 18 December 2025 (Bank of England). Some lenders price over their own cost of funds instead, which you cannot track independently; ask which yours uses.
- No margin is published here as typical. Commercial lending is priced per deal against the property, the covenant and your experience, and no public source sets a market rate, so the defaults above are round numbers to edit rather than a benchmark.
- Capital and interest and interest only are both shown because commercial terms are frequently written on one and quoted on the other. The gap between the two lines is the capital you are repaying, not a saving.
- Fees are shown separately from the loan. Lenders will often add the arrangement fee to the advance, which spreads it but charges interest on it for the full term; the calculator assumes you pay it on completion so the two options can be compared.
- Not modelled: early repayment charges, exit fees, and the cost of any required valuations during the term. Ask for all three in writing before you compare quotes.
- A trading pub is valued as a going concern, normally a multiple of fair maintainable trade, the sustainable net profit a reasonably efficient operator would achieve. That is a valuation convention rather than a rule, and the multiple is a matter for the valuer.
- The bricks and mortar figure is what the building is worth if it stops trading. Lenders look at both, and the gap between them is the part of your loan supported by the business rather than by the property.
- Fair maintainable trade is not last year's profit. A valuer normalises for an operator's own drawings, one-off events and any trade the business would not sustainably retain, which is why a vendor's accounts and a valuation frequently disagree.
Pub Mortgage Calculator is an independent introducer site operated by Ellul Solutions Ltd. We are NOT authorised or regulated by the Financial Conduct Authority, and we are neither a lender nor a broker. We do not advise, arrange or recommend any mortgage, facility or firm: we introduce you to lenders and brokers by passing your details to them, and they deal with you directly. We may be paid a commission for that introduction by the firm we introduce you to, and it never changes what you are quoted. Nothing here is financial, legal or tax advice. No rate or margin is published on this site because licensed trade lending is priced and valued per case against the trade, the tie, the location and the operator, and no public source sets a market rate or multiple. Fair maintainable trade and going concern value are valuation conventions; what they are for a specific pub is a matter for a qualified valuer and not for this calculator. Commercial lending against a trading property is normally outside FCA regulation, so the Financial Ombudsman Service and Financial Services Compensation Scheme may not be available to you, and arrangements where you live on the premises can raise questions to take advice on. Check any lender or broker on the FCA's Financial Services Register before sending documents or paying anything.
How a UK pub is valued for lending, and what moves it, 2026
Last updated
Pub lending turns on a valuation convention most borrowers meet for the first time during the transaction. This table sets out what a valuer normalises, which direction each adjustment moves the number, and the question to ask before instructing anyone.
The Bank Rate figure is the Bank of England's published rate, 3.75% effective 18 December 2025, read on 15 August 2026 and cited below. No multiple, margin, loan to value or minimum cover ratio is published, because licensed trade lending is priced and valued per case against the trade, the tie, the location and the operator, and no public source sets a market standard. Fair maintainable trade is described as a valuation convention rather than as a defined figure: what it is for a given pub is a matter for the valuer, and the calculator's multiple input exists to be edited rather than to assert a level. Whether particular arrangements are regulated is a question for your own advisers.
| What the valuer adjusts | Which way it moves value | Why | What to ask, in writing |
|---|---|---|---|
| Operator's own drawings | Usually up, once normalised | A valuer assumes a reasonably efficient operator, not the current one | How are the vendor's drawings being treated? |
| One-off trade | Down | A festival year or a road closure is not sustainable | What have you stripped out as non-recurring? |
| Tied or free of tie | Tied usually lower | A tie constrains margin and therefore sustainable profit | Is this valued tied or free of tie, and does the tie transfer? |
| Accommodation and food mix | Up where diversified | Wet-led trade is more exposed than a mixed business | How is the food and rooms trade being weighted? |
| Condition and capex needed | Down | Deferred maintenance comes out of future profit | What capex has been assumed in the maintainable figure? |
| Alternative use value | Sets the floor | A pub that can convert is worth more dead than a remote one | What is the bricks and mortar figure separately from the going concern? |
| Location and catchment | Both ways | Drives both trade and alternative use | Is there any planning protection on the use? |
| Trading record length | Down where short | A new operator has no maintainable record to test | How many years of accounts do you need? |
- A trading pub is valued as a going concern from fair maintainable trade rather than as a building, and lenders also take a separate bricks and mortar figure.
- Fair maintainable trade is what a reasonably efficient operator would sustainably achieve, which is why a vendor's accounts and a valuation often disagree.
