May 22, 2026 Office, Education & Childcare

Understanding Commercial Mortgages for an After School Care Centre

Owning the premises your after school care service runs from is a natural next step once your enrolments and catchment are steady. This guide walks through how a lender assesses an OSHC purchase, the deposit and structures involved, and where the numbers move. Ardent Capital Group speaks with operators about this kind of commercial property purchase regularly.

Ardent Capital Group is a specialist in commercial mortgages for after school care operators across Australia. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.

Funding scope: Ardent can help you access finance of $100,000 to $10,000,000+, sized to the asset and your service capacity.
Track record: We have helped facilitate over $500,000,000 in funding over a decade for over 1,000 borrowers.
Sector focus: Commercial mortgages arranged for OSHC, child care, education-aligned premises and mixed-use assets near schools.
National coverage: We service Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra, Hobart and surrounding regional towns.

Why buy rather than lease your after school care centre

OSHC services carry meaningful fit-out and compliance costs. Safe entry and sign-in zones, child-safe flooring, compliant bathrooms, food prep and allergen-safe kitchenettes, secure storage, fencing and softfall outdoors, acoustic treatment and disability access all add to sunk costs if you keep leasing. Ownership lets you invest with a longer horizon, build equity and control key compliance upgrades under the National Quality Framework.

Location is sticky for after school care. Families choose you for proximity to the school gate and reliable pick-up. A stable address inside a known catchment anchors enrolments. Revenue is supported by the Child Care Subsidy, which helps underpin demand and gives lenders more confidence in serviceability. Loan repayments build an owned asset over time, and ownership can shield you from unpredictable rent reviews.

Main drivers for buying:

Anchor your catchment: Secure a site within walking distance or a short transfer from partner schools, supporting consistent roll-up and roll-down.
Invest in compliant fit-out: Spend on child-safe design, storage, shade and acoustic comfort knowing improvements stay with your asset.
Cost control: Replace rent escalations with repayments that build equity and can be structured to cash flow.
Tenure and brand: Control signage, parent pick-up flow, storage and specialised activity zones without landlord friction.

Leasing can still be the better call in some cases, and it is worth weighing carefully with your accountant: a short licence with a school or parish with limited renewal history, an expected relocation due to a tender cycle, uncertain growth in the local school cohort, or capital you would rather put into staffing depth, quality programs and systems. The decision sits with you, and we are glad to help you think it through.

The mechanics of an after school care centre mortgage

Deposit and LVR. Childcare and OSHC premises are a specialised security, so lenders gear more conservatively than standard commercial property. Owner-occupier purchases commonly reach around 60 to 65 per cent LVR, so plan for roughly a 35 to 45 per cent deposit. Where you add residential or other property as extra security, some lenders will consider up to 100 per cent of the purchase price through a cross-collateralised structure. Owner-occupiers with a proven trading record tend to see the strongest appetite.
Loan term and structure. Terms commonly run 15 to 25 years, and some non-bank lenders extend to 25 to 30 years. You can structure as principal and interest for steady amortisation, or interest only for a period when cash flow prioritises staffing or ramp-up.
Security and serviceability. The property is the primary security. Lenders assess serviceability on business financials, CCS-backed revenue, occupancy patterns across term time and school holidays, and stress interest coverage.
Owner-occupier treatment. Lenders generally price and consider owner-occupier purchases more favourably. Stability of operations at the address, lower vacancy risk and alignment between the business and the asset improve the credit view.

Structuring the finance

Many after school care operators hold the freehold in a separate entity, such as a company or trust, then lease the premises to the trading business at a commercial rent. A lender reads that inter-entity lease as the serviceability line, using the documented rent, term and options to model repayments and the credit position. This is a common arrangement operators already use, and the finance is built around it rather than the other way around.

Some operators look at holding the property inside a self-managed super fund. Commercial premises generally qualify as business real property, so an SMSF can buy the building and lease it back to the trading entity at market rent, under a limited recourse borrowing arrangement with the asset held in a separate bare trust. Cross-collateralisation is not available inside super, so the fund needs its own deposit rather than drawing on equity elsewhere, the borrowing funds a single asset, and the rent must be paid at market rate. It is one of the more intricate purchases in commercial finance, and the detail decides whether it works. Ardent structures the finance and tells you which lenders will take this kind of security and on what terms; your accountant and a licensed SMSF adviser confirm the fund, tax and ownership detail before anything is locked in.

How lenders size up the deal

Business financials. Turnover, EBITDA, CCS receipts mix, wage ratios, and stability of margins across term time and vacation care.
Serviceability. Interest cover, debt service ratios, sensitivity to fee caps or staffing costs, and headroom for rate movements.
The property. Zoning that supports community use or child care, building condition, compliance capacity, and adaptability for OSHC.
Valuation. Market value on vacant possession or as specialised asset, comparables near primary schools, and fit-out value treatment.
Deposit and equity. Cash, retained profits, or the ability to leverage your equity in residential or other commercial property.
Lease and occupancy. If leasing back to your trading entity, a market rent and terms that support the valuation and lender criteria. If co-located on school land, clarity on tenure and permissions.

