Care home bridging finance

Who can borrow and what lenders look for

Bridging lenders are more flexible than term lenders on the property and the trading position, because the loan is short term and security-led, but they are strict on the exit. They will lend on a home that is not yet CQC-registered, on a closed home being repositioned, or on a property mid-refurbishment, where a term lender would decline. What they need is a clear charge over a saleable, financeable asset and a credible repayment route within the term. For an operator, that route is usually a refinance onto a commercial mortgage once the home is trading and rated; for an investor, it can be a sale. They will check the borrower's experience and the deal's logic, but they are not underwriting years of trading accounts. We make sure the exit is real and arranged before the bridge draws, so you are never left holding short-term money with no way out.

How much you can borrow

Bridging lenders advance up to 70 to 75 percent of the property value, with the figure set by the valuation basis and the quality of the exit. Where the home needs work, the loan may be sized against the current value with a further tranche released for the refurbishment, or against the value once the works are complete. Because the loan is short term and interest can be retained or rolled up, the net amount you receive at completion is the gross loan less retained interest and fees, so it pays to size the facility against what you actually need rather than the maximum available. We model the loan to value, the retained interest and the day-one net advance up front, so there are no surprises at completion and the bridge is no larger, and no dearer, than the deal requires.

Rates and costs

Bridging is priced per month, indicatively around 0.75 to 1.2 percent, because it is short-term, fast and flexible, so it is dearer than a term mortgage and should be used only for as long as you need it. Interest is usually retained or rolled up rather than paid monthly, so it does not strain cashflow during the term. Expect a lender arrangement fee of around 1 to 2 percent, a valuation fee, legal costs for both sides, and sometimes an exit fee. The single biggest cost lever is time: a bridge held for three months costs a fraction of one held for eighteen, so lining up the exit early matters. We disclose our broker fee in writing, quote the all-in cost over the expected term, and never claim an exclusive tie to any lender.

Bridging, purchase finance or development finance

Bridging is the right product when you need to move faster than a term lender can, or when the home cannot yet be financed on a term mortgage because it is not trading or not registered. It is short-term money and is always meant to be repaid by something cheaper: a commercial mortgage once the home stabilises, or a sale. If the home is already trading and registered and you have time, purchase finance is cheaper and the right first port of call. If you are building or carrying out major works, development finance is the better structure. The classic care home sequence is to bridge to buy or reposition quickly, then refinance onto a long-term commercial mortgage. We plan that exit at the outset so the bridge does its job and then steps aside.