Commercial Finance for Dentists: Buying or Refinancing a Surgery
How lenders treat a dental surgery purchase or refinance: deposits, the fitout, chairs and plant still under finance, ownership structure and timing.
Whitecoat Hub
Commercial Finance for Dentists · Surgery Property · Refinance
Buying the surgery you practise from means financing the property, not the practice. How lenders treat the building, the fitout, financed chairs and plant, and when a refinance makes sense.
Quick Answer
Commercial finance for dentists usually means a commercial property loan secured over the surgery building, kept separate from the practice and the equipment inside it. Lenders value the land and the fixtures built into it, while chairs, imaging and goodwill are normally financed on their own terms. Start with our commercial property loans page if you are pricing a purchase or refinance.
Also called: commercial loans for dentists, dentist commercial finance, dental surgery property loan. The first two are how dentists search for it; the third names what the lender actually takes as security.
What is commercial finance for dentists?
Commercial finance for dentists is an umbrella for three different loans: a commercial property loan over the surgery building, a business loan for the practice, and equipment finance for chairs and imaging. This insight covers the first of those, the surgery property, not the practice.
The situation that usually starts it looks like this. A dentist has leased a fitted surgery for years, the patient book is steady, and the landlord offers to sell the building. The plumbing to each operatory, the suction lines and the shielded X-ray room are already in the walls. Some of the chairs are still on finance. The question is how much of that a property lender will count, and what has to be funded somewhere else.
The wider picture of how practice owners fund vehicles, premises, equipment and purchases sits in the practice finance guide for medical, dental and vet owners, and the freehold side of consulting rooms is covered in the medical centre and consulting suite freehold guide. If the surgery is a strata suite, the planning, by-law and parking checks are set out in buying a strata medical suite and are not repeated here. If you want the full list of what a lender asks a practice owner for, the Whitecoat pack keeps it in one place.
How much deposit do dentists need to buy a surgery?
Dentists buying a surgery usually need a larger deposit than they would for a home loan, because commercial property lenders typically lend at a lower loan-to-value ratio and treat a fitted surgery as specialised security. Expect a larger deposit on specialised premises than on a plain office, varying by lender, with the final figure set by the valuation, the lease position and the practice's trading record.
Medical professional policies that reduce or waive deposits on home loans do not automatically carry across to commercial property. Some lenders run a professional policy on commercial security; many do not, and those that do often limit it by property type, location and loan size.
The deposit is measured against the lower of the contract price and the valuation. If the valuer comes in under the contract, the gap lands on you. How that gap opens on medical and dental rooms, and the usual ways to fund it, is covered in why medical rooms value below the contract price.
Purchase costs such as stamp duty and legal fees are typically paid from your own funds or from equity in another property, not from the commercial loan itself. Some lenders will take additional security to cover them; that is a policy question, varies by lender.
How does your practice's rent or income service the surgery loan?
Your practice's rent or income services the surgery loan through a lease from the entity that owns the building to the entity that runs the practice, and the lender reads both sides of that lease. When the property sits in one entity and the practice in another, the property entity should grant your practice a written lease at market rent, so the property earns an income a lender can assess and a valuer can rely on.
Lenders then test serviceability twice: the rent has to cover the loan, and the practice's profit has to cover the rent. A surgery that only works if the practice pays above market rent will usually be assessed at market rent anyway, which pushes the shortfall back onto the practice's own numbers.
If the building is owned by your own trust and leased to your own company, the lease terms matter more than they look. Rent that is never actually paid, or a lease that was never signed, weakens both the valuation and the serviceability case. The own-trust lease question, and how a valuer treats it, is picked up again in the valuation shortfall insight.
Do dental plumbing, suction and radiation shielding add value to the property?
Dental plumbing, suction and radiation shielding can add value to the property, but only to the extent a valuer believes another buyer would pay for them. Valuers separate fixtures that stay with the building from fitout that suits only one type of occupier, and they price each differently.
Shielded walls around an X-ray or OPG room, plumbing and suction run to each operatory, compressor and suction plant rooms and sterilisation bays are built in. To another dentist they save months of work and a large fitout bill. To a general office tenant they are a cost to strip out. That is why a valuer may give the fitout full credit, partial credit or very little, depending on how many dental and medical buyers are active in that location.
Lenders lend against the valuation of the property as security, not against the fitout invoice. If you spent heavily fitting out the surgery as a tenant, those works were leasehold improvements on the practice's books; once you buy the building, the valuer looks only at what is fixed and what the market would pay for it. How that changes in your accounts is a question for your accountant. How lenders approach single-purpose premises more broadly is set out in commercial property loans on specialised security.
The property loan covers
- The land and the building
- Fixtures that stay with the building, at the value the valuer gives them
- Shielded rooms, fixed plumbing and built-in plant rooms
- In some cases, extra security offered to cover purchase costs
The property loan does not cover
- Chairs, imaging units and sterilisers that can be removed
- Equipment still under finance with the vendor's financier
- The practice's goodwill and patient book
- Working capital or a refit after settlement
Who owns the chairs and plant when you buy a fitted dental surgery?
Who owns the chairs and plant when you buy a fitted surgery comes down to the contract: the fixtures schedule lists what is included in the sale, and anything left off it, or still subject to someone else's finance, may not be yours at settlement.
The general rule is that fixtures pass with the land and removable items do not, but dental fitouts blur that line. A chair bolted to the floor and plumbed in can still be treated as removable equipment. A compressor in a plant room can be listed either way. The contract decides, which is why the fixtures schedule needs to be read line by line before you sign.
