Dentists Who Invest Podcast

Can I Borrow 100% Of The Money Needed To Buy A Dental Practice? (Part 2) with Kevin Saunders [CPD Available]

• Dr. James Martin • Season 4 • Episode 409

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What if the deposit that’s been holding you back from buying a dental practice wasn’t actually required? We unpack how first-time buyers can now secure 100% finance not just on property, but on goodwill too, thanks to a major shift in bank credit policy that lifts the goodwill cap to £750,000 per dentist. That change opens the door for solo and joint buyers to fund real-world practice prices, while still meeting the hard test that matters most: serviceability.

We walk through how lenders assess cash flow, why extending goodwill terms from 15 to 20 years can make the numbers work, and how pricing bands change with loan-to-value. Expect straight talk on margins over base, what a small deposit does or doesn’t do to your rate, and how development budgets fit in. If you plan to invest in equipment or upgrades, we outline the trade-offs between short-term development loans and including improvement capital upfront over a longer term to protect cash flow.

For current owners eyeing a second site, we explain how to release equity from existing goodwill or freehold to build a workable deposit and still leverage 100% funding on the new acquisition. We also explore the market backdrop: banks competing for healthcare clients, long-outdated caps finally moving, and what this policy “arms race” means for buyers ready to act. Throughout, we emphasise case-by-case modelling, realistic owner drawings, and the refinance play once performance lifts and leverage falls.

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Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.

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Dr James:

My reason is that someone is a cabinet's owners to talk about 100% common for them facts that most of us are trained to think we have to put some level of deposit on money, but actually more than 100% of the money is possible with caveat. We're going to be re-exploring that today and also talking about some of the things that have changed in October 2025. Looking forestest episode is ever. I'm also happy to share that there is free verifiable CPD associated with this podcast episode. Whenever you finish the episode, all you have to do is click the link in the podcast description. It'll take you right to the Dentists Who Invest website. You'll be able to complete a short collection there, and once passed, you fill in your reflections, and we'll go ahead and email over to you your verifiable CPD certificate, which is entirely free. What that means is this podcast episode will be able to contribute towards your verifiable CPD hours during this learning cycle. We did a podcast not so long ago on this, and it raised a few eyebrows. Had a few people message me to say, is this possible? Is this real? And it is. You can borrow 100% of the money that you need to purchase a dental practice. But like most things in life, there's some small print, shall we say, isn't there, Kevin? It's not like anybody can just waltz in and do this, but it can be done.

Kevin:

Yeah, so within the guidelines of the bank's policy. But important to say we've got live cases, um, well, live cases, we've got cases that have completed over the last couple of years where 100% has been obtained at both goodwill and property for first-time buyers. So um, yeah, it's it's been there for some time. Um, but we just have to work within the guidelines. And maybe it's worth me just going over very briefly what we spoke about last time.

Dr James:

I think so. And just to clarify, by property, we mean freehold for the practice, right?

Kevin:

Yeah, freehold or long leases.

Dr James:

Or long leases. Good point, good point. Yes, let's reiterate what we did last. Let's reiterate what we talked about last time just to set the scene.

Kevin:

Fine. Okay, so first of all, if you're an existing practice owner, you can definitely get 100% finance for the second practice. And you do this by raising finance against your any equity in your goodwill on your first practice, or equity in the property if you have some. Um and you use that for the deposit, and then you raise money against the second practice as well. So that's always been on the cards, and it's something we do very regularly for existing practice owners. Um, so then really turning to first-time buyers, um, what we were saying last time was yes, it's possible, up to a certain cap. Um, and again, we're going to talk about not the property, there's always funding available, 100% funding available for a property that's that has value. We're really talking about the goodwill and where there's maybe a lease of 15 years available there. Um and on those kind of scenarios, the banks were capping at about £300,000 per dentist.

Dr James:

However, first time buyer, just to reiterate.

Kevin:

That's that's that's first-time buyers. Yeah. Yeah. So for example, if I had a had a client looking at buying a practice for £300,000 and a property for half a million, you could get £800,000, 100% uh £800,000, uh, and they would usually split it over 25 years for the property and 15 years for the goodwill on the practice. Wow. So that was all good. Um the big news, hot off the press, is that um the um property is still the same, still 100% of whatever the property value is. Um the goodwill now per dentist has increased massively to 750,000. So in theory, if you're looking at a practice of 1.4 million and there's two dentists, you can get 100% of the goodwill value plus the property value.

