As a medical professional, you have perhaps one of the most important jobs you can have. It is your responsibility to treat ill or injured people regardless of any personal, political, ideological or any other kind of differences. Your selfless commitment as a doctor to dedicate your life to helping others to recover and get better is rightfully a very respected job to have. We at Oportfolio realise this. Unfortunately for some doctors, it can be tricky for them to get mortgages due to the way they work and the extra income they can receive for their tireless work. Getting mortgages for doctors is one of our fortes at Oportoflio. In this blog we will discuss some of the problems doctors face when getting a mortgage and how we can help.
Problems Doctors Can Face When Getting A Mortgage
Complex Income: As we know, things to do with the medical profession, especially the NHS, aren’t always straight forward! And when it comes to doctor’s income, there is no exception. When getting mortgages for doctors, one of the most common stumbling blocks is different income types. Different allowances, locum work, overtime, different pay grades and lots of other strange and wonderful payment types can sometimes look a bit complicated to lenders and different lenders will accept different types of doctor income. That means that some banks may be more generous in their lending than others.
Contracts: Simply due to the nature of the job, it is not uncommon for doctors to move around to different locations to work during their career. Often very frequently if they are a specialist or are in training. With standard employment, many mortgage lenders require borrowers to be in the same job, in the same position, on the same contract for a minimum of 3 months. With a doctor who moves to different hospitals or departments on frequent short-term contracts or flexible contracts, this can sometimes cause an issue with lenders.
Address History Due To Changing Job Contracts: As a direct result of the above-mentioned issue, some doctors find getting a mortgage difficult due to their address history being all over the place. With frequent short-term contracts often comes frequent relocation. With standard mortgage applications, a lender will want to see a minimum of three years address history so that they can search your credit over the last three years and make sure that there are no issues. Tracing address history when there has been frequent moving around can cause an issue with the lender’s credit search criteria if you aren’t registered at an address for example, or you are still registered at an old address but everything else has been diverted to your new address.
Mortgages For Locum Doctors
Mortgages for locum doctors or any healthcare professional can sometimes be tricky and aren’t always straight forward. As we all know, being a doctor is not always a 9-5 job and often you have to work extra hours and cover extra shifts when you are needed. You are often renumerated for your extra work by receiving locum pay. Essentially a second part time job rather than overtime, different lenders would look at this income in different ways.
The important thing to establish is whether or not you will be paid the locum income as an employed NHS worker or a self-employed individual. If you are paid as an employed worker, your employer pays your tax and NI and you receive payslips, then you will be treated as employed by most lenders. You would normally need to have at least 6 months continuous employment too. That means that your income from your locum work can then be used towards your mortgage affordability and could possibly increase your borrowing potential substantially.
If you receive locum income but you pay your own tax and NI on the income, then with most lenders you will be considered self-employed. In that case, you will need to have been doing the locum work for a minimum of 1 year (most lenders will need 2 years minimum) and you will need to provide the lender with tax overviews and tax calculations for the time period. Your income will then be calculated based on either your latest years net income figures or an average of the last two years.
Mortgages For Newly Qualified And Trainee Doctors
Sometimes there is a misconception that newly qualified doctors or trainee doctors can’t get a mortgage until they have been in the profession longer, but that simply isn’t the case. Some new doctors can certainly find getting a mortgage trickier than other more experienced professionals, but it is not a straight no by any means. Often, to gain experience in the field, new doctors will take short term zero hours contracts with hospitals or surgeries where a set number of hours is not clarified, and they work however long they need to gain experience.
Unfortunately, a lot of lenders don’t look too favourably on zero hours contracts due to them not having a guaranteed minimum income. With zero hours, most lenders will need you to have been doing the work for at least 1 year but potentially longer and will calculate your income as a total of everything you have been paid over the last year. For newly qualified doctors, this is obviously not possible so there may be instances where this causes an issue.
Another issue is low initial salaries while training. Trainee doctors or newly qualified doctors are not always immediately on a doctor’s salary and frequently have to accept a lower starting salary when gaining knowledge and experience. As with any employment, if your salary is not enough for the amount you want to borrow, then the lender will not be willing to lend to you. Generally, the rule of thumb has been that lenders will lend between 4.5 and 5.5X income. The average salary of a doctor in the foundation year is £28,808 meaning they could potentially borrow between £129,600 and £158,400 assuming that they don’t have any major credit commitments. However, this is not the end of the world as some lenders look favourably on professionals like doctors and will consider the future earning potential so they may be willing to increase their borrowing amount based on this.
And finally, as we have already mentioned before, most lenders like to see a job history before accepting a borrower’s income. Meaning that they want to see a track record of employment in a line of work or a similar line of work. Some lenders are absolutely fine with people starting new jobs like a newly qualified doctor, but others will want to see either three months history or a contract of employment confirming the role is permanent.
Self-employed Mortgages For Doctors
We’ve spoken a lot about employed doctors, but there are many doctors across the country who work on a self-employed basis in GP surgeries and hospitals. When it comes to getting mortgages for doctors who are self-employed, it’s quite simple really. The criteria is exactly the same for any self-employed person. If you are classed as a sole-trader, the lenders will want to see two years tax overview and tax calculation documents and will use an average of the last 2-years net profit figures for your income. If you own a limited company and are paid through this, the lender will want to see two years of limited company accounts and will use an average of your salary and dividend figures.
If you are paid an hourly/daily/weekly rate and have been with the same employer on this basis for an extended period of time, some lenders may be able to go off the gross value of the contract, but this is not too common, and you should always discuss this with an advisor first to see if it is possible.
Speak To A Specialist In Mortgages For Doctors
Over the years Oportfolio has helped thousands of doctors and medical professionals to secure mortgages and we know all of the niches and quirky criteria with lenders to get you the best deal possible. Call our team today to speak to a professional mortgage advisor.