Commercial mortgages for care and supported housing

How much can you borrow against a care or supported living asset?

For a supported living property let on a long lease to a registered provider, most lenders advance up to around 70 to 75 percent loan to value against the lease, because the income is contracted and index-linked. For a trading care or nursing home, lenders typically advance up to around 65 to 70 percent of the going-concern value, which reflects the operating business rather than the bricks and mortar alone. Loans run from around 250,000 pounds to many millions, and the going-concern figure on a modern home sits at £100,000 to £150,000 per bed on Knight Frank / care market commentary.

The second ceiling is cover. On a trading home the lender sizes the mortgage so the EBITDARM covers the interest and any capital repayments with a clear margin, and where leverage is pushed or rates are high that cover test sets the loan before the loan to value does. On a leased supported living asset the equivalent is rent cover against the contracted lease income, which is more predictable. We model both ceilings against your actual figures so you know the realistic number before any application goes in.

What rates and repayment structures are available?

Rates on a care or supported housing commercial mortgage start from around 6.5 percent and move with leverage, the asset and the lender's cost of funds. The keenest pricing goes to a long-leased supported living investment with a strong registered-provider covenant or to a stabilised, well-rated care home with several years of settled trading. You can fix the rate for an initial period for certainty, or track a reference rate if you expect to refinance or sell within a few years.

Repayment structure matters as much as the rate. Interest only keeps payments low and suits an investor prioritising cash flow, while an amortising profile reduces the debt over the term and can support a slightly higher advance or finer pricing. Many care loans blend the two, part repayment with a bullet at maturity. We model each structure against the lease income or the trading cash flow so the mortgage fits the plan rather than dictating it.

How do lenders underwrite a trading care home versus a leased asset?

These are two different credit tests, and getting the right one in front of the right lender is the core of the job. A trading care or nursing home is read as a business: the lender wants two to three years of accounts, the occupancy history, the fee mix between private and local-authority funded residents, staffing and agency costs, the CQC rating and any enforcement, and the bed numbers against modern room-size standards. It is testing whether the EBITDARM is settled and durable. Average occupancy ran at 88.7% and the average EBITDARM margin at 30.1% in 2025 on the Knight Frank UK Care Homes Trading Performance Review 2025, which frames where a home sits against the market.

A supported living property let to a registered provider is underwritten the other way. The lender looks past the investor's own covenant to the lease and the provider: the unexpired term and any breaks, the indexation mechanism, the repairing and insuring obligations, and the financial strength and regulatory standing of the registered provider or registered social landlord. It also assesses the vacant possession value as the downside if the lease falls away, and it watches the headlease versus underlying-provider structure where one exists. We present each case the way the relevant credit team expects to see it, which materially improves the terms offered.

What is the difference between bricks-and-mortar and going-concern value?

A trading care home has two valuations. The bricks-and-mortar or vacant possession value is what the empty building and land would fetch with no business attached. The going-concern value treats the home as an operating business, capitalising its sustainable EBITDARM, and for a well-run, well-occupied home it is usually significantly higher because the registration, the staff, the occupancy and the trading record have real value.

Which basis your lender uses changes the proceeds materially. A lender anchored to bricks-and-mortar value will offer a far smaller mortgage than one lending at 65 to 70 percent of the going-concern value, even at the same headline loan to value. Specialist healthcare lenders and banks with care experience lend on the going-concern basis; generalists often do not. For a leased supported living asset the parallel is lending against the capitalised lease income rather than the vacant building. Placing the loan with the right kind of lender is the single biggest lever on proceeds, and it is exactly what we do.

Can you refinance or release equity from an asset you own?

Yes, and for many owners this is the main event. If a care home has grown its occupancy and EBITDARM since the current debt was put in place, or a supported living lease has indexed up and the covenant has strengthened, a refinance can cut the rate, extend the term, or release equity against the higher valuation to fund the next home, a refurbishment or an acquisition. The asset becomes the engine that funds its own expansion.

A remortgage is underwritten the same way as new money: the trading pack and CQC position for a care home, or the lease and provider covenant for a supported living asset, plus the cover test. We review the whole market at each refinance rather than rolling onto whatever the incumbent lender offers, because loyalty is rarely rewarded in commercial lending. Where you hold more than one asset, we can also look at portfolio facilities that cross-collateralise the homes and release more capital than financing each one alone.