Care home refinance

Who can borrow and what lenders look for

A refinancing lender underwrites the home much as a purchase lender would: the operator covenant, the CQC rating, occupancy, the fee mix and the trading accounts, sized so that EBITDARM covers the new debt service with headroom. The advantage on a refinance is history: instead of projections, the lender sees how the home has actually traded, which usually makes for a cleaner case. A home that has improved its rating, lifted occupancy or grown its fees since the last loan presents well and supports better terms. Lenders will want to understand any historic blips and the current regulatory position, and on a capital raise they will test that the larger loan still services comfortably. We assemble the trading story and the value evidence so the lender sees the home at its best, and we check the maths on any early repayment charge before recommending a move.

How much you can borrow

Refinance loans are sized like purchase loans, up to 70 to 75 percent of the going-concern value, and constrained by interest cover on EBITDARM rather than by loan to value alone. The opportunity on a refinance comes from change since the last loan: if the home is now worth more, or trades better, the same property supports a larger facility, and the difference between the new loan and the redeemed debt is the capital you can release, net of fees and any early repayment charge. Sector trends help here, with Christie & Co reporting average prices up 7.1 percent year on year in FY2025. On a capital raise, lenders re-test affordability at the higher loan, so the achievable figure depends on both the value and the trading. We model the redemption, the new loan and the net cash released before you commit, so the numbers are clear from the start.

Rates and costs

Refinance rates track the wider commercial mortgage market, indicatively from around 7 to 9 percent, set by the operator covenant, the CQC rating, the loan to value and the term, and quoted as a fixed rate or a margin over base or SONIA. The costs of moving include a new lender arrangement fee of around 1 to 2 percent, a going-concern valuation, legal fees, and crucially any early repayment charge on the existing facility, which can outweigh the saving if the current deal is recent. Exiting a bridge onto a term mortgage almost always saves money, because monthly bridging rates are far higher than term rates. We compare the all-in cost of refinancing against the cost of staying put, disclose our broker fee in writing, and never claim an exclusive tie to any lender, so the recommendation rests on the full numbers.

Refinance, a new purchase loan or staying put

Refinance is the right product when you already own the home and want to improve the debt: a lower rate, capital out, a cleaner structure, or an exit from a bridge. It is distinct from purchase finance, which funds buying a home you do not yet own, although the underwriting is similar. Sometimes the right answer is to stay put, when the current rate is keen and an early repayment charge would swallow the saving; we will tell you when that is the case. Exiting a bridge is the clearest win, because moving from monthly bridging rates to annual term rates cuts the cost sharply, and lining that exit up early is exactly what a good bridge plan should include. We weigh moving against staying on the full numbers, not just the headline rate.