How to Get a Mortgage as a Doctor?

There are many reasons why it might be challenging to get a mortgage as a doctor.

General Practitioners might have complex accounts (especially if they’re partners in a practice) and many NHS doctors also undertake private healthcare work as well.

Historically, there was a mortgage scheme specifically designed to help doctors and nurses obtain mortgages (the NHS Mortgage Scheme), but this no longer exists and has been replaced with a different type of scheme.

This article details how to get a mortgage as a doctor and the schemes that could help you buy your dream home. Let’s explore this further.

What Can Affect a Doctor’s Mortgage Application

Doctors face a number of challenges when trying to get a mortgage.

The most common problem is that doctors find it hard to provide evidence of income to lenders.

In most cases doctors that fall into the following categories struggle most to get a mortgage:

  • Newly qualified or junior doctors
  • Locum doctors
  • Self-employed doctors
  • Doctors who are partners in a practice
  • Consultants and surgeons
  • Combination of NHS and private healthcare work.

Lenders typically like to see income in a clear way (ordinarily through PAYE payslips).

Because doctors can often have a combination of PAYE payslips and invoices it can be difficult for a lender to assess exactly how much a doctor makes.

As a doctor you will know that demand for your services changes according to the time of year, you may find that during winter months you’re claiming a lot of overtime and during the summer you’re not so busy.

Typically, doctors want to complete a property purchase at quieter times of the year, but with many lenders taking an average of your last three months’ payslips this can impact your affordability significantly.

Especially if the bulk of your overtime has been accrued at the busiest times of the year.

In short, there are so many things that can be challenging for doctors, and depending on your type of work and how your income is paid, it can make applying for a mortgage stressful.

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Mortgages for Junior Doctors

Newly qualified or junior doctors will have two main problems when getting a mortgage.

  1. The NHS has a lower pay banding for junior doctors which means for a period of time your earning potential is limited. This can prove tricky when junior doctors try to pass affordability calculations.
  2. Most junior doctors have student debt/loans that will need to be paid off at some point in their lives. Most lenders factor in student loans for affordability.

Future earning potential for junior doctors is often at a high level and it is generally expected that your income will increase over the years you practice.

However, your future earning potential will not be taken into account by lenders. This is because the lender cannot guarantee that you will receive a higher income in the future, even if it is likely to happen. 

The NHS Mortgage Scheme has now been replaced with the Keyworkers First Homes Scheme.

This scheme can also be extremely helpful if you’re looking to get a mortgage.

Keyworkers First Homes Scheme

On the 4th of June 2021 the UK government introduced the new keyworkers and local residents housing scheme.

Instead of specifically targeting NHS workers only, this scheme is designed to help keyworkers and local people buy houses in their local community. 

This scheme is excellent for junior doctors looking to buy their first home. To qualify you need to:

  • Have a household income of less than £80,000 (£90,000 in London).
  • The property value must be less than £250,000 (£420,000 in London).
  • The property must be designated as a ‘First Home’.
  • You must be an eligible keyworker or local resident.

If you qualify for the scheme, you can purchase a designated ‘First Home’ property at a discounted rate which is typically 30% off the market value, but in some cases can be greater (up to 50%).

With the discounted property value, it should be much easier for junior doctors to pass the affordability checks required for a mortgage.

To get more information about the government schemes that might be available to you get in touch with Boon Brokers.

We are experts in all current government mortgage schemes and can provide advice specific to your current circumstances.

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Mortgages for Locum Doctors

Locum Doctors are in demand across the UK, and you will know your work and environment can change from one week to another. 

You will also know your income is at best erratic as filling different positions often falls into different bandings or requires varying amounts of commitment.

For example, locum doctors covering in a general practice will normally work the standard 9 to 5 week, but those covering hospitals will often work as many hours as they’re needed.

This becomes even more complex when adding in private healthcare settings as many locum doctors also provide cover across the private sector as well.

The great news is that covering in these settings tends to be well paid and can really help bolster your income for affordability purposes.

As a mortgage broker with expertise in placing mortgages for doctors, Boon Brokers will advise you on how to evidence your income and find a mortgage product that is ideal for your situation.

We know locum doctors often invoice for work and Tax Calculations are common, but even if you work through an agency, we know which documentation you will need for your mortgage.

Mortgages for Practice Owners

There are normally one of two ways that practice owners get paid. If you’re a partner in a practice, you will probably own the company through a Limited Liability Partnership (LLP).

In rarer cases you may operate on a self-employed sole trader basis.

 

LLP Practice Owners

LLPs can be a particularly interesting when it comes to a mortgage. First and foremost, your income can change year on year.

Most partners will take their income from the profit generated by the partnership.

For example, if the partnership makes a £500,000 profit, then the partners will split that equally between them.

You will also be aware that these partnerships also have expenses and partners often claim these in a similar way to a sole trader.

