Commercial Mortgage for Guest House | Best Rates & Expert Advice

Guest house mortgages are a type of commercial mortgage made for people who live on the property while running a hospitality venue like a bed and breakfast or a small hotel.

These mortgages are quite different from regular home loans for a few reasons, mainly because they help you finance both where you live and your business. If you’re specifically looking for a Commercial Mortgage for Guest House, it’s important to understand the unique terms and conditions that come with it. Various commercial mortgage lendersprovide options tailored to hospitality sector businesses, including semi-commercial mortgages for mixed-use properties.

If you’re planning to live there and more than 40% of the space is your home, you might qualify for a residential mortgage. But if the property is mostly about the business side, then a commercial mortgage for guest house is definitely the way to go. Understanding the type of mortgage available can help you make the best decision for your investment.

It’s really important to understand these differences so you can pick the right finance option for your guest house business.

The article is updated as of March 31, 2025

Risk Warnings: Commercial mortgages by referral only. The Financial Conduct Authority do not regulate commercial mortgages.

Eligibility Criteria

Securing a Commercial Mortgage for Guest House involves meeting certain eligibility criteria:

• Hospitality Experience – Lenders favor applicants who possess prior experience in the hospitality business. This instills confidence in their ability to effectively manage and operate a successful business.
• Business Plan – You will need to provide a robust business plan to your lender. This plan should encompass profit projections, financial forecasts, a thorough analysis of the market and your competitors, as well as marketing strategies aimed at maximising occupancy rates.
• Deposit Requirements – Commercial investment mortgages generally demand a larger deposit compared to standard mortgages. It’s common to anticipate a down payment ranging from 25% to 50% of the property’s total value.
• Personal Finances – Your financial accounts, including your credit score, assets, and trading history, will also undergo thorough examination. A solid financial performance can significantly enhance your chance of mortgage approval.

Costs Associated with Guest House Mortgages

Obtaining a commercial mortgage for guest house entails various expenses. Key costs to consider include:

• Mortgage Rates – The interest rate on your commercial mortgage financing will greatly influence the overall cost of your loan. Commercial mortgage rates are often higher than residential mortgage rates due to the increased risk associated with commercial elements.
• Fees – When securing a commercial mortgage solution, you’ll encounter various fees, such as arrangement fees, product fees, valuation fees, legal fees, and repayment charges. It’s essential to include these costs in your financial commitments and budget planning.
• Deposit – As previously stated, a significant deposit is required. The specific amount will vary based on the lender’s lending terms and your individual financial situation.

Lenders Providing Guest House Mortgages

In the UK, a variety of lenders provide Commercial Mortgages for Guest Houses. This includes prominent mainstream lenders such as Barclays, Nationwide, Lloyds Bank, and NatWest, alongside specialist lenders such as ABC Finance, Assetz Capital, FC Funding, and 1st Commercial Funding LTD that cater to specific commercial finance lenders.

How Can Our Mortgage Brokers Add Value

Navigating the commercial mortgage application process can be challenging, particularly when searching for a specialised product like a Commercial Mortgage for Guest House. This is where a commercial mortgage broker becomes essential.

Brokers provide expert guidance throughout the process, clarifying various commercial mortgage options, eligibility requirements, and associated mortgage payments. Additionally, they possess an extensive network of guest house mortgage lenders, including those who focus on guest house property financing. This enables them to secure the lowest rates tailored to your unique situation. Furthermore, they assist with the mortgage application process, significantly enhancing your chance of approval.

Take the first step today by requesting a call back, and let one of our CeMAP-qualified mortgage advisers guide you through the process with their expert mortgage advice and access to a wide range of trusted partners offering competitive guest house mortgages.