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Locum Veterinary Surgeon Mortgage
Elliot Culley explains how the mortgage process works if you are a locum veterinary surgeon.
What are the benefits of applying for a mortgage as a locum vet? Do vets get better mortgage rates?
Being in a professional role as a vet potentially opens up a few more doors. Some lenders offer professional mortgage products. It doesn’t necessarily mean you’ll get a better rate, but potentially you could borrow that little bit extra.
Lenders may also be more flexible with how they assess your income. If you’re starting a new contract, they’ll potentially give you a mortgage based on that income, even before you start – provided you have some experience.
What are the eligibility criteria for locum vets to qualify for a mortgage?
The main thing here is that where clients come from an employed background and move into the locum type role, their income increases quite substantially. But when you look for a mortgage, most lenders now class you as self-employed.
The high street banks need at least two years’ self-employed figures for a mortgage – two years’ tax year calculations and overviews. If you have a limited company, that’s two years’ full company accounts. How do we get around that if you’ve only been self-employed for six months?
Well, for locum vets, some lenders will look at your invoices to the clinics you work for. Some lenders will go off three months of those and others off six months. That gives you a lot more flexibility – you don’t need to wait for the whole two years and you could get a mortgage a lot earlier.
Can locum vets get a mortgage without a substantial deposit?
Absolutely. There are no restrictions on that. A 5% deposit is certainly possible for you – whether you do have the two-year self-employed figures or even just with invoices. We’ve helped various vet clients who wanted a 5% deposit based on a few months’ invoices.
With a 5% deposit, you’re going to need a stronger credit score than with 10% or 15%. It’s always worth working on your credit score, but if it’s fairly clean you can get a mortgage with 5%, depending on your personal circumstances.
How does the income of a locum vet affect the amount they can borrow for a mortgage?
If you’re a sole trader, some lenders want two years’ records. A few may potentially take one year’s tax calculations instead of two, but the majority of lenders take an average income across the last two years.
When you first start locuming, those first couple of months may be relatively low, and that could affect the overall borrowing. If that first year wasn’t as strong as your second year, there’s an opportunity to potentially look at the invoices instead. Just three to six months worth of invoice figures could be comparatively strong and could really enhance how much you could borrow.
For a limited company, some lenders take the salary and net profit. So it all depends on how you’ve been doing, at the end of the day. Some people take more salary out, and we can use that. If there’s less net profit because your costs are higher, that might not be the route you want to take. Again, the invoice option may be best for you.
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What factors do mortgage lenders consider when assessing the affordability of a mortgage for locum vets?
You’re self-employed so we’re looking at an average of the last two years from your tax calculations or the company accounts. That’s how lenders are going to assess your income – or, if we’re using invoices, it’s three to six months.
That’s your starting figure. Then lenders look at your commitments and the overall length of the repayment term. With credit card balances and any loans, they take into consideration the monthly payments on those and how long is left.
Student loans are also taken into consideration. Anyone who has trained as a vet will almost certainly have had a student loan, which is taken as a commitment. If you have any dependents, that will have an effect as well.
What kind of documentation is usually required from locum vets when applying for a mortgage?
We’ve talked about the income documents, so I won’t go over that again. Other documentation will depend on how you’re getting your deposit together. If it’s a gifted deposit, you’ll potentially need a letter from someone confirming that.
If it’s just in your savings, lenders want to see the latest savings statements. They also want your last three bank statements to check the income is being received into the account and that your locum business is still trading.
Can vets with irregular income patterns get approved for a mortgage?
Provided you are sending invoices on a monthly basis and you are working each month, a lender’s not going to have much of an issue. It could potentially affect the amount you can borrow, or they may want to look over a longer period of time.
For example, if you had two very strong months and then one weaker month – maybe when you took a holiday – they would probably ask to see more records to understand your normal level of income.
If you’re taking months off at a time, it would be more difficult to get that through. A lender may be worried about you not having an income for a month and needing to cover your mortgage payments.
If you have two years’ self-employed figures on tax calculations or company accounts, they would ask for your bank statements to check that income is being received on a monthly basis.
Do vets have access to the same government schemes?
Yes – all the usual schemes will be accessible to a locum vet. That includes the Lifetime ISA and shared ownership, and some other schemes like Section 106 agreements, where if you’re local to an area you could gain a discount on a property. All those schemes are still accessible.
It does depend on the lender, because some don’t offer shared ownership, for example, or lend on properties with a discount.
You might be a bit restricted in the lenders you can approach. For example, do the lenders that accept vets’ invoices also do those schemes? That could be a potential barrier, but there are a lot of lenders out there. Many do these schemes, so being a vet won’t stop you accessing them.
How can a mortgage broker help here? Any final thoughts?
Preparation is really important, especially for a vet as there are so many different ways your income could be assessed.
You really want to speak to a broker early on in the process. We can explain how much borrowing you might get with various lenders, and what the rates might be.
We’ve dealt with many locum vets and have guided them in how to achieve their plans and goals. Some have needed a few more invoices to reach a proper borrowing figure. We give people an idea of what they can achieve.
We’re here to help from day one, guiding you and supporting you all the way through getting the right mortgage and purchasing that property.
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