After years of hard work, it’s about to pay off. You’ve finally completed your training, recently qualified as a doctor, and now you’re looking to put down roots and buy a place. While the earning potential for doctors is great, it can take some time to reach the income level you hope for, which can present challenges when getting a mortgage. This guide explains the basics of what you need to know about getting a mortgage as a newly qualified doctor.
The Challenge
As you’ve recently qualified, your pay may be comparatively low compared to your future earnings, and most lenders base their decisions on your current pay. While you know your earning potential is high, you may not be able to achieve it yet. Most lenders are limited to offering 4.5 to 5 times your income based on your current pay.
If you are a newly qualified doctor earning £50,000, it’s likely that you will be able to borrow between £225,000 and £250,000. This is based on the typical lending multiples of 4.5 to 5 times your current income.
How to Increase the Amount You Can Borrow
As a newly qualified doctor, there are several strategies you can use to increase the amount you can borrow for a mortgage:
- Larger Deposit: Saving a larger deposit can increase your borrowing potential and may also help secure better interest rates. A larger deposit reduces the lender’s risk, making them more willing to offer higher loan amounts.
- Overtime and Shift Pay: Include overtime and shift pay in your income calculations. Some lenders will consider these additional earnings, which can boost your total assessable income and increase your borrowing capacity.
- Forward-Dated Pay Rise Confirmations: If you have a confirmed pay rise or promotion within the next three months, some lenders will consider this future income. Providing documentation of your upcoming salary increase can enhance your borrowing potential.
- Joint Mortgage: Applying for a mortgage with a partner can combine both incomes, potentially increasing the amount you can borrow. This approach leverages the total household income, making it easier to qualify for a larger loan.
- Joint Borrower Sole Proprietor (JBSP) Mortgage: A JBSP mortgage allows a family member to help with the mortgage without having ownership of the property. This can increase your borrowing capacity by adding their income to the application, while you remain the sole owner of the property.
- Professional Mortgage: Opt for a professional mortgage designed specifically for medical professionals. These mortgages often allow higher income multiples, sometimes up to six times your annual income, recognizing your future earning potential.
By implementing these strategies, you can enhance your borrowing capacity and secure a mortgage that meets your needs as a newly qualified doctor.
Lenders offering higher than standard income multiples
While most lenders limit themselves to 4.5-5 times income, some will consider up to 5.5 times income. Higher-income multiples are often afforded to those with higher earnings; however, there are some first-time buyer mortgages offering 5.5 times income for those on regular salaries. Additionally, professional mortgages can offer up to 6 times income, recognising the future earning potential of doctors and other professionals.
How Long Do You Need to Be Qualified to Get a Mortgage?
The length of time you need to be qualified to get a mortgage varies among lenders. Some lenders require 3-6 months in your current role, while others are happy with just 1 month of employment. Generally, if you are on a permanent contract you don’t need to have been qualified for a minimum time as long as your salary has increased. Most lenders will accept just one month’s payslip as evidence of your income.
If you are a Newly qualified self-employed doctor or locum doctor you may need a lengthier employment history.
If you are on a fixed term contract, you may need a minimum period remaining on the contract at the point of application
The Process of Applying for a Mortgage as a Newly Qualified Doctor
- Book an Appointment with a Broker: Schedule a meeting with a mortgage broker who specialises in working with medical professionals. They can provide tailored advice and guide you through the process.
- Gather Documents: Prepare necessary documents such as payslips, bank statements, proof of employment, and identification. This will help streamline the application process.
- Review Options: Discuss and review the mortgage options available to you with your broker. They will help you find the best deals and lenders that understand the nuances of a medical career.
- Secure an Agreement in Principle (AIP): Obtain an AIP from a lender. This indicates how much you can potentially borrow and shows sellers that you are a serious buyer.
- Property Search: Begin searching for a property within your budget. Once you find a suitable property, make an offer and negotiate the purchase price.
- Submit Full Application: After your offer is accepted, submit a full mortgage application to the lender. Provide all required documents and details for a thorough review.
By following these steps, you can navigate the mortgage application process smoothly and secure a mortgage as a newly qualified doctor.
What Documents Are Required
The Documents Required Will Vary Depending on the Lender and Circumstances, Here Are a Few Usual Requirements:
Standard Documents
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- Identification (ID): Passport or driver’s licence to verify your identity.
- Proof of Address: Utility bills or bank statements showing your current address.
- 3 Months Bank Statements: To provide a snapshot of your financial activity and stability
- Proof of Deposit: Evidence of the source of your deposit, such as savings or a gift letter if applicable.
Income documents
- Employed – 3 Months’ Payslips
- Self-Employed: 1 or 2 Years’ Accounts or SA302’s
- Fixed-Term Contract: Copy of Latest and Previous Contracts to show employment continuity and terms.
Gathering these documents will help streamline the mortgage application process and provide lenders with the necessary information to assess your application.
How Can Strive Help?
At Strive, we understand the unique financial landscape that doctors navigate. We specialise in connecting you with lenders who appreciate the nuances of your income and employment contracts. Our expertise allows us to find the best mortgage terms and rates tailored to your specific needs, whether you’re a junior doctor, locum, or consultant.
By simplifying the mortgage process, we make it easier for you to secure a mortgage that fits your career and financial goals. Let us help you achieve your homeownership dreams with confidence and ease.
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.
