Can You Use Bridging Finance to Buy a Children’s Home?

Yes, bridging finance can sometimes be used when purchasing a property that will become a children’s home.

For example, the property may need refurbishment or conversion before it is suitable for its intended use. You may also need to complete a purchase within a shorter timeframe than a commercial mortgage allows.

In these circumstances, bridging finance could provide the short-term funding required to purchase or improve the property.

However, there needs to be a realistic exit strategy from the outset. This could involve refinancing onto longer-term commercial finance once the property, registration and business are in a position to meet the lender’s requirements.

Can You Finance the Refurbishment or Conversion?

Yes. If a property requires substantial work before it can operate as a children’s home, different forms of finance may be available.

The right option will depend on the scale of the work.

A relatively straightforward refurbishment may suit bridging finance. More substantial structural work or a major conversion could require development finance.

Before approaching a lender, it helps to have a clear schedule of works and realistic costs. For larger projects, the lender may also require professional reports and staged drawdowns as the work progresses.

How Much Can You Borrow for a Children’s Home?

There is no single maximum LTV that applies to all children’s home finance.

The amount available will depend on the lender, property, valuation and strength of the overall proposal.

The lender may also look at affordability differently depending on whether you are purchasing an existing operational home or a property that will be converted into one.

This is why we would rather look at the actual project than give you a headline percentage that may have little relevance to your case.

Can You Finance an Existing Children’s Home?

Yes.

Buying an established and operational children’s home is different from purchasing an empty property that you intend to convert.

Where an existing business is being acquired, a lender may want to understand its trading history as well as the property itself.

This could include accounts, occupancy, income, operating costs, management experience and the regulatory history of the home.

The structure of the transaction will also matter. For example, buying the property itself can require a different funding approach from acquiring the company that operates the home.

Can You Refinance a Children’s Home?

Yes. Existing operators may be able to refinance a children’s home for several reasons.

You might want to:

• Replace existing borrowing
• Release equity
• Fund improvements
• Purchase another property
• Expand an existing portfolio
• Restructure existing property debt

Depending on the circumstances, a specialist commercial mortgage may provide longer-term funding for an established children’s home.

Does the Property Need Planning Permission?

Planning should be investigated before committing to a property.

Whether a change of use or planning permission is required will depend on the property, its existing lawful use and how you intend to operate the home.

Do not assume that a property can automatically be used as a children’s home simply because it is already residential.

The planning position can also affect the lender’s decision. It is therefore sensible to take professional planning advice where required before committing significant money to the project.

What Information Will I Need for a Children’s Home Finance Application?

Being prepared can make the application considerably easier.

Depending on the lender and transaction, you may be asked for:

• Details of the property
• Purchase price
• Deposit or equity available
• Your experience and background
• Details of your management team
• Business plan
• Financial forecasts
• Schedule of works and refurbishment costs
• Planning information
• Details of your registration application or existing registration
• Company accounts where applicable
• Details of existing borrowing

For children’s homes in England, Ofsted also requires extensive information when assessing an application to register a new home. Its current registration guidance explains the documents and information applicants need to provide.

You can find the official children’s home registration guidance on GOV.UK.

Can a First-Time Children’s Home Operator Get Finance?

Potentially.

A lack of previous ownership does not automatically prevent you from obtaining children’s home finance. However, lenders are likely to look closely at the experience behind the business.

Someone opening their first home who has substantial experience working or managing within the care sector is very different from someone entering the sector with no relevant experience.

The strength of the wider team can therefore be important.

Why Use a Specialist Broker for Children’s Home Finance?

Children’s home finance sits across specialist property lending, commercial finance and a heavily regulated operating sector.

That combination means the cheapest-looking property loan is not necessarily the right solution.

At GPS Financial, we look at the whole project. We consider what you are buying, what needs to happen to the property, how the home will operate and what the longer-term funding position needs to look like.

We can then approach lenders that understand specialist property and structure the finance around the project.

Speak to GPS Financial

Whether you are buying your first children’s home, expanding an existing operation, converting a property or refinancing an established home, speak to us before committing to a funding structure.

The earlier we understand the property and your plans, the easier it is to identify potential issues and establish which lenders may be suitable.

Call 029 2267 7707 or contact GPS Financial to discuss your children’s home finance requirements.