Nursery and childcare mortgages

Thinking about purchasing an existing nursery, developing a new one or adding to your current portfolio?

An increasing number of parents are going back to work sooner after having a child, meaning childcare has quickly become an important part of family conversations.

This increase in demand for childcare has led to an obvious increase in demand for nurseries and childcare properties. And this is more than likely going to continue as the government continues its aim to at least double the number of funded childcare hours for working parents of children up to the age of four.

Because of the increase in demand, the availability of funding the purchase and development of these facilities has drastically improved in recent years. However, there is a distinct shortage of the ‘perfect’ locations to build these properties, and a lot of investors have chosen to convert new-builds or existing buildings into fully-fledged nurseries.

With the recent relaxation of planning regulations, these conversions have proven popular and there has been an increasing number of properties built from varying bases.

If you are thinking about purchasing an existing nursery business, developing a new one or adding to your current portfolio, you should seek the advice of a specialist mortgage adviser.

So, where do I start if i need funding?

Firstly, you need to decide if you’re purchasing an existing nursery or starting from scratch. If you’re leaning towards buying an existing one, then you should be able to get the process started quicker as the history of the nursery is available to see by the lender.

Before you apply, the main thing to know is that most lenders will only fund experienced operators with a minimum of 2 or 3 years in the industry.

What if I am looking at buying my first nursery?

There are still lenders out there that will look at your application, but you must have at least specific childcare experience, or at least something similar – even if you’re planning on putting staff and managers into the nursery to run it for you.

You will benefit from having a registered management qualification like an NVQ Level 4 and if you don’t have this, then you may need to consider recruiting an existing teacher of a nursery to join your team and put them on the mortgage application.

What’s the mortgage process?

Like any other mortgage, lenders will want to look at your accounts to ensure that the nursery is suitable for their borrowing, and your Care Quality Commission and Disclosure & Barring Service (the old CRB check) report will also be looked at.

Regardless of the type of nursery that you’re looking at, you will always need to provide the latest three years’ annual trading accounts so that lenders can then assess your affordability based on your financials.

Could I mix and match the options?

It is known as ‘jigsaw finance’, and yes you can, if one single solution doesn’t fit your plans. Jigsaw finance is made up of various business finance arrangements all rolled up into one. For example, you may take taking a commercial mortgage for the long-term goal and an unsecured loan for the short-term costs.

How do i apply?

To begin your application, you will need to speak to a mortgage broker who has access to a wide panel of lenders so that they can get the mortgage product most suited to your circumstance.

You will need documentation such like the accounts for the nursery that you’re looking to finance, if it’s an existing one, and an overview of your background experience.

There are quite a few other bits that you’ll need like your CQC and DBS reports, which can be daunting if it’s your first one, so it will benefit you to speak to someone who can walk you through the process.

Contact one of our childcare homes or nursery finance experts below to get your application underway or if you have any further questions.

Speak to a mortgage broker who specialises in commercial mortgages

Through our free broker-matching service, we will pair you up with a mortgage advisor who has the right expertise for your needs and circumstances. Call us on 023 8098 0304 or make an enquiry to get started.

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Commercial guides

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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