Commercial mortgage to purchase 20-bed care home

The client, an existing care home operator, came to me to look at options for his son to acquire a freehold 20-bed registered nursing home in Sussex.

The purchase price that had been agreed was £1,300,000 and the borrowing requirement was for £750,000.

Both father and son already have two trading care homes located in Hampshire and Surrey and have owned these for five years.

The son is a director and part-time financial accountant for the trading companies that own the care homes.

He also has a full-time position at a global bank in London.

To complicate the case the lending required was for an offshore limited company located in the Isle of Mann.

We found a lender that was happy to finance the deal subject to a Care Quality Commission interview which will ensure that the care home and its new owners are fully registered.

In addition the lender will provide a cash back facility of £15,000 when the loan is drawn down, which will help to meet the client’s costs of purchase.

The cash back scheme is used as part of the Government’s Funding for Lending Scheme.

Here are the details of the deal which is expected to complete next month:

Property value: £1,300,000

Loan amount: £750,000

LTV: 58%

Rate: Bank Rate plus 2.5% (BR currently 0.5% variable)

Term: 15 years capital and interest repayment mortgage

Mortgage payment: £5,179 pcm

Lender arrangement fee: £11,250

Completion date: Est. June 2015

Consultant: Andy Elley

Tel: 01732 471 644