Practice Finance Bulletin: Interest Rates Hike?? with Kevin Saunders [CPD Available]

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Interest rates are supposed to be boring, but they can decide whether your practice feels effortless or constantly tight on cash. We sit down with finance specialist Kevin Saunders to make sense of the latest Bank of England base rate picture, why inflation still matters, and why some economists are now talking about rate rises again rather than cuts. If you are a UK dentist with a loan on a variable rate, or you have borrowing you have not looked at in years, this is your nudge to stop running on autopilot. 

We get practical about refinancing for dentists: who should consider a review (especially borrowing taken out between 2008 and 2020), how practice valuations can unlock better terms as your business matures, and why stacked short-term equipment finance can quietly drain your monthly cash flow. We also talk through the real-world friction costs people forget, like valuation fees, legal fees, and early repayment charges, so you can judge whether switching is genuinely worth it. 

Kevin shares how newer lending products and longer terms, including 20-year goodwill loans, can reduce repayments even if the interest rate is slightly higher. The goal is simple: improve cash flow and direct the surplus into building personal wealth, including paying down your residential mortgage where there is no tax relief on interest. We finish with straight talk for first-time buyers: waiting for the “perfect” rate can mean missing the perfect practice.

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Transcript

Dr James 0:00

We're back this month for another finance bulletin with regular podcaster, Mr. Kevin Saunders, Kevin is an expert in all things finance and borrowing for Dentists up and down the UK. Today we're going to talk about what in preference and what we need to know when it comes to making our next borrowing decision. And also specifically discussing the finance and why there's been a little bit of a resurgence in terms of tax finance experts out there. Looking forward to talking about all of the things and more in today's episode. As ever, you can tame your CPD to this episode within the official Dentists Who Invest Smart Money Members Club. Smart Money Members Club also includes multiple mini courses and webinar series on finance for dentists, including how to become as tax-efficient as possible, as well as understanding investing. All of this content coins as verifiable CPD, and you can download your certificates there and then on completing each lesson. In addition to this, we also include a whopping 10% discount on your dental identity and 5% discount on lab bills for dental principles, amongst other parts and discounts for members. Please use the link in the description to claim your verifiable CPD for this episode. Now then, Kevin, from your face and dentist investors podcast, back to talk about finance once again and all the things that we said on the tin in the intro to this podcast and more. But before we talk about that, I just want to say that it was really fun to have you along to our event uh the other weekend, uh Biz of Dentistry, uh, which was really cool. And there was certainly a great turnout, which is amazing. So, yeah, fun to have you there. Maybe we'll get you on the stage next time.

Kevin 1:37

Hi, James. Yeah, no, it was a great event, actually. Um, so different from the bigger shows, which I

Welcome And CPD Options

Kevin 1:43

think some of which have lost their way a little bit and are a bit stale. It was just nice to get so many people in the room that could give advice to dentists, and also the dentists to be able to come around and talk to us and and not feel intimidated by talking to us. The stands were tables rather than stands. So it felt more intimate, is what I'm trying to say. And I think um I think the dentist got a lot out of that.

Dr James 2:05

There we go. Well, we're definitely trying to bring the energy and bring fun uh and mix it up a little bit and not talk about clinical stuff because that's what every other event under the sun does. So we want to talk about the business side of dentistry and how it can be ethical uh and have great businesses too. And actually, those two things can be exactly the same thing when you know how. So, yeah, definitely a little bit of a different flavor on it. And actually, on that note, we're gonna bring in even more of a different flavor still with the next event, which is coming up in November, which is the entrepreneurs den where we'll be having exactly the same stuff that everybody knows and loves about the events that we currently run. Plus, on top of that, we're gonna have dental startups, dental industry startups, young entrepreneurs, uh well, not specifically young, any age of entrepreneurs who run and have set up these businesses, these you these new businesses, uh, and

Business Events And What’s Next

Dr James 2:55

they're gonna be pitching to a live audience of a ton of dentists uh who will be able to witness all the thrills and spills of Dragons Den, cross with X Factor as well, actually, I should mention, uh, all at the same time, and some dragons there who are gonna really grill them on the viability of their business. So, looking forward to that one. We're definitely gonna make a theatrical event out of it and have some fun with it, and that's gonna be really cool. So, yeah, coming up in November, but yeah, back to what we were talking about initially on this podcast, and certainly the aim of the game and the name of this podcast, which is to talk about finance specifically. And maybe a good place to begin would be on the front of the uh well of interest rates, Kevin, because from what I understand, the Bank of England recently held interest rates.

