How an optician can get 100% finance to go from a tenant to an owner.

As an established optician running a successful practice, you may find that you are starting to see the disadvantages of leasing your premises.

• You face a business risk from rent increases
• You could face a need to relocate if the leaseholder sells the property
• You are paying out funds in rent that could be used within your business.

Leasing might be ideal when you are starting up, but it may represent a disadvantage for an established business.

Of course, you may be reluctant to move your practice if you have spent years building your business in an ideal location. Your customers identify your business with your premises. Finding new premises in a good location with passing trade, transport links and sufficient space will be expensive.  

The solution can be to buy your existing premises from your landlord.

At Rangewell, we may be able to help you find the funding you need. Not only could buying your premises reduce your monthly outgoings, we may be able to provide 100% finance for the deal, using a combination of a Commercial Mortgage and a Goodwill Loan.

Why switch from a tenant to an owner?

There are many advantages to buying your own premises.

• You may be able to reduce your monthly outgoings by buying rather than renting
• You can provide increased security for your business
• You may be able to remodel or extend your premises
• You may be able to secure additional income from renting out unused space
• You will build up a valuable asset for your practice, which you will eventually own outright

Using a Commercial Mortgage to buy your premises

A Commercial Mortgage is simply a large-scale, long-term loan secured on a commercial property. It works much like a residential mortgage.

Loans are available from around £75,000 and upwards with no set upper limit, and repayment terms may be over 20-25 years.

Repayment options are similar to those for the residential market, but interest rates - which will be variable -  will be a little higher, and will be set by the lender on an individual basis. An established practice with good trading history and positive prospects should be able to secure the most attractive rate. You should expect to support your application with a detailed business plan.

There will also be valuation, arrangement and legal fees to consider.

Owner-occupied businesses can normally get a maximum loan-to-value of around 80%, although to get the best rate you may need to provide a larger deposit.

Providing the deposit with a Goodwill Loan

Most opticians practices will not have the necessary cash to pay the deposit required for a Commercial Mortgage. Attempting to fund it directly from your turnover would pose a threat to your cashflow and affect your business viability.

A better solution may be to take out a Goodwill Loan.

Goodwill Loans, also known as Capital Withdrawal Loans or Cash Outs are a special kind of lending option reserved for opticians and other professionals in the medical sector. It allows them to access the value built up in their practice without withdrawing funds from it by using the goodwill built up in their practice as the security for a loan.

A Goodwill Loan can provide a sum comparable to a practice's annual turnover, typically between £50,000 and £500,000, with repayment terms of up to 15 years. Interest rates will be agreed when the loan is taken out, and although they are variable, they are likely to remain significantly more favourable than those available with other types of lending.

Goodwill Loans can often be arranged at short notice, and there may be no need to provide any kind of deposit or additional security. They can actually be used for almost any purpose, including investment, school fees and property purchase, with the exclusion of buying your main home.

Setting up the finance you need to buy your premises

As a professional with your own practice, you may be able to take advantage of your special status to arrange 100% finance when you are ready to buy your premises.

However, expert help will be essential to ensure that you secure the most competitive deal, and to help you through the application process.

At Rangewell, we are ready to help you secure the funding you want. We will work with you to understand your opticians business plans, and use our expertise to help find the funding that meets your need from the most competitive sources and specialist lenders.

We also understand your sector - as we work with opticians across the country. We can provide solutions not just for buying premises, but for equipment, for acquiring a competitor or for any other business purpose - in fact, every type of finance for opticians. So, if you are an optician, whatever your funding needs we can help you answer them. To find out more about setting up the finance you need to acquire your premises simply call us. Our experts are ready to help.