Doctor Mortgages
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Doctor Mortgages
We talk about mortgages for doctors with Lee and Neezam from Rebus.
Are there mortgages tailored to doctors?
Yes – mortgages for doctors do exist. Most lenders are quite keen to lend to professional people in highly qualified roles.
Generally they’re seen as a lower risk category of borrower. Some lenders have created specific products, specific criteria or affordability guidelines which bend the rules for those in doctor roles.
They might offer preferential interest rates or lend a little bit more than they would to the average Joe. But there aren’t a huge amount of lenders that do that. It’s more likely that they may be swayed on the lending decision rather than offering a specific doctor mortgage.
What are the main challenges for doctors with mortgages?
Firstly, doctors are often on fixed term contracts of 12 months or one, two or three years. They may be locum doctors who work sporadically to fill in for other doctors.
Then you’ve got junior doctors who have recently started working, and all NHS doctors are paid in all sorts of different ways with different allowances. Not all banks accept those sorts of circumstances.
Doctors may also be paid through an umbrella company, which is an added complication, and there are also lots of doctors that may have not been in the UK very long. So there are lots of weird and wonderful things that come with doctors and their employment.
Sadly not all banks deal with doctors, but I’ve personally helped a lot of doctors get mortgages who are on fixed-term contracts from one to three years, are junior doctors or haven’t been in the UK very long.
How can these things be balanced against the longer term earning potential of a doctor?
That’s probably more of a question for the lender and how they make their lending decisions. If you’re in any standard, employed role, lenders want to make sure you can afford a mortgage now, assuming your income doesn’t increase.
But if you’re a junior doctor, your income is expected to increase significantly over the longer term. So lenders will challenge us a little bit in terms of what you’re doing, your plans, your current contract and how you’re paid.
But at the same time, they will factor in your future earnings and be a bit more relaxed on affordability. They might go outside their lending policy. They won’t do this for everyone, but they might for a doctor.
We’re able to position you as a good client with the lender, highlighting that long-term potential to increase income and reminding them that this isn’t high risk lending.
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How do you prove Income if you are a doctor?
This is where a mortgage advisor can really help you. Doctors are paid in many different weird and wonderful ways and how you prove your income depends on the type of employment.
It could be done via a contract, or via payslips. If you’re paid bank income, we might need six to 12 months’ payslips for example. If you’re paid through an umbrella company we would need payslips from an agency.
Lenders also view this very differently. It can make a big difference to the ultimate goal – which is how much you can borrow. We’ll take a look at your income and present it in the best possible way to the lender.
How much can you borrow if you are a doctor?
That depends on the bank or building society you’re applying with. It also depends on how much deposit you’ve got, what your credit score is and what your outgoings look like. Have you got many credit commitments like loans, car finance, credit cards?
How long you’re borrowing the mortgage over is also important, and whether you have any financial dependents. Every lender will give you a different figure, because they assess affordability in their own way. They apply their own metrics and calculations in the background and state a maximum that they will lend.
So if you go to your bank and get one figure, don’t take that as the only option, because it really will vary. Speaking with a broker will help you understand how much you can borrow from across the market.
Do I get mortgage discounts if I work for the NHS? What schemes are available?
NHS employees are eligible for all the normal schemes such as shared ownership, Joint Borrower Sole Proprietor and Right to Buy.
Help to Buy is no longer around, but there is a new approach called the First Home Scheme which offers incentives on new build properties. These prioritise NHS employees and other key workers. With the First Home Scheme you get a large discount on a property purchase.
On the bigger picture for mortgages, there are not necessarily discounts on rates as such, but there are more lenders that are more favourable towards applications from doctors and NHS employees. So speak to an advisor to understand what schemes you’re eligible for and where your NHS status might help you.
How can a broker help me get a doctor mortgage?
From our experience of working with lots of doctors as clients, we understand the different setups and the ways that you can be employed or self-employed. You might not have been in the country very long or you may not have a settled status visa. Perhaps you have a low deposit or you had problems with credit in the past.
All those things can make getting a mortgage more complicated – in which case it’s all about finding the right lender for you. So speak with an advisor, get that advice and approach a suitable lender. Once you’re aware of all of your options you can make a fully informed decision.
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