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Mortgages for care homes

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Feb 8, 2023

How to get a mortgage for a care home in the UK

If you want to purchase or renovate a care home, you may be looking at potential financing solutions. Whether a bridge loan or a commercial mortgage, it can be hard to know precisely which is the right solution for you.

Here at Loan Corp, we are determined to help you find the perfect commercial finance solution for all your business or personal needs – this includes mortgages for care homes!

Read on to find out precisely what you will need to successfully apply for a care home mortgage and how we can help you get the best deals in the UK!

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Can you get a commercial mortgage for a care home?

Investing in a care home can be a worthy but expensive endeavour. Thankfully, there are ways you can access the funding you need to complete your care home purchase.

One of the most common ways to fund a care home purchase or renovation is through a business or commercial mortgage. As care homes are classed as commercial property, most funding options will be commercial options.

Thousands of lenders across the UK offer commercial mortgages, so you will want to take your time to familiarise yourself with lender criteria. Read also: B&B Loans: Bed and Breakfast Finance Loans.

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What do lenders want to see before approving a care home mortgage?

Before you apply for a care home mortgage, there are a few things you will want to prepare. The exact criteria needed to successfully apply for a mortgage will differ from lender to lender. Most UK lenders use a few consistent requirements.

Take a look below to see what you must prepare before applying for a care home mortgage!

Latest CQC report

A CQC (Care Quality Commission) report is a universal rating used to gauge how well a care home has been maintained. It is an extremely common way for people looking to rest in a care home to quickly get a sense of how well-maintained a particular care home is.

In the UK, it isn’t uncommon for care home mortgage lenders to require the latest CQC report regarding the care home you want to purchase. This will help them decide whether or not they are willing to invest in your purchase.

The previous or current owner of the care home you are looking to purchase will generally have a CQC report at hand. Most are also published online so that prospective occupants can easily find them.

Try to gather any documentation you need for your mortgage application beforehand. This will help speed up the application process.

Occupancy rates

A care home is generally only as commercially successful as the number of occupants it currently has. As lenders will be looking at your care home as a commercial investment, they may wish to see previous occupancy rates.

This will give them an insight into how successful the care home has been in the past and how successful it could be under your ownership. It will also provide them with any added security needed to provide you with a mortgage or a loan.

Again, you can also ask the current care home owner for these rates as they will usually share these details with any potential buyer. Some care homes will also publish their occupancy rates, so be sure to check online to see if you can find them that way.

Business plan

When applying for a commercial mortgage or enterprise finance guarantee loan, you may need to share your business plan. This allows lenders to see whether or not you are a worthy investment to them and how likely they are to receive all their loans back.

Not all commercial mortgages for care homes will require this, but there are a few lenders in the UK who do require a glimpse into your business plan.

Ideally, before you start your application process, it may be worthwhile to construct a business plan. This way, if you are ever asked for a plan from a lender, you will be able to provide them with any documentation that is required.

Another great tip to keep in mind is to ensure that you, or a selected manager, has a registered management qualification. This will help solidify your business plan and will improve your chances of successfully applying for a care home mortgage or loan.

Credit score

One of the very first things any mortgage lender will check is your current credit score. This can either help you get the greatest deals and lowest interest rates, or it can be a massive detriment to your application.

There is no set single measurement for credit score as most banks and lenders have specific criteria and will use a range of different scoring methods. However, there are a few ways out there you can get an idea of your current credit score.

Most mobile banking apps will now allow you to get a brief overview of your credit score so you can check whether or not it is positive. Experian is also one of the most widely used ways you can check your credit rating!

Trading history

If you already have a strong trading history in the care sector, then applying for a care home mortgage will generally be far easier. Lenders love security, and strong trading history can be a great way to show them their money is safe.

It is also completely possible to apply for a care home mortgage without any trading history, although it can be slightly more difficult. You will generally need to provide up to date information regarding your commercial finances and trading accounts.

The lender may also want to see the trading history of the care home itself. As you are using a mortgage to pay for a property, they will want to verify that it is a worthy investment for both yours and their finances.

A typical lender will expect to see the past two years of trading history regarding the property you are looking to purchase. But this can largely depend on the lender criteria – not all lenders will require this.

If this is your first time applying for a mortgage, then we would highly recommend you get in touch with a mortgage broker. They provide mortgage advice that can be extremely valuable and help you access lower interest rates than you may typically qualify for!

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What Deposit Size Do Care Home Mortgages Require?

The size of your deposit will generally include a range of factors, from the size of your overall commercial mortgage to your credit score. A typical deposit amount for a care home mortgage in the UK will be anywhere between 20 and 40% of the overall borrowed amount.

Here are a few extra things you will need to consider when trying to determine how much deposit you will need to pay:

Mortgage Amount

The total mortgage you are planning on borrowing will perhaps have the largest impact on the deposit you will need to pay. A larger mortgage will come with more risks to the lender, which is why they may require a larger deposit.

You may be able to negotiate a smaller deposit through a mortgage broker, which can be a great way to save yourself a large up-front fee. You could also offer to pay more each month if you don’t wish to pay a higher deposit.

Credit Score

Much like the overall amount of your mortgage, your credit score will have an impact on the deposit you may need to pay. A better credit score will generally lead to a lower deposit and vice versa!

Not all lenders will focus on your credit score when it comes to mortgages for nursing and care homes – but it is fairly common. Try to check your credit score before you start applying for a mortgage from any finance provider.

On top of this, if you do have a poor credit score, then it may still be possible to attain funding. Some lenders specialise in low credit score mortgages, however, this may come with a few caveats.

You can find out more about applying for a care home mortgage if you have a poor credit score below!

