Hot Topic How To Buy A Care Home Finance Explained

Buying a care home looks straightforward on paper, but it becomes more complex once you start asking the right questions. What is the deposit amount? What documents do you need for a mortgage? Which lenders will consider your application? And what will be the interest rates for the mortgage? 

Whether it’s your first acquisition or you’re expanding your portfolio, the structure of your funding can make or break the deal. 

First-Time Buyers vs Experienced Operators 

A care home purchase is a business investment, not a simple property transaction. So, the lenders will want to see your experience in the field before approving your application. 

First-Time Buyers 

For first-time buyers, this can often be challenging. Lenders want reassurance that you have a good understanding of the operational realities of running a regulated care business. Lenders expect the buyer to have experience in healthcare management, senior care roles, or operational leadership. A well-structured business plan is non-negotiable. 

Key factors that play a vital role for first-time buyers: 

For first-time care home buyers, the deposit requirement is usually higher than for residential purchases. In general, it can be around 30% or more of the purchase price. 

Experienced Operators 

Care home purchase applications from experienced operators are assessed differently. The main focus of lenders remains on trading performance across your existing portfolio, occupancy levels and Care Quality Commission ratings.  

Lenders typically consider: 

Understanding Care Home Funding Structures 

Most care homes in the UK are purchased using commercial mortgages, which work in a similar way to residential mortgages but are underwritten based on the performance of the business along with the property value. 

For care home purchases, lenders will be more focused on business plans, projected cash flow, historical accounts and sustainability of income streams. 

Care home mortgages are typically structured around: 

Apart from property acquisition finance, many lenders may need additional funding for other requirements, such as business operations and future growth. Supporting funding structures may include: 

The Timelines: From Application to Completion 

A successful care home purchase requires careful planning and patience. The funding process can have several stages: 

Step 1: Preparation & Pre-Qualification 

Before submitting the application, gather all the key documents related to the property, business, CQC reports, financial forecast and more. This accelerates initial assessments. 

Step 2: Loan Application