Because of this lenders treat partners in the same way as they would a self-employed person. 

Lenders will want to know:

  • How much income is showing on your tax calculation.
  • How long you have been a partner.
  • How long the partnership has been in existence.
  • In some cases, the lender will also enquire about the structure of the LLP.

This last point is worth noting because partners will have a legal liability in an LLP.

For example, most practice owners need to buy into a partnership and their liability is typically equal to the amount they have invested in the partnership.

This liability in the partnership may well be taken into account especially if there is debt within the partnership.

A lender may not be interested in debt within the company, but some may be reluctant to lend if the debt could impact your ability to repay a mortgage.

For example, if you have bought into your LLP for £25,000 and there is a debt across the partnership of £50,000 the lender will know that you’re personally liable for a portion of that debt.

In this respect, LLP partners can find getting a mortgage trickier than sole trading applicants and you will need to discuss everything with your mortgage broker so they can find a lender that is favourable to your situation.

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How Much Would It Cost for a Mortgage?

It depends how you approach getting a mortgage.

Unfortunately, many brokers find it difficult to place mortgages if you’re a doctor and because your income might be difficult to demonstrate they either shy away from helping or charge broker fees.

Boon Brokers is an expert at placing doctor mortgages and we offer all advice FREE with no obligation to take a product with us.

By using Boon Brokers, you get tailor-made advice that is bespoke to your situation at no cost to you.

The following costs may be payable to access a doctor’s mortgage: 

  • Mortgage arrangement fee from the lender (normally you can add this to the loan rather than electing to pay it up front).
  • Conveyancing fees.
  • Stamp duty (dependent on your personal situation – for example first time buyers are exempt from stamp duty if the property is valued at less than £300,000).
  • Survey fees (some lenders offer free valuations). 
  • If you opt to use a broker other than Boon Brokers, you may also find a broker fee is charged.

If you want to get a better indication of how much a mortgage will cost, give Boon Brokers a call.

All costs associated with a mortgage are different between borrowers.

How Long Does a Mortgage Take?

Doctors’ mortgages tend to take a little longer than traditional mortgages.

This is because the majority of doctors in the UK are not salaried employees.

If you’re a salaried doctor the duration of your mortgage application should be no different to a person in any other profession and a lender will look at your income and can process the mortgage in hours in some circumstances.

If you fall into the large portion of doctors who are not salaried you will find your application takes longer because underwriters need to review your income and documentation more carefully.

This can be processed in a week or so but in some situations, underwriting can take much longer.

This is because underwriters will sometimes ask for additional information to process a mortgage application.

If you’re able to prepare your documentation in advance by discussing with Boon Brokers what evidence you will need for the mortgage you can expedite the process.

Adverse Credit Mortgages for Doctors

The main debt you may be worried about as a doctor is a student loan.

How Student Loans Affect a Mortgage Application

Most lenders will ask about your student loan (this is applicable to everyone, not just doctors).

The amount outstanding on the loan won’t be a consideration however the lenders will be interested in any payments you’re making to clear the debt.

To do this they will often ask for your repayment schedule and then factor this into your affordability calculation.

It’s important to realise that this requirement is the same across all graduates and you won’t be penalised specifically for being a doctor with a student loan.

Adverse or Poor Credit Mortgages

Again, this will be treated in the same way by lenders regardless of your occupation.

The good news is that there are a wide variety of lenders that offer products for people who have adverse credit or a poor credit record.

Locum Doctors and Credit Scores

One hindrance that Locum Doctors can experience is that they may not be registered to vote in a specific location.

As a locum doctor you may well be required to travel extensively and the transient nature of the work in some cases can mean that you’re not on the electoral roll.

If possible, it is a good idea to find a fixed residence where you can register to vote but if this isn’t possible, make sure you maintain your credit score in other ways to avoid it impacting your overall score too much.

The Benefits of a Specialist Broker for Doctors

Overall, the process for getting a mortgage as a doctor is no different to getting a mortgage as a gardener, for example.

You will still need to demonstrate your income and pass the affordability checks as well as find a property that is mortgageable.

Within that process though, doctors often encounter problems that can either create additional hurdles or worse cause a mortgage to be declined.

Boon Brokers is a whole of market mortgage, insurance and equity release broker.

We have extensive experience helping doctors to get mortgages and provide solutions to common problems doctors experience when getting a mortgage.

If you’re looking to get a mortgage but are unsure of where to start, contact Boon Brokers today for FREE mortgage advice – even if you have struggled to get a mortgage elsewhere.

Gerard BoonB.A. (Hons), CeMAP, CeRER

Gerard is a co-founder and partner of Boon Brokers. Having studied many areas of financial services at the University of Leeds, and following completion of his CeMAP and CeRER qualifications, Gerard has acquired a vast knowledge of the mortgage, insurance and equity release industry.