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Being a doctor is a respected and lucrative career, and you would assume it would be straightforward to secure a mortgage while working in this sector. However, there can be challenges, especially for those starting out in their medical career. This guide explains everything you need to know about securing a mortgage for junior doctors.
Strive secures residential mortgages for doctors, surgeons, consultants, and other healthcare professionals. We work with NHS trusts across the country to provide mortgages for NHS staff.
Types of Junior Doctor Contracts
Understanding your contract type is essential for discussing mortgage options with lenders, as it impacts income stability and borrowing potential. Here are the main types of junior doctor contracts, we’ll break these down in more detail throughout the guide.
- Foundation Training (FY1 and FY2): These initial two years involve rotations in various specialities to gain broad experience.
- Core Training: This stage, lasting two to three years, focuses on specific areas like Core Medical Training (CMT) or Core Surgical Training (CST).
- Speciality Training: Following core training, this phase can last five to eight years, leading to becoming a consultant in a chosen speciality.
- Fixed-Term Contracts: These temporary contracts vary in length and cover specific roles or projects within the NHS.
- Locum Contracts: Locum doctors take on temporary positions to address short-term staffing needs, offering flexible schedules.
- Academic Training: Combining clinical work with research or teaching, these roles include both medical and academic responsibilities. Medical students may be eligible for bursaries to help fund some of the costs of their training.
Fixed-Term Contracts for Doctors and Mortgages
Doctors on fixed-term contracts may face additional scrutiny from lenders. Some lenders may insist on having a minimum amount of time left on the contract or require evidence of experience from previous contracts, as well as confirmation that the current contract will be extended. However, certain lenders are more favourable and understand the nuances of junior doctor contracts, offering more flexible terms. Working with a lender who appreciates the specific conditions of medical employment can significantly improve your chances of securing a mortgage.
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Mortgages for Locum Doctors
Locum doctors enjoy flexibility in their working hours, but some lenders may view this as unstable employment. Most lenders prefer to see at least 12 months of locum work history and will take an average of the last three months’ earnings. However, some specialist lenders are more flexible and may consider mortgage applications with only three months of locum work history, recognising the high demand and earning potential in the medical field.
Non-Guaranteed Income for Junior Doctors
Junior doctors often rely on non-guaranteed income sources such as shift pay, locum work, bank work, and overtime. Lenders typically assess these incomes by averaging them over 3, 6, or 12 months. Some lenders will consider the full amount of this income, while others may only take 50-60% into account. Choosing the right lender and understanding their bandings can make a significant difference in the amount you can borrow. Working with a specialist mortgage broker who understands these nuances can help you find a lender that will maximise your borrowing potential based on your total income.
What is the Minimum Deposit Needed?
The minimum deposit required for a mortgage is typically 5% of the property’s value, depending on the property, your affordability, and the lender’s criteria. However, larger deposits can improve your borrowing potential and may also secure you better interest rates. By providing a larger deposit, you reduce the lender’s risk, which can lead to more favourable mortgage terms.
Minimum Employment History for Junior Doctor Mortgages
The requirement for the length of time in employment varies among lenders. Some lenders require 3 to 6 months of continuous employment, while others are more flexible and may consider applicants after just 1 month of employment. Additionally, some lenders may accept a forward-dated contract with a start date within the next 3 months. This flexibility can be particularly beneficial for newly qualified doctors or those changing roles.
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Professional Mortgages for Newly Qualified Doctors
Once qualified, doctors can access professional mortgages that may allow them to borrow up to six times their income. These mortgage products are designed specifically for professionals with high earning potential, taking into account the stable and significant future income that comes with a medical career. This higher borrowing capacity can help doctors secure better mortgage terms and afford more desirable properties.
How Much Can You Borrow?
Typically, you can borrow 4.5 to 5 times your gross income. The exact amount will depend on factors such as your deposit, credit profile, and outgoings. Qualified doctors may be able to borrow more, potentially up to six times their income, if they opt for a professional mortgage. These specialised mortgages take into account the higher and more stable future earnings expected in the medical profession.
What Credit Score Do I Need?
The credit score required for a mortgage depends on various factors, including the deposit level and other financial circumstances. Most mainstream lenders prefer applicants with a reasonable to good credit score and may overlook occasional minor issues in your credit history. However, if you have significant adverse credit, such as multiple missed payments or defaults, you might need to use a specialist lender. These lenders are more understanding of adverse credit and can offer mortgage options tailored to your situation.
Can I Use Bursary Income for a Junior Doctor Mortgage?
Yes, some lenders will consider bursary income in addition to your earned income when assessing your mortgage application. This can help increase your borrowing capacity and improve your chances of securing a mortgage. It’s important to work with lenders who understand the unique financial situation of junior doctors and can take all sources of income into account.
Are There Mortgages Specifically for Doctors?
Not exactly. While a few lenders may offer discounts to doctors, these are rare. When we refer to junior doctor mortgages, we mean lenders who understand the nuances of the medical profession, such as the unique income structures and employment contracts. These lenders are more likely to offer favourable terms and conditions tailored to the needs of doctors, rather than having specific mortgage products exclusively for doctors.
The Impact of Student Loans on Junior Doctor and Trainee Doctor Mortgages
When applying for a mortgage as a junior or trainee doctor, student loan repayments are factored into your affordability assessment. Lenders consider the monthly payment amount rather than the total balance of the loan.
Therefore, a large student loan balance shouldn’t be a cause for concern. In some cases, if you have a good income-to-outgoings ratio, the student loan repayments may not significantly affect your borrowing.
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Best Rates for Mortgages for Doctors
Doctors typically have access to the same mortgage rates as anyone else, provided they meet the eligibility requirements for the lowest rates. While doctors rarely receive special discounts solely for being NHS employees, their stable and high earning potential often makes them attractive borrowers to lenders. Therefore, as long as you meet the standard criteria, you can qualify for the best rates available in the market.
How Can Strive Help?
At Strive, we specialise in understanding the unique financial situations of doctors. We can help you navigate the mortgage process by connecting you with lenders who appreciate the nuances of your income and employment contracts. The goal is to find the best mortgage terms and rates tailored to your needs, whether you’re a junior doctor, locum, or consultant. With Strive’s expertise, the process is simplified, making it easier for you to secure a mortgage that fits your career and financial goals.
Frequently asked questions
A few specialist lenders offer and a few mainstream such as The Co-operative Bank and Metro Bank, are most notable for offering professional mortgages tailored to medical professionals.
While there aren’t many mortgages exclusively for doctors, some lenders provide products that cater to medical professionals. These lenders understand the unique income structures and employment contracts in the medical field and may offer more favourable terms.
Yes, it’s possible trainee doctors can get a mortgage. Many lenders understand the career trajectory and earning potential of trainee doctors. They may offer trainee doctor mortgages based on a combination of bursary income and earned income, considering your future salary increases.
Yes, it is possible to get a mortgage up to 5 times your income. Some lenders, especially those offering professional mortgages, may even consider lending more, particularly if you have a high income and a good credit profile.
Contact us today, and we’ll work hard on your behalf to find you a competitive mortgage.
For more information on mortgages for contractors, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.
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