Dr James:

Just to reiterate, first-time buyer.

Kevin:

Yeah, first-time buyers, yeah. I mean, as I say, it it it's not an issue for existing practice owners because they've got some equity already they can use. It's it's really first-time buyers that this is important for. And why I think that's so important is that um, I mean, there is a an average um purchase price for dental practice on the market, and it depends who you talk to, is what they say it is 1.1, 1.2 for goodwill. Uh goodwill only, that is. I mean, I just look at what comes across my desk, and it tends to be between the sort of 600 to 1.2 million pounds for goodwill. Uh, and the reason that's so wide is you might have a dental practice in the southwest that's exactly the same as one in London, but they're priced very differently. Um, but so really it opens up that um that average practice purchase price if you've got two dentists buying, you potentially they can get 100% of all of that. Um, obviously one dentist on their own can get up to 750, but that still puts a lot of practices within their reach.

Dr James:

Wow, crazy. That is that is fascinating. So, really, what we're talking about today is most of relevance to those first-time buyers because with the set with people who already have practice and what have you, I mean, it's not this is not uh anything new, really. Or they could always they could always do this. It was just whether or not they were aware of it. And to me, that makes more sense. They already have an asset that they can borrow against.

Kevin:

Yes, I suppose where it does come into play with um people buying the second practice is if they haven't quite got enough equity in their existing practice and they need 700,000 for goodwill for a second practice. So that then it does um apply to them as well. Um, but generally people buy a practice two or three years down the line, they've they've grown the uh the fees on their existing practice, and so therefore the goodwill value's gone up as well. So um so yeah, it also applies to um existing practice owners.

Dr James:

But uh tell me this, why don't we not talk about this?

Kevin:

Uh I think because up to now it's been reined in by the fact that it was £300,000 per dentist. So you've got you know, there's not too many practices out there that are just valued at £300,000 for a um one off individual purchaser. The rate's a bit higher as well. Uh should say that perhaps if you on the market you can get a rate in the low twos overbase. This is more like the low four's overbase. But to my mind, if the bank's buying the asset for you 100%, that's actually worth paying, you know, that extra interest rate. And actually you can you can revisit that a few years later when you've grown the goodwill value and it's no longer 100% and refinance the loan even back to your existing bank.

Dr James:

Tell me this: if you were able to put down even a 5% deposit, would that take your rate from 4% over base down to 2% over base? Or do you have to put down a little bit more of a deposit in order to achieve that rate?

Kevin:

That's a really good question. And the answer is it's a bit more complicated than that because the bank's price differently. So for some banks, if you're at 90% loans of value, it might be a little bit more expensive, it might be top twos, and if you drop down to 80%, it might be bottom twos. Another bank might not differentiate, and they might just say 90 to 95% is 2.3 over base, and um you know 100% is 4.6. So everything's plugged into a pricing calculator, um, and that church out the the price. So we have we haven't got exact rates, but I think that's the ballpark kind of figures.

Dr James:

Ah, I see. So it's more nuanced than that. It's on a bank-by-bank basis.

Kevin:

It is, yes. One thing I do want to talk about, because there is a caveat to all of this, and that is serviceability of the loan. Um, and you know, we are seeing goodwill values jump up at the moment, so it's getting harder and harder to get some of these uh these propositions across the desk with the bank because you've got to prove that the loan's serviceable and that the applicant can draw a salary as well. So um what we are seeing a little bit of is movement towards 20-year money from 15 years on goodwill. Uh property generally is stretched over 25. Um, so that's I mean, it's been a thing with what at least one of the banks for some time, and I can see other banks slowly creeping towards that. Because by doing that, it'll actually make the loan serviceable and the whole proposition works basically.

Dr James:

I see. So this is very much just for the purchase of the practice. So if you wanted any additional money to invest in the practice, that would be additional loans still. Have I got that right?

