80% Commercial Mortgage for a Trading Business in Elmbridge, Surrey

The situation

The clients were two directors of a private diagnostic and physiotherapy clinic that had traded from the same Weybridge premises for nine years, most recently on a lease with four years left to run. The clinic runs musculoskeletal imaging, sports injury rehabilitation and a growing occupational health contract book serving employers across Elmbridge and the wider Surrey commuter belt. Turnover had grown every year since 2021.

The landlord offered the freehold at £2.3 million before putting it on the open market. For the directors this was the building their patient base already travelled to, fitted out to their own specification at their own cost over nine years, with parking, which in Weybridge is worth almost as much as the building. Losing it to an investor buyer and renegotiating a lease with a new landlord was the risk they were not prepared to take.

The catch was cash. The business held a healthy balance but had committed £310,000 to two new ultrasound suites and an imaging upgrade, and stripping the deposit for the freehold out of working capital would have delayed the clinical investment that was driving the growth in the first place.

Why the high street could not do it

Their own bank, who had held the business account for nine years, offered 70% LTV and would not move. That is not unusual. High street credit committees price risk on the sector label, not the trading numbers, and healthcare-adjacent businesses that are not GP surgeries or dental practices tend to fall into a generic commercial bucket with a 65% to 70% ceiling regardless of how well the business trades.

The 10% gap was £184,000. The directors could have found it by pausing the equipment investment, and around a third of the owner-occupier cases we see arrive with exactly this shape, a business asked to choose between buying its premises and investing in its own growth because one lender's LTV ceiling is treated as the market's. It is a false choice. The ceiling belongs to that lender, and the market for strong trading covenants goes higher.

The structure

We took the case to the specialist commercial lenders who assess owner-occupier deals on affordability first and LTV second. The lender we placed it with wrote £1.84 million at 80% LTV over 20 years, capital and interest, priced at a margin over base that landed within £190 a month of the terms the bank had offered at 70%.

Affordability was assessed on adjusted EBITDA. The clinic's statutory accounts showed profit after two costs that would not exist post-completion, the rent on the premises and a one-off fit-out write-down, and after directors' remuneration that was deliberately conservative for tax planning. Adding back the rent alone transformed the affordability picture, because the mortgage payment was replacing a rent line that was already larger. On the adjusted figures the proposed debt service was covered 2.5 times, which is comfortable territory for any commercial credit team.

I spent more time on the EBITDA adjustments than on anything else in this case, and my advice to any business owner buying their freehold is to have your accountant produce the adjusted EBITDA workings before you go to a lender, not after. A clean adjustment schedule, with each add-back evidenced against the accounts, is the difference between a lender seeing a marginal case and a lender seeing 2.5 times cover.

Security was a first charge over the freehold and a debenture over the trading company. Personal guarantees were limited and negotiated down from the lender's opening position, supported by the strength of the cover ratio.

How it completed

The valuation came in at £2.3 million with a strong commentary on owner-occupier demand for medical-grade space in Weybridge, helped by the fit-out the clinic had funded itself over nine years. Legals ran over six weeks, with the main work on the title and on documenting the debenture alongside the existing equipment finance. First enquiry to completion took just under ten weeks, and the directors exchanged before the landlord's agent had finished preparing the open-market particulars.

The occupational health contracts mattered more than the directors expected. Contracted, repeating revenue from employer clients gave the credit team something a walk-in patient book does not, visibility, and we made those contracts a centrepiece of the application rather than a footnote.

What the freehold changes for the business

The mortgage payment replaced a rent line that was £9,000 a year larger, so the business is cash-flow better off from month one, before any capital growth. The clinical investment went ahead on schedule. At the end of the 20-year term the business owns a Weybridge freehold outright, and in the meantime every pound of amortisation is moving value from the landlord's balance sheet to the directors'.

Rent is money gone. Amortisation is money kept. For a business planning to trade from the same premises for another decade, the case for buying the freehold at 80% LTV rather than losing the building to an investor was not a close call.