Mortgages for Junior Doctors
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Mortgage for Junior Doctors
What is a junior doctor mortgage?
Mortgages for junior doctors can be difficult to obtain. It is all about approaching a mortgage lender who understands your income, the structure of your fixed term contracts and generally makes the process much easier for you as a junior doctor.
Can you get a mortgage as a junior doctor? Is it hard to do this?
What we find with junior doctors is that most will be on a fixed time contract from the NHS. The biggest issue for these applicants is that some lenders want you to have 12 months’ contracting experience before you can apply with them.
That can be an issue if you’ve just come out of university, you’re on a better salary now and you want a mortgage. Even though you’ve got experience in this professional role, lenders often need 12 months’ experience – which means you need to be on your second fixed term contract.
Sometimes junior doctors have shorter fixed term contracts of potentially three to six months in one area, and then moving to another contract. Certain lenders don’t like the shortness of those contracts.
Do junior doctors get better mortgage rates?
As a junior doctor is it certainly possible to access the best and cheapest mortgage rates on the market. It does depend on your personal circumstances; however, we have placed many junior doctors with the most cost effective mortgage lenders.
Can you get a Mortgage as a newly qualified doctor?
It can be difficult getting a new mortgage as a newly qualified doctor. Most mortgage lenders have strict criteria when it comes to fixed term contracts. Many mortgage lenders will need two years of employment history while on a fixed-term contract before lending. However, if you’re a junior doctor it’s actually possible to get a mortgage with just one payslip and your contract of employment.
What deposit do I need? How much can I borrow as a junior doctor?
The amount you can borrow will depend on your circumstances, but some lenders would class a junior doctor as a professional. They may then give you access to higher loan to income ratios.
So instead of the standard 4.5 times income, you could potentially borrow five or 5.5 times your income, before they look at your commitments on top of that. It puts you at a higher bar from the start.
With the deposit, it will come down to your credit score. If you only have a 5% deposit, your score will need to be that bit better. If you’ve had any credit issues in the past, that does make it harder and will mean you need a higher deposit. But if your score is clean, then 5% or 10% would potentially be possible for you.
How much can junior doctors borrow on a mortgage?
There are some mortgage lenders that will offer junior doctors the ability to lend a bigger mortgage. Junior doctor friendly mortgage providers know as a junior doctor your income is likely to increase in the short term as you progress as a doctor. They are therefore more comfortable with offering you higher borrowing amounts.
Can I get a bigger mortgage as a junior doctor with a pending payrise?
If you have evidence of a payrise in your next contract, then there are lenders that can consider this income before you have it. Giving you the ability to secure a higher loan amount.
You will need to have started the new role before completion of your mortgage.
What eligibility criteria do I need to meet as a junior doctor?
The main issue is this potential need for 12 months’ contracting with some lenders. But quite a few other lenders actually see this as a professional role with the NHS, and will treat you as if it’s a permanent, employed contract.
In that case, they’re not too concerned about how long is left on that contract. Even if you haven’t started yet, some lenders are also happy to use your new contract. The only restriction in that scenario would be that the mortgage can’t start until you’ve taken up that role. So there is flexibility on a fixed term contract for a junior doctor.
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What documentation do I need to prove my income? Why can this be difficult?
Again, it boils down to the fixed term contract and how long is left on that – which can sometimes be an issue. We’ll check the contract to make sure that the income is correct and how long that contract is for. Provided it’s with the NHS, it’s more of an admin task than scrutinising it to a huge degree.
The other documents you’ll need are just standard – such as proof of deposit and your pay slips. Depending on the lender, that could be between one and three months’ pay slips. Some might just want that contract.
How is affordability calculated for a junior doctor?
You can potentially get a higher loan to income as a result of being in a professional role. Other lenders perhaps won’t have a particular product in place, but if you’re looking at a five year fixed rate, they may push your affordability a little more.
There are also some products out there to help First Time Buyers borrow more. It’s not specific to being a junior doctor, but some lenders try to support higher borrowing amounts because they recognise that, unfortunately, house prices are just increasing.
Do NHS staff get mortgage discounts?
There used to be products with a discount for professionals, but that has gone away now. A couple of lenders may offer special NHS incentives, but it’s more to do with the loan to income and allowing you to borrow that little bit extra. There’s also that flexibility around the fixed term contract, where they’re not too concerned if you haven’t done the 12 months. It’s more about flexibility, now, than discounts.
Mortgages for junior doctors on rotational contracts
If you are a doctor on a rotational contract, you may find it much harder to obtain a mortgage as most mortgage lenders want at least a 12-month initial fixed term contract. There are mortgage lenders that understand as a junior doctor you are likely to be on rotational contracts and they will be happy to lend to you.
Can I get a mortgage as a junior doctor if I have bad credit? How important is it to have a good credit score as a junior doctor?
A good credit score is always more favourable and gets you access to more lenders, with potentially less deposit. That’s always important, to start with.
If you have some history of adverse credit, it’s not a barrier. It just means we’d perhaps have to look at other lenders, who may want a little more deposit or charge a higher rate. We would work with you and see how we can support you going forward – so that when it comes to your remortgage in the future, hopefully at that point we can then move you on to a more favourable rate.
Can I get a Buy to Let mortgage as a junior doctor?
With Buy to Let, the affordability is worked out on the rental income that could be generated from that property. In most scenarios, your income won’t come into the application. The fact that you’re in a fixed-time contract won’t be too much of a concern for the lenders because they’re looking at the rental income.
Some lenders do have a minimum income requirement, but being a junior doctor shouldn’t really affect that. If you are a First Time Buyer, you’ll have some restrictions in place.
Some lenders won’t offer a Buy to Let mortgages to a First Time Buyer. Others may accept you, but will go through a more rigorous underwriting process. Again, it’s about finding the right lender for you.
How can I better my chances of getting a mortgage as a junior doctor? How can a mortgage broker help?
If you have already started the role, that would be better for you because you will have more lenders to choose from. As I said, it doesn’t necessarily mean you can’t qualify, it would just give you a few more options. Having a good credit score would also be very helpful. They are the main two areas, I would say.
More deposit does help too, but as I said, it is possible with 5% or 10%. That shouldn’t be an issue for you in getting a mortgage.
Preparation is something I would always champion – start the process early to check you can get that mortgage. If you just go to your bank, they may be one of those lenders that doesn’t accept the fixed term contract scenario. If that’s the case and they say you need 12 months, it could delay your property purchase unnecessarily. You may think you can’t qualify – but actually you can.
If your contract is starting in four or five months time, there’s no harm in having that conversation with a broker now. An advisor will still give you information about when you can start looking to do something. It just prepares you better, I think.
There are some unique challenges to arranging mortgages for doctors. Employing the services of a mortgage broker can make the process more efficient and stress free. If you are a junior doctor or you have complex income streams you may find it more difficult to obtain a mortgage. This is where we can help you by utilising our experience of the market. We have helped out many doctors with their property ambitions and hopefully we can help you too.
YOUR PROPERTY 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.
Why Switch Mortgage Finance
- Raising The standards of financial advice
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Why Switch Mortgage Finance
- Raising the standards of financial advice
- Making financial advice accessible to all
- Trusted & stress-free financial advice
- Friendly, personable advisors