Buying an aged care facility is not like buying a warehouse or an office block.
The property itself is only part of what lenders assess. They look at your operating model, staffing ratios, accreditation status, occupancy levels, and your experience running aged care services. Most mainstream lenders will not touch this type of transaction, and those that do take between eight and twelve weeks to reach a formal approval.
If you are looking at an aged care facility in Melton, the lending structure will depend on whether you are acquiring the property alone or both the property and the business. Lenders treat these as distinct scenarios, and the loan terms shift accordingly.
Why Aged Care Facilities Require Specialised Commercial Finance
Aged care facilities are assessed as specialised commercial assets because they are purpose-built and difficult to repurpose. Lenders need to know that if the business fails, they can recover their funds. That means they assess the building's alternative use, the local demand for aged care beds, and the regulatory environment.
Consider a buyer looking at a 60-bed facility on the western edge of Melton. The property has been operating for 15 years and currently sits at 85% occupancy. The buyer plans to take over the existing business and rebrand under a different provider group. The lender will ask for three years of financial statements from the current operator, the buyer's aged care experience, a business plan showing projected occupancy, and evidence of compliance with the Aged Care Quality and Safety Commission standards. The loan amount was structured at 65% of the combined property and business valuation, with a variable interest rate tied to the lender's commercial rate plus a margin. Settlement took ten weeks from application to drawdown.
How Commercial Property Loans Differ for Aged Care Acquisitions
Standard commercial property finance typically allows loan-to-value ratios of up to 80%, depending on the asset type. Aged care facilities rarely exceed 70%, and most lenders sit closer to 60% or 65%. The reason is risk. If the business collapses, the building is difficult to sell or lease to another operator at full value.
Lenders also look at whether the facility is a going concern. If you are buying the business and the property together, they will require a valuation that covers both. If you are only buying the property and leasing it back to an operator, the lender will assess the operator's financial strength and the lease terms. A long-term lease with a reputable operator improves your borrowing position.
What Lenders Assess When You Apply for an Aged Care Facility Loan
Your application will be assessed across four areas: your financial position, your experience in the sector, the facility's financial performance, and the property's location and condition.
Your financial position includes your deposit, your existing assets, and your ability to service the loan. Most lenders want to see at least 30% to 35% in equity or cash. They will also look at your credit history and any existing commercial or residential debt.
Your experience matters more in aged care than in almost any other commercial property type. If you have not operated an aged care facility before, the lender may decline your application outright or require you to bring on a business partner with relevant experience. If you are already operating one or more facilities, that strengthens your case.
The facility's financial performance is critical. Lenders want to see consistent occupancy above 80%, stable revenue, and a clear profit margin. They will review profit and loss statements, balance sheets, and cash flow reports for the past two to three years. They will also look at your forward projections, including how you plan to maintain or improve occupancy.
The property's location and condition are assessed through a commercial property valuation. The valuer will consider the age of the building, the layout, compliance with current building codes and accessibility standards, and the local demand for aged care beds. Melton's population is growing, and the area has a higher-than-average proportion of residents over 65, which strengthens demand in the long term. However, if there are multiple new facilities planned in the area, that may affect your occupancy assumptions.
Loan Structure and Repayment Options for Aged Care Purchases
Most aged care facility loans are structured as principal and interest loans with terms between 15 and 25 years. Interest-only periods are less common than they are for other commercial property types, but some lenders will offer an initial interest-only period of one to three years if your cash flow requires it.
You may also have the option to structure the loan with flexible repayment options, allowing you to make additional payments during strong cash flow periods without penalty. Some lenders offer a redraw facility, though this is less common in commercial lending than in residential loans.
If you are also upgrading the facility or completing minor refurbishments after purchase, some lenders will allow for a progressive drawdown. This means the loan is released in stages as the work is completed, rather than in a lump sum at settlement.
How Long the Approval Process Takes
Expect the process to take longer than a standard commercial property loan. From application to settlement, most aged care transactions take between ten and fourteen weeks. This includes time for due diligence, valuation, legal review, and lender assessment.
The lender will engage a specialist valuer who understands aged care assets. That valuation can take two to three weeks. Legal review of the business sale agreement, the property title, and any existing leases adds another two to three weeks. The lender's credit assessment, which includes review of your financials and the facility's performance, can take another three to four weeks.
If you are also seeking asset finance for equipment or vehicles as part of the transaction, that can be structured separately or rolled into the overall facility, depending on the lender.
What Happens If You Are Refinancing an Existing Aged Care Facility
If you already own an aged care facility and want to refinance, the process is similar to a purchase, but with some key differences. The lender will still assess your experience, the facility's financial performance, and the property's condition. However, you may have more options if the facility has been operating profitably under your management.
Refinancing can help you access equity to expand the facility, upgrade equipment, or acquire a second site. Some operators use a refinance to switch from a variable interest rate to a fixed interest rate, particularly if they want more certainty over their repayments. Others refinance to consolidate debt or improve their loan structure.
The same lenders who provide purchase finance also handle refinancing, and the timeline is usually shorter because you already have a track record with the facility.
Working with a Commercial Finance Broker in Melton
Aged care facility loans are not widely advertised, and most lenders who provide them do so through broker channels only. A broker with experience in commercial property finance will know which lenders assess aged care transactions and how to structure your application to improve your chances of approval.
A broker can also help you compare loan structures, interest rate options, and repayment terms across multiple lenders. They will manage the application process, liaise with valuers and solicitors, and keep the transaction moving toward settlement.
If you are ready to explore your options or want to understand what a lender will ask for before you begin, call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
How much deposit do I need to buy an aged care facility?
Most lenders require a deposit of at least 30% to 35% of the purchase price. Aged care facilities are considered specialised assets, so loan-to-value ratios are typically capped at 65% to 70%.
Do I need aged care experience to get finance?
Yes, most lenders require the buyer to have experience operating aged care facilities. If you do not have experience, you may need to bring on a business partner who does, or the lender may decline the application.
How long does it take to get approval for an aged care facility loan?
The approval process typically takes between ten and fourteen weeks. This includes time for valuation, legal review, and lender assessment of both the property and the business.
Can I refinance an existing aged care facility?
Yes, refinancing is possible and follows a similar process to a purchase. You may be able to access equity, change your interest rate structure, or consolidate debt if the facility is performing well.
What do lenders assess when I apply for an aged care facility loan?
Lenders assess your financial position, your experience in the aged care sector, the facility's financial performance including occupancy and cash flow, and the property's location and condition. They also review compliance with regulatory standards.
