Demand for childcare in the UK continues to grow, making nurseries a resilient business sector. Whether you are buying an existing nursery, refinancing your current property, or expanding into additional settings, our specialist brokers connect you with lenders who understand nursery and childcare finance.
From 5.50%
Interest rate
Up to 75%
Loan-to-value
5-25 years
Mortgage term
£100,000
Minimum loan
A nursery mortgage is a specialist commercial mortgage designed for purchasing, refinancing, or expanding childcare premises. With growing demand for childcare across the UK, day nurseries and day care settings are attractive propositions for lenders who understand the sector. Our broker team specialises in nursery finance and accesses the whole UK lender market to find competitive terms.
Whether you are an experienced operator looking to expand your portfolio, a first-time buyer acquiring your first nursery business, or looking to refinance an existing nursery mortgage, we provide expert guidance throughout the process. The childcare sector has unique lending requirements — including Ofsted ratings, staff-to-child ratios, and occupancy levels — that require a finance broker with specialist knowledge.
The UK childcare market is worth approximately £7 billion annually, with demand consistently outstripping supply in many areas. Government-funded childcare hours (15 and 30 hours provisions) provide a baseline revenue stream that lenders view favourably, complemented by private fee income from additional hours and wraparound care. This combination of government-backed and private income makes nurseries one of the more stable childcare business models for lending purposes. Our broker team understands the income structure of nursery businesses and presents applications in a way that highlights the security and predictability of childcare revenue to lenders.
Nursery mortgage rates typically range from 5.50% to 8.50%, depending on the lender, LTV, and the strength of the nursery business. Affordability is assessed on the nursery's profitability, cash flow, occupancy rates, and the borrower's experience in running a nursery. Loan terms of 15-25 years are standard, with both capital repayment and interest-only options available.
Key lending criteria include: property value and condition, Ofsted rating (Good or Outstanding preferred), occupancy levels (lenders typically want 70%+ sustained occupancy), staff qualifications and ratios, and the operator's track record. A detailed business plan demonstrating projected revenue, costs, and profitability is essential for every nursery mortgage application.
Most lenders offer up to 70-75% LTV on established day nurseries. Variable rate products track the base rate, offering flexibility, while fixed rates provide repayment certainty. An arrangement fee of 1-2% is standard. Use our calculator to estimate monthly costs.
Beyond the standard assessment criteria, lenders specialising in nursery finance examine the local childcare market in detail. This includes reviewing the number of competing settings within a defined radius, the demographic profile of the area (particularly the number of under-5s), local housing development plans that may increase future demand, and the pricing dynamics of the local market. A well-researched market analysis demonstrating strong local demand for childcare significantly strengthens a nursery mortgage application. Our team helps you prepare this analysis using publicly available data from the Department for Education, Ofsted reports, and local authority childcare sufficiency assessments.
Nursery property valuations are specialist assessments that consider both the property value and the business goodwill. A well-run nursery with high occupancy, good Ofsted ratings, and strong parental demand is worth significantly more than the property alone. Lenders who understand nursery valuations will base their lending on the combined property and business value, potentially allowing higher borrowing than lenders who assess only the bricks and mortar. Our broker team works with specialist nursery valuers and knows which lenders accept goodwill-inclusive valuations, maximising your borrowing capacity for nursery purchases.
Acquisition finance for nurseries covers both the property and the business as a going concern. When purchasing an established nursery business, the lender values the property, goodwill, and trading performance separately. A strong business plan should demonstrate how you will maintain and grow occupancy, manage staff, and cater to local demand for childcare.
First-time nursery buyers need to show relevant experience — either in childcare management, education, or business operations. Experienced operators with proven track records in running a nursery will access better rates and higher LTVs. The type of finance available depends on your experience, the property condition, and the business's financial performance.
Working capital funding may also be needed alongside the main loan to cover staff costs, equipment, and initial operating expenses. Our broker team can arrange business finance packages that include both the acquisition loan and working capital facilities. Day nurseries and day care settings benefit from structured funding that matches the seasonal patterns of the childcare sector.
Staff costs represent the largest operating expense for nursery businesses — typically 55-70% of revenue — and lenders scrutinise staffing plans carefully. Demonstrating that you can maintain required staff-to-child ratios while remaining profitable is essential. The ongoing national shortage of qualified early years practitioners adds complexity to workforce planning, which lenders factor into their risk assessment. For operators purchasing an established nursery, TUPE transfer obligations for existing staff are an important consideration that affects both the acquisition cost and ongoing operating costs. Our team ensures that staffing plans and TUPE obligations are properly reflected in every nursery mortgage application.
The nursery acquisition market is active and competitive, with sellers often receiving multiple offers for well-performing settings. Having finance pre-agreed through a specialist broker gives you a significant advantage when making offers, as sellers and their agents prefer buyers who can demonstrate funding capability. We provide agreement-in-principle letters and fast-track application processing that enables our clients to move quickly when the right nursery opportunity arises. For nursery businesses valued above £500,000, we typically achieve completion within 8-12 weeks from offer acceptance, subject to standard legal and regulatory processes.
