Premises funding
Commercial Mortgages for Surgery, Clinic and Practice Premises
Own the building your practice trades from. Owner-occupier lending to 80% of value over terms of up to twenty-five years, secured on the property rather than on the goodwill.
The proposition
Rent is an expense. A mortgage is an asset with a payment attached
A practice that owns its premises is a materially different business at exit. The freehold can be retained and let to the incoming principal, sold separately at investment value, or held in a pension. A practice on a short lease with an unhelpful landlord is worth less and sells more slowly — every buyer’s solicitor asks about security of tenure.
Owner-occupied commercial lending is also the cheapest borrowing most healthcare businesses will access. Lenders regard a trading surgery in the hands of a qualified principal as strong security, and will go to 75% or 80% of value on terms up to twenty-five years.
Where the property is purchased alongside the practice, we split the funding so each element sits on the term it deserves — property over twenty-five years, goodwill over fifteen. The saving in monthly cost against a single blended facility is substantial.
Applications
What the facility is used for
Most cases fall into three groups: buying premises already occupied, buying premises to move into, or refinancing a property already owned to release capital at a better rate.
Pension purchases through a SIPP or SSAS are common in healthcare, and lenders on our panel will lend to a pension scheme buying the premises from the practice it belongs to. Structured properly, the practice pays rent to its own pension.
- Buying the freehold of premises the practice already occupies
- Purchasing a surgery, clinic or veterinary premises alongside the goodwill
- Converting retail, office or residential space to clinical use
- Remortgaging to release equity for expansion or a second site
- Purchases by a SIPP or SSAS with the practice as tenant
- Investment purchases of medical centres and let healthcare property
Client outcomes
What ownership changes
Two assets at exit
Goodwill and freehold can be sold together or separately. Retaining the property and letting it to the buyer creates income after you stop practising.
Cost fixed, not reviewed
A mortgage payment replaces a rent subject to upward-only review, which protects the practice’s margin over a twenty-year horizon.
Free to invest in the building
Extending, adding surgeries or reconfiguring becomes a capital decision rather than a negotiation with a landlord.
At a glance
Indicative terms
- Loan to value
- Up to 80% for owner-occupiers; typically 65% to 75% for investment purchases.
- Loan size
- £100,000 to £15m. Larger facilities available on a syndicated basis.
- Term
- 5 to 25 years, capital and interest or part interest only.
- Rates
- Fixed or margin over Bank Base Rate or SONIA, depending on lender and term.
- Property
- Freehold and long leasehold with at least 40 to 50 years unexpired at the end of the term.
- Timescale
- Agreement in principle within days; completion typically 6 to 12 weeks including valuation and legals.
Related funding lines
Questions
Commercial Mortgages — frequently asked questions
Yes. A SIPP or SSAS can purchase commercial property, and lenders will advance to the scheme, usually to around 50% of the property value subject to the scheme rules. The practice then pays a commercial rent to the pension, which is generally free of tax within the scheme.
It is one of the more effective structures available to practice principals, but it must be set up with your pension adviser and accountant from the outset.
Both, but the emphasis differs. Owner-occupier lending is underwritten primarily on the trading business’s ability to service the debt, with the property as security. Investment lending is underwritten on the rental income and the strength of the tenant’s covenant. The distinction changes the loan to value, the term and the rate.
Fixed periods of two, five and ten years are widely available, and some lenders will fix for the full term. Variable products track Bank Base Rate or SONIA at an agreed margin. Because commercial early repayment charges can be significant, the length of the fix should be matched to how long you genuinely intend to hold the property.
Next step
Buying or refinancing premises?
Send the property details and your last two years of practice accounts. We will confirm the loan to value, the likely rate and the realistic timetable.
Prefer to write? Send an enquiry or email info@apexfundingpartners.co.uk.