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Commercial Mortgages for Pharmacies

A complete guide to commercial lending for medical-sector business and how to ensure you get the best mortgage rates for your pharmaceutical organisation.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-07-17
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Commercial Mortgages for Pharmacies

Medical sector businesses, such as pharmacies, tend to be strong commercial mortgage candidates since the lender will usually find it much easier to approve the loan based on key factors such as affordability and risk.

Commercial mortgages for pharmacies are usually offered on similar terms to lending for GP surgeries.

Still, working with an experienced broker remains crucial to ensure the terms are aligned with your business aspirations.

Lender Criteria When Applying for Finance to Buy a Pharmacy

Lenders will evaluate several factors before offering a commercial mortgage, including:

  • Business trading experience - you might find that interest rates on commercial mortgages for pharmacies vary considerably between established companies with a long track record and applications from start-up practitioners.
  • Credit history - every mortgage application requires a credit check, highlighting any issues impacting the company and directors.
  • Deposit - while you can find commercial mortgages at high LTVs, the better your deposit, the more cost-effective the rates.
  • Business performance - your past trading records, profitability, and business plans are necessary to demonstrate your business risk level.

Revolution Brokers is a fully independent, whole-of-market broker with years of industry experience negotiating outstanding commercial mortgages for pharmacies and other medical sector organisations.

Here we'll outline some of the key information to know before you apply - or you can contact our knowledgeable team on 0330 304 3040 or at [email protected] for tailored advice.

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Financing Pharmacy Purchases Through a Commercial Mortgage

Demand for both NHS and private prescription medications remains high, and although the business case for these enterprises might look somewhat different, there are often advantageous mortgage brokers available.

The key to achieving optimal commercial mortgages rates for pharmacies is to tailor your mortgage agreement to your objectives, for example:

  • Do you need a commercial mortgage to buy out a retiring owner and finance the full business acquisition?
  • Are you an established pharmacist and want to purchase a second property to expand your company into a new area?
  • Is the commercial mortgage part of a business strategy to invest in a new trading location, perhaps purchasing a premise that needs renovation work?
  • Do you wish to remortgage an existing loan secured against a commercial pharmacy practice or buy a property to launch a brand new medical services company?
  • Are you an experienced pharmacist or a new practitioner?

Lender Criteria to Compare Financing for Pharmacy Businesses

Clarifying your aims is important since, with thousands of commercial mortgages for pharmacies out there, you could potentially save thousands with expert guidance.

For example, a lender that doesn’t specialise in medical sector applicants might offer commercial mortgage rates on the same rates as any other low-risk business mortgage - but you might need a sizable deposit and a good credit rating to be eligible.

Niche lenders focusing on specific types of commercial mortgage may have favourable interest rates and heavily competitive terms that are a much better prospect for your business.

Likewise, a new business is inherently riskier, so it makes sense to ensure you avoid unnecessary delays and cost applying for a commercial mortgage for pharmacies through a lender that requires a minimum trading history.

This stage is where an accomplished broker steps in, analysing your circumstances, scouring the breadth of the market for the most suitable deals, and structuring your commercial mortgage application to optimise your chances of approval.

How to Finance a Pharmacy With the Best Commercial Mortgage Deal

Pharmacies are an integral part of the framework of medical care and a business that poses a low-risk exposure level to commercial mortgage lenders.

As the pharmaceutical sector evolves, lending is influenced by:

  • Changes associated with NHS contracts and public sector funding provision.
  • Additional pharmacy services, strengthening the business plan - such as immunisations, walk-in clinics and 24-hour dispensing services.
  • Trading history, with pharmacies in prominent city-centre locations or proximity to hospitals and clinics providing the greatest stability.

Therefore, it remains paramount to compare the commercial mortgages for pharmacies before applying since the interest rates available will vary widely.

Lenders will assess each application on a case-by-case basis before making an offer, so the stronger your application, the less your commercial mortgage will cost your pharmacy business.

As commercial mortgages become more prevalent and high street banks weigh in on this unregulated market, it has never been a better time to work with an independent, experienced broker such as the Revolution Brokers team.

The best commercial mortgages for pharmacies are often available from specialist lenders, which don't offer products to the general public and negotiate terms directly within their network of approved brokers.

How to Choose a Lender for Financing a Pharmacy Purchase

Ultimately, whichever commercial mortgage you choose needs to fit within your cash flow forecasting, and long-term business aims.

Commercial mortgages can run upwards of 40 years, so it's essential to research your mortgage options thoroughly before making this financial commitment.

Revolution Brokers provides a bespoke service to support each client, from their initial inquiry to final mortgage completion.

Why Pharmacy Finance Brokers are Advisable

Our consultants take the time to get to know you, your business, and what you require from your commercial mortgage, identifying:

  • Which lenders are correctly suited to your commercial mortgage needs?
  • Where will you find the best possible terms - including flexible repayment policies, low arrangement fees and conditions of lending?
  • Which commercial borrowing products align with your plans, whether you're buying a building, a business, or an investment project?

