B&B and Guest House Mortgages UK

A B&B or guest house mortgage funds a property that is both your home and your business. Depending on the size of the business and how much of the building you live in, it can be a regulated residential mortgage or a commercial mortgage assessed on the trading income.

Getting that first call right matters. Apply to the wrong type of lender and you can waste weeks. Apply to the right one and a guest house is very financeable.

This guide covers which type of mortgage fits, what lenders check, deposits, costs and holiday lets. For the bigger picture, see our commercial mortgage guide.

Can you get a mortgage on a B&B or guest house?

Yes. Smaller guest houses where you live in a big part of the building can often go to residential lenders that accept a business element. Larger guest houses and small hotels usually need a commercial lender who looks at the trading accounts. Expect to put down 25% to 40%, depending on the route and the trading record.

Which type of mortgage fits?

Set-up	Usual route
A family home letting one or two rooms on the side	Some residential lenders, with permission for the letting
A guest house where your living space is at least 40% of the building	Regulated mortgage from a lender that accepts guest houses
A larger guest house or small hotel with a smaller owner’s flat	Commercial mortgage, assessed on trading income

The 40% test comes from the FCA’s definition of a regulated mortgage. It is set out in PERG 4.4 of the FCA Handbook. Lenders draw their own lines too, so check before you make an offer.

Which situations do lenders see most?

These are illustrative situations, not Option Finance client outcomes.

Buying a running guest house

The business has a trading record you can show the lender. This is the easiest route to finance.

Get the seller’s accounts early

Turning your home into a B&B

There is no trading record yet. Lenders lean on your other income and want a bigger deposit.

Check with your current lender first

Seasonal coastal business

Most bookings come in summer. Lenders look at the whole year and how you cover the quiet months.

Show monthly bookings

Selling up and staying put

You want to stop trading and keep it as your home. A residential remortgage may be possible.

The property needs to work as a house

What do lenders look at?

Trading accounts, usually two to three years
Occupancy and room rates through the year
Seasonality, especially in coastal and rural areas
Your experience in hospitality or running a business
Other income you or your partner earn
The property, including how easily it could be sold as a house if the business stopped

Illustration only

A couple buy a six-room guest house with a three-bedroom owner’s flat for £550,000. A lender offering 70%, £385,000 over 25 years at 7%, would expect payments of about £32,700 a year. With trading profit of £58,000, the business covers the payments about 1.8 times.

Are holiday lets different?

Yes. If you plan self-catering units rather than serviced rooms, you need a holiday let mortgage. The special furnished holiday let tax rules were abolished in April 2025. See our holiday let mortgage guide.

What costs should you plan for?

Stamp Duty: depends on the mix. A building with a business part and a home may be charged mixed-use rates, but where it is mainly a dwelling residential rates can apply. GOV.UK explains non-residential and mixed-use rates. Your solicitor will confirm.
Valuation, which may be a trading valuation for larger businesses
Arrangement and legal fees
Licences and compliance, such as fire safety and food hygiene

Frequently asked questions

Can I get a residential mortgage on a guest house?

Sometimes, if it is mainly your home and the business is small. Larger guest houses usually need a commercial or specialist lender.

How much deposit do I need for a B&B?

Usually 25% to 40%. It depends on the trading record, the owner’s accommodation and the lender.

Is a guest house mortgage regulated?

It is likely to be if you or close family live in at least 40% of the building. Otherwise it is usually unregulated.

Can I convert my home into a B&B?

Check with your current lender first, as you may need permission. Planning and licensing may also apply.

Do lenders accept seasonal income?

Many do. They look at the full year and may test affordability against the quiet months.

How many years of accounts do I need?

Usually two to three. For a business you are buying, lenders look at the seller’s accounts.

Speak to Option Finance about your guest house

Tell us about the property, how much of it you will live in and the trading figures. We will tell you straight which type of mortgage fits and which lenders are realistic.

Book a free initial consultation using the enquiry form below. See also our commercial mortgage advice, hotel mortgage guide and semi-commercial mortgage guide.

Some buy-to-let and commercial mortgages are not regulated by the Financial Conduct Authority. Regulation depends on the mortgage type and circumstances.

Important information

If you will live in the property and it is at least 40% of the building, the mortgage is likely to be regulated by the Financial Conduct Authority.

Figures are illustrations, not quotes. Lender criteria change often.

Your home may be repossessed if you do not keep up repayments on your mortgage. This guide is general information, not a personal mortgage recommendation.

B&B and Guest House Mortgages