A specialist broker who understands OSHC revenue cycles, CCS dynamics and school catchment risk can line up the right lenders and terms without wasted process.

A scenario worth considering

This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.

Profile: an OSHC operator with 110 approved places across two primary schools, currently leasing a community hall. A nearby freehold hall on 1,000 sqm with on-site parking is listed at $1,950,000.
Objectives: secure tenure within the same catchment, add outdoor shade and storage, keep repayments near current rent, and preserve working capital for educator staffing.
Structures considered: purchase in a family trust with a lease to the trading company at market rent, or an SMSF purchase assessed for fit given the fund balance and borrowing rules.
Funding options mapped:
- Around 60 to 65 per cent LVR against the property, with roughly a 35 to 45 per cent deposit from cash and a line secured by home equity.
- A principal and interest term modelled against current rent, with an interest only period during refurbishment.
- Fit-out and outdoor works staged across two terms to spread the capital.
Key variables: development approval for change of use to a community or child care facility, an acoustic treatment allowance, and a contingency buffer in the fit-out budget.

How we would approach it: we would map the ranges, structures and repayments, run the sensitivity testing, and present the terms so the decision stays with the operator. The figures above are illustrative, not confirmed outcomes.

Related finance for an after school care centre

Asset finance for OSHC equipment. Fund people movers for excursions, commercial fridges and freezers, shade structures, storage systems and IT sign-in hardware. This sits alongside after-school care equipment finance for the fit-out itself.
Fit-out and refurbishment finance. Spread the cost of compliant bathrooms, acoustic panels, fencing, softfall and kitchenettes aligned to NQF requirements.
Working capital. Support staffing rosters, program materials and seasonal cash flow around vacation care peaks and term transitions. If you need working capital for an after-school care service, we can arrange it around your CCS timing.
Business overdraft. Smooth CCS timing differences and parent fee cycles without interrupting payroll or supplier payments.
Refinancing and debt consolidation. Restructure existing facilities to reduce total cost and align terms with OSHC revenue patterns.
Construction and renovation. Convert a hall or strata unit into a compliant OSHC centre, including approvals, services upgrades and outdoor areas.
Business or premises acquisition finance. Buy a competing OSHC service or the freehold that underpins your primary site.

These facilities often interact. Owning the premises can build equity for future growth, and a refinance can consolidate short-term facilities into a clearer structure.

Working with a specialist broker for after school care premises

Ardent Capital Group helps after school care operators buy well. We arrange and structure commercial mortgages around how you plan to hold and occupy the property, including a leaseback to your trading entity or an SMSF pathway where it suits.

We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas, and we have helped facilitate over $500,000,000 in funding over a decade for over 1,000 borrowers.

If buying your premises is on the horizon, our team can map the numbers with you and line up the right lenders. Start with our after-school care property loan options, and we will give you clear, sector-specific lending advice on structure, strategy and the years ahead.

Frequently asked questions

How much deposit do I need to buy an after school care premises?

Childcare and OSHC premises are a specialised security, so owner-occupier purchases commonly gear to around 60 to 65 per cent, so plan for roughly a 35 to 45 per cent deposit. Adding residential or other property as extra security can reduce the cash you need through a cross-collateralised structure, and a proven trading record helps the credit view.

Can I use my home equity to help with the purchase?

Yes. Many owners use equity in a home or other property for part of the deposit or to support a higher LVR, then refinance once the business and property stabilise.

Will a lender accept a property that needs OSHC-specific fit-out?

Yes, provided zoning supports community or child care use and the valuation supports the purchase. Lenders look for a funded plan to achieve compliance, with contingencies for acoustic treatment, bathrooms and outdoor areas.

Is an SMSF allowed to buy the OSHC premises and lease it to my business?

Often yes. Commercial premises generally qualify as business real property, and an SMSF can lease to your trading entity at market rent. The trade-offs include borrowing limits, liquidity and contribution caps.

Do lenders prefer owner-occupier or investment structures for OSHC?

Owner-occupier purchases usually receive stronger credit appetite and pricing, as your business occupancy reduces vacancy risk and supports serviceability.

What lease terms do lenders want if I hold the property in a trust and lease it to my trading company?

A market rent with a clear term and options that align to the loan, documented outgoings, and conditions that support valuation and cash flow modelling.

What properties suit OSHC ownership best?

Freehold halls or community-use buildings near primary schools, adaptable strata commercial suites with ground-floor access, and sites with safe pick-up and parking. The closer to the school catchment, the stronger the enrolment stability.

Written by

Nick Chong

Managing Director, M.AppFin, Dip. Mortgage Mgmt

Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.