Opening a bed and breakfast (B&B) can be a great way to generate income while stepping back from the typical 9 to 5. It’s hard but rewarding work, and enables you to create a business that reflects your personality and passion as a hospitality business operator.
However, unless you live in a large property with a significant number of spare rooms, you will need to invest in a new property in order to set up a B&B business.
In most cases, that will mean taking out a mortgage. But what sort of mortgage will you need? And how much deposit will you be expected to pay when you buy your bed and breakfast?
As with any mortgage, different lenders will have different requirements when it comes to deposits for a B&B. The type of mortgage you will need will depend on a number of factors, including how much of the total space in the property will be used for commercial purposes.
Deposit for a commercial mortgage
In most cases, if you are using less than 40% of the property for personal use, you will require a commercial mortgage, or a semi-commercial mortgage.
Most commercial mortgages require a deposit of between 30% and 40%, depending on the level of risk they deem your business to come with and the type of commercial mortgage you have applied for.
Buying a B&B without a deposit
Whichever way you buy your B&B you will need a deposit.
If you don’t have a cash deposit for your bed and breakfast, you may be able to release equity from your existing property or another property to release the necessary funds for the purchase of the new B&B and Stewart Hindley can help with this.
If you’re considering buying a bed and breakfast, it’s important to speak to someone experienced in the hospitality finance sector to ensure that you are aware of all the funding options available to you. Get in touch to speak to one of our skilled and experienced team.