Kevin 3:42

Yes, uh, I went back actually and listened to the podcast we did in February, um, which feels like a completely different world now. Um back then I mentioned that we'd had four cuts in 2025 and two cuts to interest rates in 2024, to you know, to the base rate specifically. Um and it looked like we were gonna get a further cut this year. Um since then, because of the uh uh matters happening around the world, everything's changed. Um I've sat in on a lot of chief economist briefs from the banks recently, and they're all saying the same thing. Um, no matter what the scenario and what happens in the Middle East, the Bank of England, all of their um forecasts offer rate rises now. So it seems to be a question of are we gonna get one or three rate rises? Um and they're talking about uh that happening by mid-2027. It almost feels like the phony war at the moment, feels like the calm before the storm because they're holding the interest rates, and we can only hope that if if matters can settle down, um then maybe it would be one rate rise, and that wouldn't be too bad after all. Um but anyway, yeah, that's where we stand at the moment.

Dr James 4:57

Even as far ahead as 2027, they're predicting that rates might rise. Surely so much can change since then.

Kevin 5:04

Well it can, and as you've seen from February, things have really changed in the last few months. But at the moment, if nothing changes, depends on how long things

Base Rate Forecasts And Inflation

Kevin 5:13

drag on in the Middle East uh with Iran. Um, but there could be three rate rises by mid-2027, or it could just be one. If things are sorted out quickly, you're more likely to just have one rate rate rise. But these are just forecasts, as we always say, nobody knows, crystal ball territory. Um, and let's hope for a good outcome on this.

Dr James 5:32

Yeah, indeed. And for those who don't know, the main reason the Bank of England, well, one of the main reasons Bank of England do this is to tame the inflation base. So that's definitely a big factor which determines what their next move is. And inflation is it's it's it's kind of stubborn, but it is lower than what it was uh in years gone by. So certainly they look for that to start to decrease a little bit before they might think about uh rate uh decreases, certainly uh reducing the uh interest reducing interest rates for sure. Uh so they're definitely watching that one avidly. So it's it's always good to watch this space as ever. UK Dennis, Dennis to Invest now has an official platform where you can learn about finance and obtain UK compliant, verifiable DVD at the same time. The only platform that exists on which you can do both. The Smart Money Members Club has hundreds of hours of mini courses, webinar series, and live day recordings on all things finance slash tax efficiency for UK dentists. This includes complete courses on how tax works for UK dentists, finance so that you can invest and grow your own money, business so you can improve your profitability as an associate or principal, and for those out there that want it, there's also a mini course and how you can responsibly enter the crypto space using measured amounts of capital. I've gathered this content from the best of the best I could find in each respective area so that you know that this is how people at the forefront of each field advise their clients. The Smart Money Members Club also contains discounts on common things that UK dentists need to pay for on a regular basis. This includes a whopping 10% discount on dental indemnity, the offer to beat your income protection deal no matter what you're paying, and for the principals out there, 5% discount on lab bills and 10% discount on practice insurance. These are designed to offer hundreds, if not thousands, in annual savings. The purpose of this members club is to not only boost your monthly income but also manage your outgoings as much as possible and therefore create more profit. To celebrate the launch of the Smart Money Members Club, and given that the CPD deadline is coming up soon, I've decided to offer the first month for this platform entirely for free. This offer will end in the coming weeks as soon as the current CPD cycle is up. To collect your CPD for this podcast episode using the Smart Money Members Club, feel free to use the link in the description of this podcast.

Kevin 8:06

Because who would have thought that oil prices would affect clothes manufacturers and pretty much everything in life seems to be um affected by this? So um, so yeah, inflation is expected to rise, hence so are so is the base rate.

Dr James 8:21

There we go. And let's bring that back to dentistry. Kevin, what does that mean for us on our borrowing? What should what should each demographic of dentists should be be what should they be looking out for? Or is it just blanket uh kind of uh not advice, we don't like that word because we don't want to cross that line, but certainly blanket things that we should be aware of? Or how does that look? What are you saying to your clients?