Then there is equipment still under finance. If the vendor, or the vendor's practice, financed chairs, imaging or plant, the financier will usually hold a security interest registered on the Personal Property Securities Register. That equipment cannot pass cleanly until the finance is paid out or the financier agrees to a transfer. A search of that register belongs on your solicitor's checklist, and the contract should say who pays any payout.
| Item | Goes with the property? | Usually funded by | What the lender holds as security |
|---|---|---|---|
| Land and building | Yes | Commercial property loan plus your deposit | A registered mortgage over the property |
| Fixed plumbing, suction and compressor plant | Usually, if built in and listed in the fixtures schedule | Included in the property price and valuation | Covered by the mortgage, at the value the valuer gives it |
| Radiation shielding | Yes, it is part of the walls | Included in the property price and valuation | Covered by the mortgage; credit given varies by valuer |
| Chairs and imaging | Usually not, unless the contract lists them | Separate equipment finance, or bought outright | The equipment itself, under the equipment financier's security interest |
| Goodwill | No, it belongs to the practice | A separate practice purchase or business loan | The business, usually with a director's guarantee |
Where this commonly lands: the building and its built-in plant go on the commercial property loan, the chairs and imaging go on separate equipment finance, and the goodwill, if you are buying the practice as well, sits on its own business loan. If the practice is part of the deal, the goodwill and patient book side is covered in dental practice acquisition with property and goodwill. If you are planning a refit straight after settlement, the order of events is set out in buying your practice premises: settlement, then fitout.
Should the surgery sit in your name, a trust, a company or an SMSF?
The surgery can sit in your own name, a family trust, a company or a self-managed super fund, and the right choice turns on tax, asset protection and your plans for the practice, which makes it your accountant's call rather than the lender's. What changes from the lender's side is who signs and who guarantees.
- Your own name. The simplest to lend to, but the property sits alongside your personal assets.
- A family trust. Common for asset protection and flexibility. Lenders usually want the trustee company and the people behind it to guarantee the loan.
- A company. Keeps the property apart from the practice if it is a separate company. Directors usually give personal guarantees.
- A self-managed super fund. Possible because business real property is an exception to the related-party rules, but if the fund borrows, it must use a limited recourse borrowing arrangement, and the lease to your practice has to be on arm's length terms.
Moneysmart's guide to self-managed super funds sets out the trustee duties that come with running one. The super rules require a related-party lease of business real property to be on arm's length terms, which in practice means market rent, a written lease and rent that is actually paid on time. The deposit and borrowing mechanics for an SMSF buying practice premises are in SMSF practice premises and deposits. Whether a medical or dental practice should buy at all, or keep leasing, is worked through in buying your clinic with a commercial property loan and should your practice buy its premises.
When should a dentist refinance the surgery loan?
A dentist should look at refinancing the surgery loan when the property has built equity you need for a refit or a second site, when the original loan's terms no longer fit the practice, or when a change of partners means ownership has to move.
A refinance is a fresh application. The new lender orders a new valuation, reads the practice's current financials and checks the lease between your entities. If the surgery has been refitted since you bought it, the fitout valuation question from earlier comes back, and the new figure sets how much equity you can actually draw.
The usual pattern: dentists who bought with a specialist or non-bank lender because the deal needed flexibility move to a lower-cost lender once the practice has a clean trading record in the new premises. Others refinance the surgery together with equipment and practice debts so the whole stack is on terms that suit the next stage. That wider exercise is set out in refinancing the practice debt stack. If the trigger is a lease ending or a decision to sell the building and lease it back, see medical centre lease ending: refinance, sell or lease back. Other property lending options for practice owners are gathered on the Property Lending Hub.
Buying your surgery is a property loan first. The lender funds the land, the building and the fixtures that stay with the building, at whatever the valuer gives them. Chairs, imaging and any equipment still under finance sit outside that loan, goodwill is a separate deal, and deposits are typically higher on specialised premises, varying by lender. Structure, the lease back to your practice and the fixtures schedule decide whether the deal holds together.
Key takeaway: before you sign, check the fixtures schedule against the register of financed equipment, and get the lease between your entities on paper at market rent.Frequently Asked Questions
Dentist commercial finance is lending for the business side of dentistry, most often a commercial property loan to buy or refinance the surgery building, alongside separate finance for equipment and the practice itself. Lenders treat each as its own loan with its own security. How the property loan itself works is set out in our commercial property loan glossary entry.
Commercial loans for dentists use the same structure as other commercial property loans, but a surgery's specialised fitout and the dentist's professional income change how lenders assess them. Some lenders apply professional policies to dentists, which varies by lender, and a fitted surgery can be valued differently from a plain office. The Whitecoat Hub brings together our dental and medical finance guides.
A dentist can get a commercial loan from a non-bank lender, and it is a common route when a deal needs flexibility on documents, timing or property type. Non-bank pricing is typically higher than a major bank's, so many dentists treat it as a starting point and refinance later. How that refinance works across a whole practice's debts is covered in refinancing the practice debt stack.
A lender values a dental surgery with the fitout that stays with the building, but only at the figure the valuer believes another buyer would pay for it. Removable equipment such as chairs and imaging is usually left out of the property valuation. How specialised premises are valued is set out in commercial property loans on specialised security.
You can refinance a surgery to buy out a partner, provided the property's valuation and the practice's income support the larger loan in your name or your entity's name. The lender reassesses the whole loan, not just the extra amount, and the new balance has to fit within its loan-to-value ratio limit. The partnership agreement and any change to the lease are worth settling with your solicitor first.
FBAA Accredited
