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What mortgage options are available for locum GPs?
The majority of locum GPs are self-employed, so most lenders will ask you for two years’ self-employment figures. That could be your tax calculations or, if you run a limited company, they may ask for your accounts as well.
However, because you’re a locum and that income is varied, some lenders will potentially look at your invoices. They may take an average of the invoices you send on a monthly basis. That can be quite useful, especially if you’ve only recently started locuming.
It can also boost how much you can borrow – so you’ve got a little flexibility there. You can also start looking at a mortgage earlier than someone who is self-employed in a standard, non-professional role.
Can I get a mortgage if I’ve recently started locum work as a GP? How many years of income do mortgage lenders require from a locum GP?
Most high street lenders will ask you for two years’ income. But that might not suit you, especially if you have just started.
In that situation, some lenders can just look at your invoices. As long as you’ve got a steady income and can provide three to six months’ figures, some lenders average and annualise that as your income figure.
Don’t be put off straight away if you go to a high street lender and they need two years’ books. Every lender is different on criteria – they don’t all do the same thing.
How does being self-employed as a locum GP affect mortgage applications?
It’s really about the documentation they may ask you for, and what’s right for you. If you’ve been a locum for a couple of years, providing those self-employment figures via your SA302s is probably the right option – you will potentially get a better rate as a result.
If it’s a scenario where we need to use your invoice income to improve that affordability, other lenders may offer a better route. That’s the job of a broker – to manage that on your behalf.
What if I’m a first-time buyer and a locum GP? How does the process work?
It’s no different for a first-time buyer, someone who is remortgaging or a home mover. We’ll ask you for the same details as regards to your income. It’s a very similar process.
Can I use NHS bank or agency income as proof for a mortgage?
Yes, you can. Most lenders want to see some consistency. Generally that involves looking at your payslips. If it’s a zero-hours scenario, where your income is different every month, lenders will want evidence over a long enough time. It’s usually a three to six month average.
Some high street lenders might ask you for 12 months’ payslips. Again, if you haven’t been doing it for long, we may need to find a different lender to help you with that.
A lot of the lenders will want you to have some experience – potentially a year in the industry in general, for example, not necessarily just in bank work. So there should be a few options available to you.
How do lenders assess variable income for locum GPs? Is it harder to get a mortgage with irregular income?
Lenders would look at the average over a three to six month period and annualise it – that will be your income figure.
It’s not harder to get a mortgage with irregular income, but it can be challenging if you weren’t working for one of those months. Lenders would be worried if you had no income at all in a month.
If you are looking to use invoices or bank payslips, consistency is key. Obviously, if you work less one month, it’s going to affect that annualised figure for you.
What documents do I need to prove my income as a locum GP?
If you go down the self-employed route, lenders will ask for your last two years’ tax calculations, to show the salary and dividends you’re taking.
If you have a limited company, they may ask you for those tax calculations and also your company accounts. Most will look at your net profits alongside your salary over two years.
Some lenders may just look at one year’s details, which may be useful if you have only been a locum for a year. The other option is your invoices, depending on how many you have. We’re looking at three to six months worth, and potentially 12 with some lenders. So different options are available.
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What is the minimum deposit needed for a mortgage as a locum GP? Do locum GPs get better rates with a larger deposit?
You could potentially do it with a 5% deposit – there’s no problem with that. You will need a higher credit score to meet the criteria for these lenders, but it’s definitely available to you.
If you have a larger deposit, you will naturally get a better rate from the lenders. It usually works in bands of five – at 90% Loan to Value, for example, the rate will be better than at 95%. At 85%, it will be better again.
How much can I borrow as a locum GP?
The lenders we use will start at 4.5 times your income – and how they work out that income is important. If they are looking at your last two years books, for example, they’ll use an average, but if your latest year is lower, they just use that figure. They then multiply that by 4.5.
They then make deductions depending on your credit commitments or number of dependents, to reach the figure they will allow you to borrow.
But all lenders are different. If your income is above a certain level, you may be able to borrow five times your income, and potentially 5.5 times with some lenders.
Can I get a mortgage with a low credit score as a locum GP?
If you do have bad credit, it can make things more difficult and your rate may be higher. Also, there will be fewer lenders that look at invoices rather than your self-employed books if you’ve got bad credit.
It does depend what it is. If it’s just a few missed payments, you’d probably fit with those lenders. Something more serious like a CCJ or a default could hamper your chances with them, and so we would look for a lender to use your self-employment figures in a more traditional way.
How does remortgaging work as a locum GP?
The lenders would treat you the same in assessing the income whether you are a first-time buyer, a home mover or doing a remortgage.
We would assess your circumstances – what are you looking for, how much do you need to borrow and what are the options? Should you move to a new lender or stay with the one you’re already with? It’s just about working through to find the right route.
Can I get a Buy to Let mortgage as a locum GP?
Yes. The main difference is that you need between 20% and 25% deposit, just because that’s the standard for Buy to Let.
Some lenders don’t actually look at your income with Buy to Let mortgages. They just want to know that you’ve got an income – there’s less scrutiny on that.
How can I improve my chances of being approved for a mortgage as a locum GP?
Having a good credit score is always helpful. A slightly larger deposit is also good, but you don’t necessarily need those things. It just will improve your chances slightly.
We never know for sure until we run a Decision in Principle with a lender. It can be helpful to do that two or three months before you start looking for a new home – just so you know what’s possible and if anything might be a problem. You then have time to sort any challenges out in advance.
How can a mortgage broker help? Anything you’d like to add?
It’s just the preparation side. Speak to a mortgage broker early, especially if you haven’t been a locum for very long. In that scenario, you probably will need a lender that can look at the invoices – and they’re not high street lenders. They can be more tricky to find on your own.
I would definitely speak to a mortgage adviser, get our take on the right option for you, and we’ll support you through that application.
Key Takeaways:
- Most lenders require two years of self-employment figures (tax calculations or company accounts), but for new locums, some lenders will consider an average of three to six months’ worth of invoices.
- NHS bank or agency income can be used as proof, with most lenders looking for 3-6 months of consistent payslips to calculate an average annualised income figure.
- A 5% deposit is possible, but having a larger deposit will secure a better interest rate, with rates typically improving in 5% Loan to Value bands (e.g., 90% LTV is better than 95%).
- Lenders commonly start lending at 4.5 times your income, which is calculated based on an average of your last two years’ figures or just the latest year if it is lower. Higher earners may be able to borrow up to 5 or 5.5 times their income.
- It is advisable to speak to a mortgage broker early, as they can help find lenders who accept invoices, which is often necessary for locums who have not been working for long.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
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