Care home finance rates and costs
This guide sets out the indicative rates and costs of borrowing to buy, build or refinance a care home, and what drives the price a lender quotes.
Care home commercial mortgages are indicatively priced at about 7 to 9 percent, development finance at about 9 to 12 percent, and bridging at roughly 0.75 to 1.2 percent a month. On top of the rate you pay an arrangement fee of around 1 to 2 percent of the loan, a specialist valuation fee and legal costs. Pricing depends on the operator's covenant, the CQC rating, occupancy, trading margin and the property. These are illustrative ranges, not an offer of credit.
At a glance
- Commercial mortgageAbout 7 to 9%
- Development financeAbout 9 to 12%
- BridgingAbout 0.75 to 1.2% a month
- Arrangement feeAbout 1 to 2% of the loan
- Term mortgage length15 to 25 years
What these rates are, and what they are not
This page is about the cost of BORROWING to buy, build or refinance a care home as a business. It is not about the weekly fee a resident or their family pays for care. If you are looking for help with paying care fees, this is the wrong page.
The rates below are the cost of capital to an operator, buyer, investor or developer. They are indicative ranges based on the market we see across lenders, and the price any individual deal attracts depends on its own facts.
Indicative rates and costs
| Facility | Indicative rate | Typical term | Use |
|---|---|---|---|
| Commercial mortgage | About 7 to 9% | 15 to 25 years | Buying or refinancing a trading home |
| Development finance | About 9 to 12% | 24 to 36 months | Ground-up build or major conversion |
| Bridging | About 0.75 to 1.2% a month | Up to about 18 months | Speed, closed homes, repositioning |
Most commercial mortgage pricing is structured as a margin over a reference rate such as the Bank of England base rate or a swap rate, so the absolute rate moves with the market. Development and bridging facilities are usually priced as a flat or monthly rate with interest often rolled up rather than serviced monthly.
The fees beyond the rate
- Arrangement fee, commonly about 1 to 2 percent of the loan, sometimes added to the facility
- Specialist healthcare valuation fee, paid up front
- Legal fees for both your side and the lender's side
- Monitoring or quantity surveyor fees on development facilities
- Exit or redemption fees on some bridging and development products
- Our broker fee, disclosed before you commit
What drives the price
Two homes of the same value can be priced very differently. The main factors a lender weighs are the strength of the operator and management team, the CQC rating, occupancy and how stable it is, the trading margin measured as EBITDARM, the fee mix between private and local-authority residents, and the quality and suitability of the property. A stronger profile means a lower rate and higher leverage.
As context for trading strength, Knight Frank reported sector occupancy of 88.7% and an average EBITDARM margin of 30.1% of income for FY2024/25. Homes that beat those benchmarks tend to price keenly.
Lenders in this market
We work with lenders that understand care as a trading business, including Shawbrook, OakNorth, Allica Bank, Atom Bank and Paragon on term and acquisition lending, and Assetz Capital, Puma Property Finance and Ortus where development or bridging is needed. We are not tied to any of them; we place each case with whichever lender fits it best.
Care home finance rates and costs: common questions
What are care home mortgage rates?
Indicatively about 7 to 9 percent for a commercial mortgage on a trading care home, structured as a margin over a reference rate. Development finance is higher at about 9 to 12 percent and bridging is priced monthly at roughly 0.75 to 1.2 percent. These are illustrative ranges, not an offer.
Is this the cost of borrowing or the cost of care?
It is the cost of borrowing. These rates are what an operator, buyer or developer pays to finance buying, building or refinancing a care home as a business. They are not the weekly fees a resident pays for care.
What fees apply beyond the interest rate?
Expect an arrangement fee of about 1 to 2 percent of the loan, a specialist valuation fee, legal costs for both sides, and on development deals monitoring surveyor fees. Some bridging and development products also carry exit fees.
What makes a care home loan cheaper?
A strong operator and management team, a Good or Outstanding CQC rating, high and stable occupancy, a healthy EBITDARM margin, a good private-pay fee mix and a suitable, modern property. The better the profile, the lower the rate and the higher the leverage.
Funding a care home?
Send us the home and the operator and we will come back with a view on fundability and likely terms within one working day.