Can a dentist borrow 100% to buy a practice?
Yes, from some lenders. Dental practices are one of the few areas where specialist lenders will fund the full purchase price, goodwill included, because patient demand is steady and the income transfers with the practice. That is well above the 75% our commercial mortgages page gives as typical for commercial property.
The conditions matter more than the headline. Lenders want accounts showing the practice’s profit comfortably covers the repayments, a price that makes sense against that profit, a buyer with relevant clinical experience, and a clean CQC registration. Purchase costs such as legal fees, valuation and stamp duty, and some working capital for the first months, usually have to come from you.
How do lenders treat goodwill?
Goodwill is the value of the practice beyond the building: the patient base, the reputation, the NHS contract if there is one, and the income all of that produces. Unlike an NHS GP practice, a dental practice’s goodwill can be bought and sold, and it is usually the largest part of the price.
Freehold: you buy the building and the business together. The lender values the property and the goodwill separately, takes a charge over the building, and lends against both.
Leasehold: you buy the business and take over the lease. There is no building to charge, so the lender is lending mainly against goodwill and equipment. It will want the lease to run well beyond the loan term, the landlord’s consent to assign it, and usually a charge over the business itself.
NHS, mixed or private: does it change the mortgage?
Yes. Lenders look at where the income comes from, not just how much there is.
- NHS income is paid under a contract with the local NHS commissioner. It is reliable, but the contract value is fixed, and if a practice does not deliver its contracted activity, money can be clawed back. The contract also has to transfer properly on sale.
- Private income often brings higher fees, but depends on patients staying with the practice after the seller leaves. Lenders look at patient retention and how much income comes from monthly payment plans.
- Mixed practices are assessed on both.
As practices move from NHS to private, lenders want to see a track record of private income after the change, not projections. A practice that converted last year will be judged on what has actually happened since.
What do lenders want to see from an associate buying for the first time?
You do not need to have owned a practice before. Lenders do want evidence you can run one:
- Experience: several years as an associate, ideally in the type of practice you are buying.
- The target practice’s accounts: usually three years, plus current figures.
- A business plan: staffing, how you will keep patients through the handover, and any changes you plan.
- Your own finances: personal income, assets, liabilities and credit history.
A seller who agrees to stay on for a handover period, and an experienced practice manager who stays, both make lenders more comfortable.
How profitable does the practice need to be?
This is answered as a lender sees it, not as a profit promise. The lender starts from the practice’s profit and adjusts it for the change of owner: the seller’s own drawings are added back, and the cost of replacing their clinical work is taken off. What is left has to cover the loan repayments with a margin to spare. The exact cover each lender wants varies, and it tightens where income is falling or depends heavily on one clinician.
If the numbers only work on optimistic assumptions, the lender will notice, and so should you. We look at the accounts with you before you make an offer.
Timeline, costs and the sale agreement
A dental practice purchase commonly takes three to six months. The finance is rarely the slowest part: CQC registration of the new owner and the transfer of any NHS contract often take longest.
Budget for a specialist dental valuation, legal fees on both the purchase and the loan, a lender arrangement fee, stamp duty if you are buying the building, and our fee. We typically charge £495 for arranging a mortgage, and up to 1% of the loan for more complex cases.
Before you sign, agree in writing what is included (equipment, stock, patient records), how long the seller will stay on, any restrictions on the seller practising nearby, who carries any NHS clawback for the current contract year, how staff transfer, and whether the landlord will assign the lease.
