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Commercial Mortgages for Dental Practices

All you need to know about commercial mortgage products for dentistry professionals, with advice about securing a business mortgage even if you're new to practice.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-17
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Commercial Mortgages for Dental Practices

Businesses in the medical sector, including dental practices, are usually eligible for a range of commercial mortgages.

Although a lender will still need to run through affordability assessments and other evaluations, this type of business is low-risk.

Most commercial mortgages dental practice are similar in terms of interest rates to GP practice mortgages.

An independent broker, such as Revolution, can advise on the range of dental practice financing options and negotiate rates on your behalf to ensure your business has the best possible financing agreement aligned with your goals and expectations.

Lender Assessments on Dental Practice Financing

Any commercial mortgage will require the applicant to provide information and documents, allowing the lender to check whether you meet their eligibility policies and calculate the rates they are prepared to offer.

Those rates depend on a huge range of variables but include things such as:

  • Professional experience - if you are an established dental practice with a team of qualified staff, you will usually achieve more competitive rates than a newly formed business or an independent dentist just branching out after qualification.
  • Credit reports - commercial mortgages incorporate credit checks just like a standard residential mortgage, looking for issues such as bankruptcy or repossessions impacting the directors, owners or the trading company.
  • Valuations - the lender will need to know what down payment you have available, plus take a look at financial accounts, profit margins and the value of the dental practice business or property you wish to finance.

As a whole-of-market, independent commercial broker with extensive skill in negotiating even complex mortgage solutions, Revolution can guide you through the application process one step at a time.

Below we'll look at commercial mortgages for dentistry businesses in more detail, with a FAQs section at the bottom to help answer any remaining questions.

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The Market for Dental Practice Financing Through Commercial Mortgages

There is a huge demand for dentistry, both through NHS practices and private surgeries.

You will need a business case to demonstrate your forecast revenue and profits.

Still, commercial mortgages tend to be readily available for dentists as a medical sector business that attracts low-risk levels.

Questions to Consider Before Applying for Finance to Buy Dental Practice Businesses

Before you start applying for finance to buy a dental practice, we'd suggest taking a moment to think about what you'd like to achieve and your priorities from your financing deal:

  • What is the financing for? Are you setting up a new branch, buying a business from a retiring dentist, or want to purchase a new property for an existing practice?
  • Are you established as a dentist, and is the financing being used for a new enterprise or to grow your current company?
  • Will the new property or newly acquired business be ready to go, or do you need to finance renovations or improvement works?

There are multiple lending products available, including a range of commercial mortgage structures, so getting to grips with exactly what you're trying to accomplish can help highlight those products that are best suited.

Choosing Dental Practice Financing Options

It's essential to have a firm plan about how much you need to borrow and what you'll use it for - any lender will want to see your business plan as a minimum requirement.

But, it's also important because, as we've mentioned, a commercial mortgage is just one potential borrowing option.

Whether you need to invest in assets, consolidate debts, improve your equipment, renovate a property, acquire an entire business or use your mortgage brokers for another reason, an independent broker can run through the alternatives.

There are also choices between high street commercial lenders, niche specialist mortgage providers and brokerage-only exclusive deals, so there are many variables to work through!

What is Dental Practice Acquisition Financing?

Acquisition financing is similar to a commercial mortgage but provides the funding required to buy a business as a going concern.

Much depends on whether you're buying a franchise, share ownership or a business as a whole, but you'll need to think about:

  • The risks inherent with buying a business - assessing trading history, financials and values, including factors such as reputation, which are hard to quantify.
  • Values of all assets, customer lists, equipment, vehicles, medical machinery, staffing, property and other items included in the acquisition.
  • Existing business liabilities, obligations and debts that are expected to pass to the new owner.

Launching a new business can be highly risky, so buying out an established practice may be a favourable option and secure more competitive lending terms.

Comparing the Best Dental Practice Purchase Financing Options

Dentists are an integral element of the UK medical sector, relied on for NHS treatments, routine check-ups, emergency appointments and private dental work.

The demand and skill involved with dentistry make this sector low risk for mortgage lenders.

However, the market can change depending on public sector funding, NHS contracts, additional services (e.g. aesthetic work) and dispensing services.

Commercial lending is assessed on a case-by-case basis, depending on how much you want to borrow, the various elements we've explored here, and the lender's policies and appetite for dental practice loans.

How to Choose Dental Practice Financing Options

The right dental practice financing for your business depends on what you hope to achieve and how that fits in with your business aims.

Business mortgages can run for 20 years as a standard but are available on significantly longer or shorter terms, so it's essential to consult a seasoned mortgage expert to crunch the numbers and make informed decisions.

