How to get a mortgage for a bed and breakfast

cup of tea and a decorative flower on a bed at a luxury bed and breakfast
cup of tea and a decorative flower on a bed at a luxury bed and breakfast

Owning and running a bed and breakfast is something many of us dream of. What could be better than living in an idyllic location, running your own business and enjoying the chance to meet new people?

For those who are lucky enough to make this dream a reality, there are several practical steps to overcome – from finding the right property in the perfect location, through to securing a mortgage.

If you’re thinking of buying a B&B for the first time, here’s our guide to getting a mortgage for your dream business venture.

What type of mortgage do I need for a bed and breakfast?

When buying a B&B, you will definitely need a commercial mortgage. In some cases, if you’ll be living in the property and over 40% of the space will be used for your own residential purposes, then you’ll need a regulated commercial mortgage.

You’ll typically be expected to pay a deposit of between 30% – 40% for your commercial mortgage. The exact amount will depend on the terms of the mortgage and the level of risk involved. For first time B&B buyers, lenders will usually require a 40% deposit.

When considering your application for a commercial bed and breakfast mortgage, lenders will take into account the following:

Business plan

When you take out any commercial mortgage, the potential lender will want to see a thorough business plan, clearly demonstrating:

  • How you will run the business
  • Your long-term plans
  • Financial projections
  • Your marketing plan for ensuring high levels of occupancy

Trading history

Lenders will look at the bed and breakfast’s existing trading record and will likely want to see 3 years’ worth of accounts for the business you’re buying.

If the business you are buying does not have a strong trading record, there are still some lenders that will consider your mortgage application, if you can demonstrate that you have a comprehensive plan in place to improve profitability.

Credit history

As with any mortgage application, the lender will want to see that you have a strong credit history. There are lenders that offer bed and breakfast mortgages for those with a poor credit history. If this is the case, you will usually need to find a specialist provider, and you won’t necessarily be able to access the preferred rates.

Your experience

The lender will consider how much experience you have in the sector. Of course, experience isn’t essential, and lenders understand that many B&B buyers are moving into the industry for the first time, but any relevant industry experience will be looked upon favourably.

Speak to a specialist broker

If you’re buying a bed and breakfast, it’s well worth speaking to specialist broker with experience in securing mortgages for B&Bs. They will help you source the most competitive offers, undertake all of the work for you to include the financial business plan, revenue and cash flow projections as well as the marketing plan ,as well as handling all of the required paperwork, which will increase your chances of being approved.

To find out more about how to get a mortgage for a bed and breakfast, get in touch. Call us on 01488 684 834 or email:

Stewart Hindley
Specialist financial experts helping you secure commercial loans across the hospitality, leisure and commercial property sectors.

More by the author