Kevin 8:44

Yeah, uh, and the reason for doing this now is is we were saying, we're in choppy waters, we don't know what's gonna happen going forwards in terms of rate rises. So why not consider refinance? Anyone that's got any existing finance should really be looking at it. Um so who are those people and who should be considering that? Anyone that took a loan out, and and I'm gonna give you two events makes it easier than just stating years here. Anyone who took a loan out between, say, the credit crunch and COVID, which is roughly sort of 2008 to 2020, were probably paying a higher margin with the bank. Uh so whatever base rate was doing, their margin's probably three and a half percent over base. That's a ballpark figure, it could be either way, uh either side of that. Um but rates are much lower now, or the margin's much lower. So um anyone in that bracket should have a look at this. Um anyone who's set a practice up over the last 10 years or so, and maybe was paying four and a half percent over base, has now got an established practice, so we can jump back in and get it valued, it's got a good rule value, and we can we can put them at a lower rate. Um alone with a lower rate, rather. Um so anyone that has too much short-term finance, uh and you know, short-term finance is great, you need it for equipment, etc. Sometimes it's too easy

Who Should Refinance And Why

Kevin 10:04

to obtain, and people pretend to take too much of it um and have high monthly payments. So we're you know, we're helping quite a few people at the moment lift all of that debt and put it onto the midterm, and by that I mean a sort of 15 to 20 year loans. Um and that brings repayments down massively, and it can make thousands of pounds a difference a month in some cases. So that's that's definitely one to look at. Um anyone who is relocating, extending their practice, getting out surgeries, expanding buying further practices. What we tend to do now is someone approaches approaches us for finance um for whatever the reason, we'll automatically look at any existing finance and look and see if if refinance is an option on that as well. Um sorry, Julian, what you were gonna say?

Dr James 10:56

No, no, I thought you were finished as well and listening.

Kevin 10:59

So obviously against that we um we look at the cost of refinance because obviously what we don't want to do is lead a client down a path that turns out to be horrendously expensive. So there are fees to consider such as valuation and legal fees, early um early repayment charges on fixed rates, or sometimes just variable rate loans have them inside the legacy loans. Um so we need to price all that in as well, which is what we do with clients. And if it's not to their advantage, we wouldn't take a client down that route. Um but you know the banks have various products out there uh that can help with this. Some banks have products with no facility fees, um, some banks have products with no valuational security fees. Literally, it's just an unsecured loan. The rate is cheaper than it was back in the day. All the client will need to do is put the facility fee on the loan and make sure they've got a life policy to cover the debt. Um on top of that, we've mentioned before we've got these um loans with a larger amount of it on interest only and a smaller amount repaying over a short period of say five years, and that allows us to get a really cheap rate on those loans in ballpark, about 1.5% over base rate. So um that can outweigh some of the upfront costs sometimes in refinance. Um so the other thing to consider is um interest rate versus turbo. Uh and again, we've mentioned that the banks have have released lots of new products recently, um and one of which is an extension to goodwill loans to 20 years. Uh so if the rate goes up slightly, sometimes it's still better to do that because the monthly payment is lower and it's all about cash flow. So, for example, if you took 500,000 at let's say an all-in rate, base rate and a margin of six percent over the standard 15 years, your monthly cost is 4,29. If the bank added half a percent onto that and turned it over 20 years, then there's a monthly saving of about 500 pounds a month. Um, and to my mind, that's better steered towards overpaying your mortgage, your residential mortgage. Um so and I had a conversation with a client about that this morning, and basically said, you know, your plan going forward now should be to um to repay your residential mortgage because there's no tax relief on the interest on mortgages. So if we can get the commercial debt as low as possible and then steer the money into repaying the personal debt.

Dr James 13:38

Nice, that's some wizardry right there.

Kevin 13:42

Yeah.

Dr James 13:43

It's all about thinking about the strategy, I guess, really. Okay, cool. So these are I mean, this is it's like all of these things. There's always so much. I always think to this to myself whenever you talk about finance, I'm like, man, there's so much depth to it, and it's why I guess it can make sense to get a pair of eyes on it. Not just someone who's just gonna, I guess, uh flog you a product per se, but also just have a conversation with you about like what your plans are long term and even even revisiting these sorts of things, because it's free to ask, right?