Revolution Brokers has years of experience supporting dental practice mortgage applicants of all sizes and can help determine:

  • Which mortgage or borrowing products are best suited to your needs?
  • Which lenders will offer the lowest rates and most appealing terms?
  • How long should your loan term be?
  • How much can you afford to repay per month?
  • Would a repayment or interest-only product be preferable?

We can also guide you in unusual circumstances, such as quickly securing financing to purchase a dental practice business against competing bids or taking out mortgage finance to progress with ambitious dental practice business plans.

Auction finance, as one example, usually means putting down a 10% deposit and paying the full balance within 28 days to avoid losing the property.

If you wish to buy a commercial premise at auction to develop into a dental practice, please get in touch for more information.

General Terms on Dental Practice Acquisition Financing

It isn't easy to give precise terms against standard dental practice acquisition financing since each lender is different and will amend their offer following the initial assessment phase.

However, as a rough guide, we've listed below the typical terms available on most dental practice financing applications, without any complex requirements.

  • LTV, or Loan to Value, indicates the loan value as a proportion of the property or dental practice business value. Lenders tend to offer up to 80% LTV (requiring a 20% deposit), but you can borrow up to 100% if you meet other eligibility criteria and have sufficient security.
  • Mortgage terms can run from a few years up to 40, so it's essential to consider your cash flow and other obligations to structure your mortgage to match those outgoings.

We'd reiterate that these are only estimates, and we’d be happy to provide more accurate pricing and information following a consultation about your financing requirements.

Expert Support With Dental Practice Purchase Financing

If you need competitive commercial financing for a dental practice, an experienced broker with decades of experience is undoubtedly the best option to secure an advantageous deal.

Revolution Brokers supports hundreds of businesses, providing independent guidance and information about any commercial mortgage product from any lender we think will be to your advantage.

Please get in touch on 0330 304 3040 or email our team at [email protected] for more information about dental practice financing or to get your application started.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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Frequently Asked

If you haven't owned a dental practice before, you will need to register with the Care Quality Commission (CQC) and run through a few other requirements such as Disclosure and Barring Service (DBS) checks. You may have your CQC application pending, in which case it's a matter of demonstrating the authenticity of the business to the lender, so they can be confident you have the appropriate registrations, accreditations and insurances in place. The situation may vary if you buy a fully private practice, compared to an NHS dental business. Still, in either case, the more experience you have in the field, the less risky it is perceived by a commercial mortgage lender. It's wise to submit your CQC application at least ten weeks before you expect to complete your mortgage to give enough time for the application to be assessed and returned.
Not necessarily - mortgages themselves can feel like complex borrowing products. Still, if you are comfortable that you have found a great offer with a trusted lender, and have a broker negotiating on your behalf, much of the work is done. Lenders will need to consider your business strategy and future revenue forecasts, but a broker and solicitor will be able to help you submit your plans in a format that complies with the lender's requirements.
Rates can vary, but as a very general guide, the starting point on medical sector mortgages is around 2.1% above the Bank of England Base Rate. Of course, that depends on how much you want to borrow and when you apply! Arrangement fees are also common in commercial mortgages, and although you might find a fee-free product, we usually suggest budgeting about 2%. Most lenders prefer a maximum commercial mortgage term of 25 years, but terms as long as 40 years are possible.
You can buy a dental practice business as either a leasehold or freehold, and it can make quite a difference to your funding outcomes. Either can be used as security against the mortgage, but a freehold is more reliable since you own the property outright, rather than for a limited period (although that could be up to 99 years). Leasehold dental practice financing will need to be adjusted depending on the length of the lease, as a bank or mortgage provider won't extend a loan secured against the practice premises that exceeds the duration of your lease. It's vital to get this right as any errors or queries could result in financing rejection or cost you more in solicitors' charges to amend the paperwork. Note that NHS contract conditions apply, so independent advice about acquisition structures, leasehold vs freehold, and business viability is strongly advisable.
Commercial mortgages are one of many borrowing products available to dental practice businesses. Depending on why you need financing and what you expect to do with the funds, Revolution Brokers might recommend: Short-term business loans, secured or unsecured. Practice acquisition financing. Consolidation loans or commercial remortgage products. Hire purchase or leasing options. Asset finance or other capital injection products. Each loan structure has a different purpose. For example, if you wish to buy a property and convert it into a new dental practice branch, bridging finance may be preferable if the building isn't eligible for a commercial mortgage in its current condition. There are also specialist loans available for medical sector businesses, which can be used to invest in equipment such as X-Rays, imaging units, office systems and scanners. Revolution Brokers can recommend a number of financing options as a whole-of-market broker with expertise in negotiating bespoke commercial borrowing products to fit your business aspirations.

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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