How B&B finance works
Buying a B&B is usually financed with a commercial mortgage. Lenders look at the business's trading accounts and occupancy, as well as the property. If you live on site, some lenders treat it as part home, part business.
Deposits are typically larger than for a home, and lenders will want to see that the business's income covers the repayments.
Worked example
A £600,000 B&B with a £180,000 deposit means borrowing £420,000. At 7% over 25 years, the repayment payment is £2,968.47 a month; interest-only it's £2,450.00 a month.
The calculator works interest out monthly. Lenders may use other methods, and some treat part of the property as your home, so rely on the figures in your offer.
Before you buy
Check the business's accounts and bookings over several years, as hospitality income can be seasonal.
What this calculator assumes
The calculator treats the B&B loan as a single loan on one nominal rate for the whole term, repaid in equal monthly payments, with interest worked out monthly at one twelfth of the annual rate. Enter the price of the whole property, including any owner accommodation.
It leaves out the cost of fixtures, stock and working capital, occupancy swings and business rates, so treat the result as a guide for comparing options rather than an offer.
Inputs for the bed and breakfast loan calculator
Property price
The price of the B&B or guest house.
Deposit
Your deposit.
Interest rate (per year)
The annual interest rate on your mortgage. The rate shown is only an example, so enter the rate from your quote.
Term
How many years you'll repay over.
Repayment type
Repayment clears the loan over the term. Interest only leaves the full loan to repay at the end.
CALCULATOR QUESTIONS
Bed and breakfast loan calculator questions
What kind of mortgage do I need for a B&B?
Usually a commercial mortgage, assessed on the business's trading figures as well as the property.
How much deposit do I need?
Typically more than for a home. Lenders' requirements vary.
What if I live in the B&B?
Some lenders treat properties with owner accommodation as semi-commercial, which can affect the terms.
Does this include fees?
No. Valuation, legal and arrangement fees are extra.