Kevin 14:13

Oh, definitely, yeah. But I mean we can overview this for clients and feedback to them. As I said earlier, we're not afraid to tell clients actually you're better off just leaving your finance as it is. It's all about how it's structured and um and feeding back a range of options. So we'll feed everything back to the client and they can make a decision. I mean, and and as I said before, the banks are lending in very different ways. So often will be three or four different options as to how we could possibly structure this as different terms, uh different products. There's no right or wrong answers to here, but at the end of it, if you can reduce your monthly payments and steer that money into building your personal wealth, then that can't be a bad thing.

Dr James 14:55

Understood. And is it as simple as interest rates go up, therefore finance rates go up as well, or not really?

Kevin 15:06

Well, guess if you've got a fixed rate, then you're fine. Um anyone on the variable rates, if the base rate goes up, then yes, the monthly cost of borrowing will go up with it as well. Uh but yeah, let's put that in perspective because rates have reduced quite a long way from where they were at the start of 2024. As we said, we've had six rate cuts. So if we had one or two now, it wouldn't be the end of the world. It's just always nice

New Products And Cash Flow Strategy

Kevin 15:32

to have a cheaper rate.

Dr James 15:34

Nice. And I know from a previous podcast, people uh on this podcast may have listened to those, and we've got a whole series of different podcasts that talk about uh how can I say this, uh, you know, all sorts of different factors in the nuance of finance, you know, the difference between the difference between equipment finance, the difference between practice finance, everything along those lines. So shout out those episodes. We definitely won't repeat ourselves uh from those uh today. So, really what this episode is, uh Kevin in a nutshell is a bulletin to say basically, guys, here's the things you need to be aware of, here's the things that may have changed, and here is what is out there by way of new products and everything along those lines. We've covered people who I guess already have finance. Kevin, but what about first-time buyers? What would you be saying to them at the minute?

Kevin 16:27

Yeah, so before I answer that, I would just say what I really want to encourage anyone with existing finance to do is just reach out and check their finance arrangements out. Because so many people just sit there with the finance they took out 10 years ago, not realizing that they could be saving a lot of money. Uh so I guess that was the motivation behind this podcast. We know that um we're gonna have inflation, rate rises, so why not review existing debt? Yeah.

Dr James 16:55

Well, I say, and just to quickly touch on that, it's like, okay, cool. Uh if this, if obviously it's impossible to predict, but um if at present it looks like something's gonna rise, I guess their interest rates are gonna rise, then I guess it could represent an a window of opportunity uh whilst they are where they are to get things reviewed and then hopefully locked in on a fixed rate, which is much more favorable. Um, or at the very least, depend no matter where that pans out, or whether that go whether that goes up or down, you've made some sort of meaningful game in the meantime because you have uh already reduced your rates. So yeah, just something to consider. But yes, back to what we were saying a second ago, first-time buyers.

Kevin 17:34

Yeah, so first-time buyers, we're back to the conversation we've had previously, which is should you wait for the cheapest rate? And the answer is no, not really, because um yeah, rates go up and down. If you agree if you start buying a practice today because the rates are low, by the time the practice completes, which is often nine months, rates might have gone up. Uh, and they're gonna fluctuate and go up and down over the term of the loan. You're borrowing for 15 years, not for the next year. Um, so while it's helpful for rates to

First-Time Buyers And Rate Timing

Kevin 18:02

be cheap when you first buy, I don't think it's the reason not to buy right now. Um, so first time buyers should definitely still look at buyer practice if the right practice comes up. I think I mentioned in the last podcast that first time buyers have gone a little bit quiet, but they seem to have come back more now. I think that they're realising there's no point waiting this out. It you know, the world carries on, doesn't it? Um and you and I have said if there's a good business opportunity there to buy a great practice, then you shouldn't be waiting for dose rate to go down to three percent.

Dr James 18:34

Absolutely, 100%. Kevin, thanks so much for sharing everything that you said in the podcast today. If anybody wants to reach out to you, get in touch off the back of anything that we said today, how are they best off finding you?

Kevin 18:44

Yeah, so um the best email address is info at Soroma.uk. Uh that one reaches both my colleague Dan Fearan and I. Um, or they can find us on our webpage, the Soroma Finance webpage, or the mobile number is 0780-144-0622.