If you already own a nursery, refinance options can help you secure better rates, release equity for expansion, or fund refurbishment projects. As your nursery business grows and profitability increases, refinancing can unlock improved loan terms that reflect your stronger trading position.
For operators looking to expand, we arrange commercial finance for purchasing additional day nurseries or converting existing properties into childcare settings. Development finance is available for purpose-built nursery construction or major refurbishment projects. The demand for childcare continues to grow, making the sector attractive to lenders.
Our finance broker service ensures you get the best deal by comparing offers from specialist nursery lenders, challenger banks, and mainstream providers across our 100+ lender panel. Competitive terms are available for refinance and expansion transactions. Contact us to discuss refinancing your nursery mortgage.
The nursery expansion market is particularly active, with many operators seeking to grow from single-site businesses to multi-site groups. Portfolio lenders offer efficiencies for operators with two or more nurseries, including reduced per-site arrangement fees, simplified annual reviews, and potentially better rates reflecting the diversification benefit of multiple locations. Development finance is available for purpose-built nursery construction — designing a setting specifically for childcare use can improve operational efficiency and Ofsted outcomes compared to adapted premises. Our team structures expansion and development finance packages that support the growth ambitions of nursery operators at every stage.
For nursery operators considering expansion into new settings, the choice between purchasing an existing nursery and building from scratch has significant financial implications. Purchasing an established nursery provides immediate revenue and an existing customer base but comes at a premium for goodwill. Building a new nursery requires development finance and a period of occupancy build-up but allows you to design the setting exactly to your operational preferences. Many successful nursery groups use both approaches depending on the opportunity. Our team arranges finance for both acquisition and development scenarios, providing flexibility to pursue whichever growth strategy presents the best opportunity.
The nursery sector is regulated and specialist, requiring a broker who understands Ofsted requirements, staffing regulations, and the unique cash flow patterns of childcare businesses. Not every lender has appetite for nursery lending, and those that do apply specific criteria around occupancy, staff qualifications, and operational standards.
At CMB, we bring decades of commercial finance expertise to nursery lending. Matt Lenzie's background in corporate banking at Lloyds Bank and Bank of Scotland means we understand business finance, affordability assessment, and what lenders look for in a nursery business application. We cater to operators of all sizes — from single-site day nurseries to multi-location nursery groups.
Every nursery mortgage application is unique. Our broker team provides a comprehensive type of finance assessment, comparing commercial mortgage products, business finance, and specialist nursery lending options to find the right solution for your needs. Get in touch for a free initial consultation.
The nursery sector benefits from strong demographic tailwinds and government policy support for expanded childcare provision. The extension of funded hours and the introduction of wrap-around childcare initiatives create additional demand that underpins business viability. Lenders who understand these sector dynamics are more willing to offer competitive terms. Our specialist knowledge of the nursery finance market — combined with Matt Lenzie corporate banking experience at Lloyds Bank and Bank of Scotland — ensures every application is positioned to take advantage of the positive lending environment for childcare businesses. We work with nursery operators from Cornwall to Scotland, accessing the best finance terms regardless of location.
Nursery finance is a relationship-driven sector where long-term broker support adds genuine value. We maintain ongoing relationships with our nursery clients, providing refinancing assessments as their businesses grow, expansion finance when new opportunities arise, and market intelligence on lending trends and product changes. This proactive approach ensures our nursery clients always have access to the most competitive finance terms available in the current market, supporting their growth ambitions at every stage.
“Every nurseries application is different. I work directly with borrowers to understand their objectives, structure the deal correctly, and present it to the right lenders. That hands-on approach consistently delivers better outcomes than going direct to a single bank.”
Matt Lenzie
Founder & Principal Broker, Commercial Mortgages Broker
Yes. Specialist nursery mortgages are available from lenders who understand the childcare sector. You will need a business plan, evidence of childcare experience or qualifications, and a deposit of at least 25-30%.
This is primarily a residential mortgage consideration — childcare costs can affect residential mortgage affordability calculations. For commercial nursery mortgages, the nursery's fee income is actually the revenue that supports the loan.
Most lenders require a deposit of 25-30% for nursery purchases. First-time operators may need a larger deposit (30-35%) and additional evidence of childcare sector experience.
Nursery mortgage rates typically range from 5.50% to 8.50% depending on the LTV, Ofsted rating, occupancy levels, and borrower experience. Fixed and variable rate options are available.
Yes, though lenders prefer operators with relevant childcare experience. A strong business plan, industry qualifications, and a larger deposit will help first-time nursery buyers secure finance.
Yes. Refinancing can help you secure better rates, release equity for expansion or refurbishment, or restructure your existing loan. Growing occupancy and profitability will support better refinancing terms.