How to Get a Commercial Mortgage for a Dental Practice
If you are planning to buy a dental practice, purchase your surgery premises, expand to a second site, or simply refinance for better terms, the right commercial mortgage can make all the difference.
The dental sector is unique. Lenders look at goodwill, regulatory approvals, the mix of NHS and private income, and the durability of cash flow before they look at anything else. That is where having specialist advice matters.
What is a commercial mortgage for a dental practice
A commercial mortgage for medical practice such as a dentists is a business loan secured against a property used for clinical activity or as a trading base.
You might use it to buy the freehold of your current surgery, acquire a new site, fund a relocation, or support a restructure where goodwill and property are both involved.
Terms are usually longer than standard business loans, commonly fifteen to twenty five years on capital and interest, depending on the lender .
Some lenders will allow an initial interest only period for cash flow management. Pricing varies by risk, sector comfort, security quality, and your track record.
Alongside commercial mortgages many dentists blend additional facilities such as acquisition finance for goodwill, asset finance for chairs and imaging, and short term working capital. The mix you choose depends on whether you are buying a practice, starting a squat, refurbishing, or refinancing to improve terms.
Find out Your Options
Why dental sector expertise really matters
Dentistry is not like a general high street business. Lenders want to see evidence of stable patient numbers, strong compliance, and predictable revenue. They will ask about the split of NHS and private income, your associate model, hygiene capacity, and your pipeline for higher value treatments. If you are moving from an associate role into practice ownership the lender will want to see clinical breadth and some exposure to the kind of dentistry the target practice provides. If you aim to shift the balance from NHS to private, you will need a credible plan for that transition.
Kerr & Watson knows what credit teams expect. We prepare the numbers the way they want to see them, tie EBITDA to debt service headroom, and build a narrative that shows how you will maintain throughput and profitability. That clarity can lead to sharper pricing, fewer conditions, and faster decisions. It saves you time and helps protect your reputation with agents and vendors. If you want sector led preparation with no guesswork, speak to us.
Freehold versus leasehold
You can purchase a practice property freehold or leasehold. Freehold gives the lender tangible security and can open up higher loan to value and longer terms. Leasehold works well too, provided the lease length comfortably exceeds the mortgage term and the repair and rent review clauses are acceptable. Assignability, break clauses, and consent to fit out will be examined. If the property and goodwill are purchased together, the structure matters. Get it right at the start and you avoid costly legal changes later.
What lenders assess
Every application is unique, yet most lenders look at similar core areas. Expect focus on:
- Financials and forecasts: Three years of accounts if available, up to date management figures, and cash flow projections that align with chair time and bookable capacity.
- Deposit and equity: Typical cash contribution for property ranges from ten to thirty percent depending on risk, security, and experience. For goodwill driven deals the lender may fund a lower percentage unless additional security is offered.
- Experience: Your clinical background, leadership responsibilities, and any prior ownership or practice management exposure.
- Affordability: Lenders test debt service against EBITDA after a sensible allowance for drawings and tax.
- Security: Valuation of the building, lease strength if applicable, and the sustainability of income from the practice.
You will also need the right approvals. A first time owner should plan for CQC registration and DBS checks.
Types of dental practice finance you might combine
A well built funding solution often blends several products, each with a role to play.
- Commercial mortgage: Long term facility secured on the property for fifteen to twenty five years.
- Acquisition finance for goodwill: Used when purchasing an established practice where the trading business has value beyond the bricks and mortar.
- Start up finance for squat practices: Covers fit out, equipment, IT, marketing, and early working capital while you build patient numbers.
- Asset finance: Spreads the cost of major kit such as digital X ray, scanners, chairs, and compressors over three to seven years.
- Refurbishment loans: For surgery expansion, decon upgrades, reception redesign, or accessibility improvements.
- Tax and VAT funding: Smooths large periodic bills to protect cash flow.
- Short term working capital: Bridges seasonal dips or supports recruitment pushes.
Squat practices growth strategy
Starting a practice from scratch gives you control over location, brand, and services. It also requires careful planning. The lender will expect a clear forecast for patient acquisition, marketing activity, fee structure, and the month by month build of chair time. Build costs and lead times for cabinetry, flooring, suction, and imaging can be significant. Planning permission and compliance works add further steps. With the right design of facilities and finance you can match repayments to ramp up, keep cash flow healthy, and retain headroom for extra staff or a second surgery once demand arrives.
Refinancing an existing practice
Many owners focus on patients and staff and leave legacy borrowing untouched. A review can uncover opportunities to lower cost, release equity for investment, or simplify complex arrangements left from prior owners. The case is strongest when you can evidence stable or rising EBITDA, improved compliance scores, and a track record of timely repayments. We compare options across mainstream lenders and specialist healthcare funders, position your story, and handle the paperwork. If you want a simple way to quantify savings and decide whether a switch is worth it, ask us for an options review.
Fees and costs to consider
Budget for arrangement fees, valuation fees, legal costs for both sides, stamp duty where applicable, and costs linked to due diligence such as survey and searches.
Also allow for working capital to cover payroll, materials, and marketing through any transition.
Your property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Frequently asked questions by dental practice owners
Can I buy a practice with a small deposit?
Yes, in some cases where security is strong and experience is clear, lenders can be flexible. Additional guarantees or collateral can help. We will assess your options and show you realistic pathways.
Can I buy goodwill without buying the property?
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Yes. Many deals finance goodwill and leave the property on a lease. The lease must be strong and aligned to the mortgage term on the goodwill element. We help you get those details right.
What if I want to move a practice from NHS to more private?
Lenders will support a measured shift backed by a detailed plan. Show how you will protect core income while building private treatments. We can model the path and fit the finance to your milestones.
How long does a commercial mortgage take?
Timing depends on valuation, legal work, and CQC steps. Good preparation shortens the process. Expect the process to take a number of months.
Conclusion
Securing a commercial mortgage for dentist practices is about more than finding a rate. It is about demonstrating a credible story backed by numbers, structure, and compliance.
Whether you are buying your first practice, expanding to a second site, building a squat, or refinancing for better terms, we are here to help you.
Contact Kerr & Watson today for tailored mortgage and protection advice.