- The gap between going concern and bricks and mortar value is the part of a loan supported by the business rather than by the property.
- A tie constrains purchasing margin and therefore the sustainable profit a valuer will accept, so tied and free of tie pubs are not comparable on a single multiple.
- Bank Rate has been 3.75% since 18 December 2025, down from 4.00% in August 2025 and 4.25% in May 2025.
Cite this page
“How a UK pub is valued for lending, and what moves it, 2026”, Pub Mortgage Calculator, https://pubmortgagecalculator.co.uk/ (updated 2026-08-15). The Bank Rate figure is the Bank of England's published rate, 3.75% effective 18 December 2025, read on 15 August 2026 and cited below. No multiple, margin, loan to value or minimum cover ratio is published, because licensed trade lending is priced and valued per case against the trade, the tie, the location and the operator, and no public source sets a market standard. Fair maintainable trade is described as a valuation convention rather than as a defined figure: what it is for a given pub is a matter for the valuer, and the calculator's multiple input exists to be edited rather than to assert a level. Whether particular arrangements are regulated is a question for your own advisers.
Want this priced by someone who lends on pubs?
Trading premises are underwritten on the business, not just the bricks. Tell us what it is and a broker who places pub and leisure finance will come back with terms.
The detail
Sourced, dated, kept current.
Fair maintainable trade, and why it is not last year's profit
Pubs are valued on what a reasonably efficient operator would sustainably earn. What valuers add back, what they strip out, and why vendors disagree.
Going concern or bricks and mortar: which one you are borrowing against
Lenders take both figures and underwrite cautiously to the gap. What that means for deposit, term and personal guarantees.
What to establish before paying for a pub valuation
Tie, planning, trading record, licence and capex. The free questions that decide whether a pub purchase is financeable at all.
Common questions
How is a pub valued for a mortgage?
As a going concern, normally a multiple of fair maintainable trade, which is what a reasonably efficient operator would sustainably achieve rather than what the current owner made last year. Lenders also take a separate bricks and mortar figure for the building if it stopped trading. Both matter, and the gap between them is the part of a loan supported by the business rather than by the property. We publish no multiple because it is a matter for the valuer on the specific pub.
Why does the valuation differ from the seller's accounts?
Because fair maintainable trade is a normalised figure rather than an extraction from the books. A valuer adds back the operator's own drawings and personal costs, since the assumption is an operator paid at market rate, and strips out trade that will not repeat, such as a festival year or a competitor being closed for refurbishment. Deferred capital expenditure also reduces the sustainable figure. That is why vendors and valuers so often disagree.
Does a tie affect what I can borrow?
Yes. A tied pub buys its drink from a specified supplier, which constrains purchasing margin and therefore the profit a valuer will treat as maintainable. Tied and free of tie houses are not comparable on a single multiple. Establish which you are buying and whether the tie transfers with the property, because it is a question about the value of the asset rather than a detail of supply arrangements.
Why is the lender asking for a personal guarantee?
Usually because part of the loan sits above the bricks and mortar value and is therefore supported by the trade rather than by the property. That is the risky portion from the lender's side, and it is where deposit requirements, shorter terms, tighter covenants and guarantees come from. You can reduce the gap with deposit or accept it in the structure, but discovering it at offer stage having modelled on going concern value alone is the avoidable mistake.
What if the pub is closed or has poor accounts?
Expect to be treated as a development or refurbishment case rather than as a trading business purchase, and expect a much narrower lender pool. A pub with a short or interrupted record has no maintainable figure to test, which is the input the whole valuation method depends on. Price and structure the deal on that basis from the outset rather than hoping a lender takes a different view.
What should I check before paying for a valuation?
Five things, all free. Whether the pub is tied and whether the tie transfers. The planning position, including any protection on public house use, since it sets the floor under your loan. How many years of accounts a lender wants and whether the seller can produce them. The premises licence and its conditions, because conditions on hours or activities feed straight into maintainable trade. And the capital expenditure the building actually needs.
Is a pub mortgage regulated?
Normally not. It is commercial lending to a business against a trading property, so the consumer protections that attach to residential borrowing generally do not apply and the Financial Ombudsman Service and Financial Services Compensation Scheme routes may not be open to you. Arrangements where you live on the premises can raise questions, so take advice on your own position. Check any lender or broker on the FCA's Financial Services Register before sending accounts.
Sources
Price both valuations, not just the payment
Going concern from fair maintainable trade, bricks and mortar separately, and the gap between them that decides your structure.
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