Mortgaging A B& B

Mortgaging A Bed and Breakfast

2025 August update.

Interesting Facts About B&Bs in Niagara-on-the-Lake

Over 150 B&Bs operate in Niagara-on-the-Lake alone, making it one of the most concentrated regions for this type of accommodation in Canada.
95% of a B&B’s value is typically tied to the real estate itself—not the business revenue. That’s why residential mortgages are often used, especially for B&Bs with three rooms or fewer.
Commercial mortgages are tricky: Banks are hesitant to finance B&Bs with more than three rooms due to their classification as tourism businesses, which are seen as higher risk post-pandemic.
Zoning matters: Properties zoned as “Country Inns” may require commercial financing, while those zoned residential can sometimes qualify for conventional mortgages.
Couples dominate ownership: Most B&Bs are purchased and operated by couples, and lenders often factor in one partner’s external income when assessing mortgage eligibility.

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The great thing about financing a Bed and breakfast is that it does not have to have a large start up cost compared to many other businesses. The biggest portion of the investment is the residential real estate. The cost of the real estate depends on where and what you purchase. Getting a conventional residential mortgage for the bed and breakfast becomes the starting point of the overall business plan. All the information provided on this website assumes that your Bed and Breakfast will be in the Niagara Region or at least the property will be zoned residential.

1) Bed and Breakfasts in Canada are still a nouvelle idea. Banks do not know how to handle them and therefore getting a mortgage is difficult. Although Bed and breakfasts are normally zoned residential, you will be running it as a home based business therefore banks will want to use commercial criteria and rates for the mortgage. Commercial rates are much higher than residential rates. That should not be the case. The exception to this is if it is greater than 3 bedroom bed and breakfast and is zoned as a "Country Inn" in Niagara on the Lake. Then you may have to get a commercial mortgage.

2) As with all new businesses, banks will not consider the revenue from the business until you have a proven track record. After 3 years and you are ready to renew the banks will use the revenues from the Bed and Breakfast. From the banks perceptive a bed and breakfast is similar to a consulting business - just because the previous owner did $70K does not mean you will, therefore in order to qualify for a mortgage, you need to have approximately 30 - 35% down.

As with any residential mortgage, the lender will also require a report on the physical condition of the property in order to be assured that it is structurally sound.

Bed and Breakfasts for Sale Niagara-on-the Lake

Trish Badham, Agent Bosley Real Estate Brokerage

Mortgaging A Bed and Breakfast

Interesting Facts About B&Bs in Niagara-on-the-Lake

Other Topics

Bed and Breakfasts for Sale Niagara-on-the Lake

Trish Badham, Agent Bosley Real Estate Brokerage

Mortgaging A Bed and Breakfast

Interesting Facts About B&Bs in Niagara-on-the-Lake

Other Topics

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