We can also provide structured guidance in unique circumstances to help you make fast financing decisions.

For example, suppose you wish to quickly finance a commercial mortgage for a pharmacy to buy out a business for sale. In that case, a bridging loan or development mortgage might help shore up your business plans.

How Does Pharmacy Finance Work?

As we've explored, multiple variables will influence the type of commercial mortgage we recommend and what sort of rates and charges you can expect to pay.

Below we've listed some of the typical terms you'll find attached to commercial mortgages for pharmacies to give you an idea of what to expect.

  • Loan to Value (LTV) - the LTV is the amount you're borrowing against the property or business value. Most commercial lenders will require a deposit of around 20% (lower than the standard for commercial borrowing). However, you could borrow up to 100% depending on the nature of the borrowing product and the security available.
  • Terms - pharmacy businesses applying for a commercial mortgage to buy a property will often find that the terms start at around 25 years, similar to a residential mortgage. If you need a shorter-term loan or a long-term mortgage, a broker can negotiate this with your selected lender.
  • Flexible lending - commercial mortgages for medical sector companies buying an existing business, or using the financing to achieve a trading aim, will typically find that shorter terms from 15 years are available.

Of course, these are very rough indications, and the exact rates, LTV and mortgage terms you are offered will depend on your application circumstances.

Expert Support to Choose Competitive Financing for Pharmacy Mortgages

If you're looking for a mortgage against a commercial medical company, a specialist broker with experience in the market will ensure you get the best possible deals.

Revolution works with thousands of businesses, offering independent advice and access to all the commercial mortgages and lenders available on the market.

For help and advice structuring your commercial mortgage application, please get in touch with us on 0330 304 3040 or email the team at [email protected].

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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Frequently Asked

Your application for financing to buy a pharmacy will include an initial assessment, followed by a formal, full application.

Revolution Brokers will always try to provide indications as to what you might expect to be offered, but the first step is to run through your requirements and recommend the right products and lenders.

To get a solid idea about the kind of pharmacy financing you need, it's best to have available:

  • Sets of your latest trading accounts for the last two to three years.
  • Any information about the value of the property and pharmacy business.
  • How much you wish to borrow (even if it's an estimate).
  • Details about how you propose to use the borrowed financing.
  • A brief overview of your experience in the pharmacy sector.

Lenders will inevitably ask for more information as we advance, including a business plan. Still, these pieces of information should usually be enough to get started with your pharmacy financing search.

There are countless reasons that we recommend using a pharmacy finance broker before making any long-term financial decisions.

As an experienced broker, we can negotiate terms, advise on niche offers, and structure bespoke mortgages perfectly aligned with your business aspirations.

Another consideration is that a commercial mortgage may not be the ideal product for your investment. Other pharmacy finance options might include:

  • Asset finance - if you need to raise funds to invest in new medical equipment, testing services or other pharmacy resources.
  • Practice refurbishment loans - used to smarten up surgeries and provide the capital needed to boost the professionalism of your premises.
  • Pharmacy stock loans - stock loans are a way to avoid the typical upfront payments required and help you meet demand by financing the cost of restocking your shelves and essential medicines.

Although often considerably more complex than a straightforward commercial mortgage, practice acquisition loans are another possible option.

The trick is to work with an independent broker who will advise on the right financing options for your pharmacy to help you select products to your advantage.

As we've mentioned above, some pharmacy finance might be designed to help a pharmacy buy a whole business, which could be:

  • Purchasing another pharmacy from a competitor business.
  • Buying a brand name or trading pharmacy as a going concern.
  • Launching yourself as a new independent pharmacist by buying out a retiring owner.

Whatever the circumstances, it's best to speak with an experienced commercial broker to help you work out which products fit your requirements and compare like-for-like borrowing products.

Commercial mortgages are usually the fastest option to finance a pharmacy purchase and work like a residential mortgage, secured against the business property. You can borrow as much as you require, without an upper cap, limited only by the value of the company and the cost of the trading premises. Most commercial mortgages run for 20 years, although longer or shorter terms are available. Business mortgages for pharmacies are bespoke to the applicant, so there isn't a fixed rates table we can share to indicate exactly what you can borrow and at what interest rate. Instead, financing for pharmacies is based on the prospects of the medical sector business and past performance to assess the company's viability.

The best way to secure optimal financing for a pharmacy is to work through the steps methodically and with guidance from a whole-of-market independent broker.

If you have all your paperwork prepared and an in-depth assessment about how you will use the financing to grow your business, you will be in a strong position.

Lenders will want to see things like:

  • Business plans and financial records.
  • Valuations of the commercial premise.
  • Details of your expertise and professional qualifications.

Whether you're buying empty commercial land to build a pharmacy adjacent to a hospital or medical centre, buying a vacant unit to renovate into a pharmacy, refinancing your existing building, or buying out another business, professional advice is invaluable.

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FCA disclaimer

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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