A Guide to Mortgages for Doctors
Despite factors such as varying income meaning it may be more complex, there are mortgage options for doctors. Medical professionals may also be able to borrow more than a standard mortgage applicant by using professional mortgage schemes. Read on to find out how to apply.
While there are generally no mortgage schemes designed exclusively for doctors, there are ways that medical professionals can take advantage of existing schemes aimed at professionals.
Whether you’re new to your profession, or have been practising for years, read on to find out more about how doctors might be able to benefit from existing mortgage schemes.
What mortgages exist for doctors?
Mortgages for doctors can be complex. While secure employment and relatively high pay can make them an attractive proposition for lenders, variable incomes and complex contracts mean it can sometimes be difficult to get the mortgage they need.
However, doctors can often access specialist mortgages aimed at professionals. This type of mortgage may enable them to borrow more than they could with a standard residential mortgage.
Doctors who qualify for professional mortgages include:
- self-employed doctors
- newly qualified doctors
- trainee doctors
- junior doctors
- locum doctors
Doctors can access the whole market in terms of mortgage lenders, but specialist providers with a long history of providing mortgages for doctors are available.
These professional mortgages also offer specialist deals to people in a variety of other medical occupations, including dentists, nurses, optometrists, pharmacists, and vets.
You may also come across specialist key worker mortgages specifically for ‘heroes’ – including teachers, firefighters, police officers, teachers and doctors – which take into account all overtime income rather than just a portion of it.
Doctors can sometimes borrow up to six times their income from lenders, although this will vary according to what stage you are in your career, as well as the lender you choose. A well established doctor is likely to have more options than a junior doctor, for example.
Specialist brokers say that they can secure finance for newly qualified doctors or those starting a new job up to four months before they start work. The same applies to planned increases in salary.
This can be helpful if you are relocating to another part of the country and want to buy a home first. The broker will need a copy of the contract and the lender may apply for an employer’s reference.
Can doctors access competitive rates?
Doctors won’t get enhanced rates as a result of their occupation, however they should be able to access competitive mortgage deals if they have a good credit history.
» MORE: Find out your credit score
How to apply for mortgages for doctors
Rather than applying directly to lenders, it can make sense to approach a broker who will be able to track down the right lender for your circumstances.
Most lenders that provide mortgages for doctors prefer permanent employment contracts for doctors and other clinical staff, as this suggests a steady and secure income, which can be relied upon for mortgage repayments.
However, lenders will still consider locums and self-employed medical professionals when assessing a mortgage application. Often, a mortgage underwriter will evaluate a salaried locum more favourably than a self-employed portfolio locum because of their irregular income due to their working patterns.
Before deciding whether to make a mortgage offer, lenders will look at various factors, including the following:
- number of dependants, if any
- annual earnings
- the regularity and predictability of your income
- the type of property you would like to buy
- any debts you may have and how recently any debts have been settled
Lenders will want to see proof of your income and expenditure and will typically ask for documents, such as three months of payslips, your most recent P60 and at least three months of bank statements.
They may want to see proof of your deposit too. You’ll also need original documents to prove your identity and address – for example, energy bills, driving licence or a passport.
Non-specialist help for mortgage applications by doctors
Just like any other borrower, doctors buying their first home who are not at the top end of their pay scale can apply to the various government schemes designed to help first-time buyers. These include the First Homes scheme in England – offering a discount of at least 30% on certain new-build homes to households with an income below £80,000 (£90,000 in London) – and, shared equity schemes such as the government’s Help to Buy: Equity loan scheme.
This intiative requires a minimum 5% deposit and is interest-free for the first five years. The government will lend homebuyers up to 20% of the cost of a new-build home in England, or up to 40% in London. There are regional price caps – in London, for example, the scheme is capped at homes worth £600,000. In Wales, Help to Buy is capped at £250,000.
There isn’t currently a version of the equity loan scheme available in Northern Ireland and Help to Buy in Scotland has closed to new applicants.
Another option is a shared ownership scheme, which lets you buy a part share in a new-build property from a housing association. You pay rent on the part of the property you don’t earn, but you can gradually increase your share of the equity in your home.
Also look out for schemes available to both first-time buyers and home movers, including discounts on new-builds to key workers, such as doctors. For example, house builders can offer discounts of £500 for every £25,000 of the purchase price of a property.
Meanwhile, the government’s 5% mortgage guarantee scheme has encouraged lenders to offer loans at 95%. This compensates lenders for any losses, so has opened up more low deposit loans to borrowers.
» COMPARE: Shared ownership mortgage deals
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Anthony is a BBC-trained journalist. He has worked in financial services and specialised in investments for over 20 years, writing for various wealth managers and leading news titles. Read more