Locum Doctor Mortgage

How does getting a mortgage as a locum doctor differ from a regular mortgage application?

When you become a locum doctor, you’re now self-employed, which changes how a lender will look at your income.

It’s very simple if you’re employed in a salaried position – they’re just going to look at your last couple of payslips. When you become a locum, lenders might want tax calculations – and it can take up to a year before you have those.

Some lenders may want two or even three years’ records, which can make it a little more difficult. The key is to find a lender that can support your specific circumstances.

What are the eligibility criteria for locum doctors to qualify for a mortgage?

You need a good credit score, to start with. Some lenders will look at your monthly invoices instead of using the normal tax calculations and tax year overviews. Those lenders are in a better position to help you if you have a good credit score.

As long as you’ve got some prior experience, which you will do, you can certainly look at it – even if you’ve just really started the locum scenario.

With three to six months worth of locum work, more lenders will consider you – because you have prior experience of being a doctor, perhaps in a salaried position.

How much employment history does a locum doctor need to apply for a mortgage?

If you’ve been a salaried doctor before, you’re in a stronger position. The lender knows you have that experience and you’re probably likely to be getting consistent work as a locum.

Sometimes lenders want a little longer since you’ve been locuming. But some can consider it with three to six months, for example.

If the lender needs your tax calculations, you’re going to need one to two years’ documents – that does range between lenders. Depending on your circumstances, you might find that a lender that does ask for tax calculations could be better for you and offers a better rate. You would just need to be in a position to provide that information.

However, if you don’t have that level of history in the locuming role, provided you’ve got some employment history, some lenders can consider a shorter term.

What kind of documentation is usually required from locum doctors when applying for a mortgage?

Let’s concentrate on the income side, because that’s where locums really differ in the application. Depending on the lender, you could need your last two years’ tax calculations and tax year overviews.

Some lenders may ask for invoices to work out your income. Using invoices could work out better for you – it could mean you could get an enhanced affordability and borrow that bit more.

Those are the main differences. If you’re a limited company rather than a sole trader, they could ask for your accounts instead – meaning your finalised accounts for the last couple of years. It depends on your scenario, really.

Are locum doctors treated differently by mortgage lenders compared to salaried doctors?

It’s a similar scenario. If you were salaried, they’re going to look at your pay slips. If you’re a locum, they’re going to ask for your self-employed documents – your tax calculations, your tax year overviews or your invoices, depending on the lender. You will be treated differently in that regard, but everything else will be very similar.

How does the income of a locum doctor affect the amount they can borrow for a mortgage?

Most lenders will start at 4.5 times your annual salary before taking any commitments off the amount you could borrow. Sometimes, if you’re using your tax calculations, some expenses will have come off that figure – so that baseline number won’t be as high as when using your invoices, for example, as that is gross income.

There are a couple of ways you can enhance your borrowing ability. If you’ve got a limited company, some of those lenders will look at your salary and net profits, for example, rather than your salary and dividends. Depending on your scenario, there are different ways of making it better for you.

Can locum doctors with irregular income patterns get approved for a mortgage? How does irregular income affect a mortgage application for locum doctors?

If locum work is your main source of income, lenders are going to want to see some regularity in how you’re getting paid. If it is really up and down, that could cause concern. If you’ve got a steady income, they don’t mind if it’s increasing. They will use an average.

But if it is much lower one month, higher another and that keeps changing, they could ask questions as to why. But as long as there are legitimate reasons for that, it will be okay.

In a situation where you’re doing a bit of locum work on the side, they’re less concerned about variability – because they know it’s not the main source of income. Some lenders in that scenario won’t take the full 100% of that locum income anyway. So there’s less risk involved when they’re using that income.

What factors do lenders consider when assessing the affordability of a mortgage for locum doctors?

They’ll take your baseline figure, initially, to work out how much you can borrow. Most of the time, that starts at 4.5 times your annual income. However, if that income is above a certain level, you may be able to get a multiple of five as a starting mortgage amount.

That salary threshold might be perhaps £50,000, depending on the lender. If they are using your tax calculations, they’re going to average those over two years, unless your current year is less than the previous year. In that scenario, they would use your latest year’s figures.

They then look at your commitments. If you’ve got any dependents, credit cards, loan repayments or student loans, those will also be factored into how much you can afford. Some lenders will even look at where you’re living. If you’re in London, for example, they might offer you less than if you were living in the north.

Are there any specific mortgage products or deals available exclusively for locum doctors?

There aren’t many specific mortgage products or deals, but you may gain more flexibility. As we mentioned earlier, some lenders will take your invoices into account – that’s quite rare and only available in certain professions.

Being able to use those gives you much more flexibility, in that if you’re self-employed, you don’t need to wait for a year or two before a lender will take your income into account. That’s the main benefit to a locum doctor. In terms of products and deals, you’ll access the same deals as any other client.

Can locum doctors get a mortgage without a substantial deposit?

Yes, it’s certainly possible. I’ve been able to secure mortgages for clients with a 5% deposit – looking at a 95% mortgage in total. That’s certainly an available option to locum doctors.

The more deposit you have, the lower the rate will be, and also the lower the credit score requirement. If your score isn’t the best at this moment in time, 5% may be a little bit more difficult to do. It’s not impossible – you will have options available, whether that be 5% or 10%.

Are there any additional fees or charges associated with mortgages for locum doctors?

No. The same fees are applied across the board – whether you’re purchasing or doing a remortgage. There will potentially be solicitor costs, product fees and valuation fees, depending on the type of product you’re going for.

It doesn’t really differ between a locum doctor, a normal doctor or someone who’s salaried in an office job.

Is there anything else to cover before we come back with part two?

For a mortgage as a locum doctor, the best option is to use a mortgage broker. You might expect me to say that, but with this type of thing you could get really different mortgage borrowing amounts depending on the lender and your circumstances.

Your invoices could be much higher than your tax calculations show – which could make a massive difference with one lender compared to another. Talking to a broker is the best way to get a full picture of your mortgage options.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.