Lender Preferences

A large part of how much deposit you may need to pay will come down entirely to lender preference. This is why it is so important to compare a range of lenders as opposed to just settling on one.

Some lenders will generally prefer a larger deposit, as this provides them with more security in case you cannot pay your mortgage back. However, a few lenders in the UK don’t mind offering lower deposits if you can prove you have a strong credit history!

A great way to ensure you are only paying a deposit amount that you are comfortable with is to compare various lenders. As the deposit can largely vary from lender to lender, it is essential that you don’t just settle on the first lender you find.

Preparation and research is key to a successful mortgage application. Take your time to compare, and your wallet will surely thank you!

Interest Rates

The total amount of deposit can also be heavily influenced by the interest rates you and your lender agree on. At the end of the day, higher interest rates mean more profit for the lender, so they may be tempted to reduce the deposit for you.

This isn’t always the case, however, so it’s always recommended to seek mortgage advice before you splash out on a care sector mortgage. This way, you can be certain to pay only for what you can afford.

It can be tempting to offer a slightly higher interest rate if it means paying less up-front. But if you are unsure about the success of your business or you just don’t want high monthly fees to contend with, it may not be the best idea.

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Can You Get A Care Home Mortgage With Bad Credit?

It is possible to access mortgages for care homes even with bad credit; however, your application can be far more difficult. A few lenders in the UK specialise in bad credit cases, but not all will be willing to offer you a mortgage.

Typically, if you have bad credit, you may be expected to pay higher interest rates on your loans. You may also have a far stricter limit on your mortgage than if you were applying with a decent credit score.

Before you apply for a care home mortgage, consider checking out what options are available to anyone with bad credit. There are a few schemes out there designed to offer support to people who may not ordinarily be able to access commercial mortgages!


Other Financing Options For A Care Home

Bridging loan

A bridging loan is a short-term financial solution that can be used to help you gain enough funding to purchase a commercial property. Bridging loans are best used as a short-term financial solution and should not be relied on for future purchases.

There are two main types of bridge loans, a closed loan or an open loan. The main differences between the two are:

  • Closed Bridging Loan: With a closed bridge loan, you will be given an exact repayment date that you need to meet. This is most commonly used when you are finalising a property purchase and just need the added finances to complete your purchase.
  • Open Bridging Loan: As you might expect, an open loan is the complete opposite of a closed loan with no exact repayment date. However, that doesn’t mean you are given forever to repay your loan.
  • When applying for an open bridge loan, it isn’t uncommon for your chosen lender to ask for a set repayment plan.


If you’re not sure about taking out a care home mortgage, then a bridging loan could be a great option for you. They are best suited to people who are close to the overall payment amount and just need an extra bit of cash to bridge the gap.

Consider talking to a mortgage advisor regarding bridging loans if it is a financial option you are interested in.

Development finance

Although mortgages can be used to develop a property, they are most commonly used to purchase an existing building. Development finance offers you the extra funding you may need to improve and develop any care home you already own.

It is also extremely common for some development finance loans to be used to fund the construction of a building. If you are considering building a brand new care home, then a development finance loan may be a better option than a care home mortgage.

Most development finance loans are designed to be short-term solutions when you need the cash quickly. As they can cover extremely high amounts of cash, they can also be fairly strict when it comes to lending criteria.

To decide how much money they are willing to lend, a lender will typically assess and measure the potential earnings of the care home once built. This will help them decide whether or not it is worth investing in them.

You can learn more about development finances and why they may be a good choice for your needs by contacting our mortgage advisors today!

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Will a Care Home Mortgage Cover Furniture?

Whether or not your care home mortgage will cover furniture and other fittings will depend entirely on the total amount of your commercial mortgage. If your mortgage offers enough finances, it is possible to purchase furniture using a care home mortgage.

A great way to know whether or not your chosen mortgage option will fund furniture is to discuss this option with your lender. Some lenders will offer strict criteria regarding what it can and cannot be used for.

However, as furniture is required to run a successful care home, there will rarely be any issues with using mortgage funding to purchase furniture. You can’t run a care home with no furniture inside after all!


Contact Our Brokerage Team Today For More Information

Whether you are a first-time commercial property buyer or you are just looking to develop your existing properties, we are here to help. Our brokerage team is determined to help you find the funding option best for your needs.

We will compare deals and discuss what is available for your commercial purchases. This will help you find the best deals on commercial mortgages and ensure that you get the lowest interest rates available to you.

Get a fast and free quote today either through the form found on our site or by giving us a call on 0808 301 9509! See also our other commercial finance services here.



Is a commercial mortgage the best way to finance a care home?

There are a few ways to fund a care home, but one of the most popular options out there is through a commercial mortgage. Depending on your credit score and what is available to you, commercial mortgages may be the best way to finance a care home.

If you’re not sure what option is the best for you, then consider talking to a financial advisor. They can offer you an insight into potential commercial funding options and which aligns best with your values!

Is a care home always classed as a commercial property?

Yes, if you are ever planning on buying or developing a care home then you will need to apply for commercial property financing. This can be in the form of a commercial mortgage or a similar commercial loan.

How can a commercial mortgage broker help secure a care sector mortgage?

Mortgage brokers base their entire careers on knowing the ins and outs of any commercial and personal mortgage options. This will allow them to help you negotiate lower interest rates and a potentially lower mortgage deposit.

Brokers can also provide mortgage advice that can help you save in the long run. If you are unfamiliar with the world of mortgages, then we highly recommend you seek the aid of a commercial broker!

What level of trading history do most lenders require for care home mortgages?

This will completely depend on your chosen UK lender. A typical lender within the UK will expect to see the past 2 to 3 years’ trading history regarding the property you are looking to purchase or invest in.

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