As the population ages and the social care sector expands, the number of lenders offering specific mortgages for care homes continues to grow.

One of the biggest positives is being able to demonstrate two or three years of experience, which shows a positive track record.

Where an investor wishes to purchase a care home, but won't be involved in the day to day running, lenders will usually request a breakdown of the qualifications and experiences of the management team, with accreditation or certification such as an NVQ 4 being a minimum.

The other crucial factors in care home mortgaging include:

• Care Quality Commission reports reflecting the rating of the business, where an existing care home facility is being purchased.
• Information about occupancy rates and ongoing profitability.

Similarly to many other sectors, having experience is an essential requirement, which demonstrates that you know what you are doing, and are likely to run a profitable business which will be able to keep up with mortgage payments.

The industry standard is to look for two or three year’s worth of trading. However, you can apply to specialist lenders if you are new to the sector, provided you can meet other criteria.

If you are buying or investing in a care home that has made losses in the past, the reason for the mortgage will also matter. For example, if you are buying out a business and replacing the management, or remortgaging to invest in refurbishments, this may be looked on more favourably.

A business plan is also vital as you can explain your plans for the future.

As with most commercial mortgage types, lenders will usually look for a deposit of around 20% to 40%, depending on the other circumstances.

This all depends on your forecasts, business performance and credit rating.

Many mainstream lenders refuse applicants with adverse credit, although more niche providers will want to know a little context and when the bad credit issues occurred.

You may find that a high-street bank will automatically refuse any care home mortgage with credit concerns, but that bad credit commercial lenders take a more flexible approach to the assessment process.

As an alternative to a mortgage - or a stopgap if an immediate purchase is necessary - you can invest in a business via a bridging loan. These typically run for one to three years and are ideal for an expedited investment such as purchasing a care home at auction.

The critical factor in bridging finance is to demonstrate your exit strategy and how you will repay the loan.

This is usually via a remortgage, or by selling the business.

There are some scenarios where development finance is the best option. For example:

• Starting a new care facility from scratch.
• Building your own care home premises.
• Renovating an out-dated care home facility.

Development financing works like a bridging loan, but with funding released in stages according to the progress of the build or development work.

The benefit here is that you only pay interest on what you have drawn down, and not on the total value of the development finance facility.