Kevin:

Yes, that's correct. Yeah. Uh, and that depends on how highly geared you are against your practice goodwill if you were to approach for development uh money for the practice. Sometimes it's termed over 10 years, sometimes 15 years. If you were looking at an 80% loans of value, you might be able to get the development costs on top at the outset termed over the same period, the same 15 to 20 years. So again, it depends on the proposition, and that is the reoccurring thing with commercial finance, because it is about the story that we put into the banks, it's not a tick box like residential mortgage.

Dr James:

You know, I'm glad I asked that because obviously if your plan is to upgrade the practice and invest in it, it's just good to make that clear, right? Because if you're borrowing against 100% of the goodwill, then you have no more well, there's no goodwill to borrow against with the more short-term finance.

Kevin:

Yes, yeah. I mean there's all there's always short-term finance available with the small banks for developments and equipment uh purchase, etc. And that's generally termed over five to seven years. Uh but if you can get the money from the head bank at the beginning and spread it over 15 to 20 years, obviously that impacts cash flow far less.

Dr James:

Interesting. Anyway, it sounds like there's some numbers crunching behind this, really, to kind of figure out if it's possible. And from what I understand, Kevin, you're happy to do that for dentists. UK dentists, if you are just starting out on your investment journey or you're already investing and want to know if your strategy is 100% foolproof and optimized to reduce fees and maximize growth, then you might like to know. I have teamed up with independent financial planner Luke Hurley to create the Dent to Invest Academy. Dent to Invest Academy fully documents the process that a financial planner would normally perform for a client behind the scenes and reveals it to you. This means that you can implement it into your own life, therefore pulling your financial freedom data forward by years. If you wish to set up and manage your own investment portfolio, then this is designed to give you all the tools and knowledge you need to perform this properly. This means that when viable and appropriate, you will have the know-how and skill required to build and manage your own investment portfolio, plus ensure that it is 100% optimized. If this sounds like your thing, then keep an eye out on the Dentist Who Invest mailing list where we'll be announcing the details of the next intake very soon.

Kevin:

Definitely. And that's why I said it's a case-by-case um scenario. We have to look at every single case, crunch the numbers, and I do that for dentists. Sometimes they'll look at two or three practices, and I'm they're crunching the numbers in the background, telling them what works, and talking to the banks on their behalf, and we'll finally find one that is the right fit and they're happy with the numbers on.

Dr James:

And just one more thing. I'm just curious to know why have the banks all of a sudden doubled the amount that you can borrow against the goodwill under 100% finance? What's the reasoning behind that?

Kevin:

That's a really good question. So uh one of the banks has fired up and done that, um, and that's kicked off the other banks as well. So there is a little bit of a policy war going on at the moment, a credit policy war. Um, the banks are all vying for the business. Um, so healthcare professionals are really good clients to have. Uh, and probably it's there's only been a couple of banks that have been lending large amounts of money for the last few years, and another bank's now stepped up and it's caused a bit of a shape in the marketplace, and they're all revisiting the policy. But I think it was the right thing to do. Um, that £300,000 limit we're talking about was the same when I was in the bank, and that was uh well when I started in the healthcare team back in 2002, hasn't been changed since then. Back then it made sense given the price of practices, whereas now it's it's become a bit outdated. So I think that's what's really pushed the um the bank to increase its amount.

Dr James:

Interesting. So this has been something that, in your opinion, was due to revisit, and it just so happens that since we did the last podcast and this podcast, that was that time, that one time over the last 20 years. How crazy is that? We'll do another podcast in another three months, it'll be higher still.

Kevin:

Maybe others maybe that was the trigger. Well, well, no, to be honest, I I I knew it was going on uh when we had the last podcast, but until a bank signs off on an amendment to credit policy, and and I know myself from working on credit policy in a bank, um, it it takes forever. So we just never count our chickens until we get the you know the the news that it's been changed.

Dr James:

Awesome. And Kevin, if anybody listening today wants to find out more about anything you said or have you crunched the numbers for them, how are they best off getting a hold of you?

Kevin:

Yeah, they can email me or call me uh or check out the Saroma web page.

Dr James:

Sure. And what's your best email and mobile number?

Kevin:

Okay, so um email will be kevin@saroma.co.uk and mobile 0780-144-0622.

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Dr. James Martin

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