Mortgages for Junior Doctors
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Mortgages For Professionals with complex incomes through the main high street lenders
High street lenders typically provide more appealing rates, making them the preferred choice for many professionals seeking mortgage solutions. However, navigating the complexities of professional incomes can present challenges in securing loans from these lenders.
Professionals often assume they must seek alternative lenders due to the intricacies of their income streams. Yet, armed with a deep understanding of various payment structures, we confidently facilitate successful mortgage applications with high street lenders.
In fact, a substantial 93.4% of our mortgage applications are seamlessly processed through reputable high street lenders, showcasing our expertise in navigating complex income scenarios.
Mortgage for Junior Doctors
Can you get a mortgage as a junior doctor? Is it hard to get a mortgage as a junior doctor?
The simple answer is yes, you can get a mortgage. Obviously, as a junior doctor you’re at the beginning of your career as a doctor, so your income is at the lower end.
Because they know what they will earn in the future, junior doctors often want to aim that much higher than other First Time Buyers. That’s probably one of the complications – you want to start higher because you know where your income is going. And to a certain extent we can help with that.
The process is pretty much the same as for anybody else. You start by talking to a broker, establishing what you potentially can borrow and getting a Decision in Principle with a lender.
You’re not committed to using that lender, but it’s an indication of how much you can borrow. You then find a property and submit the full mortgage application.
What deposit do I need?
Generally, the minimum deposit is 5%, but as your deposit increases, three different things happen. One, your chances of passing the internal credit score increases – although that doesn’t mean you won’t pass it at 95%, with a 5% deposit.
But as your deposit increases, the risk to the lender reduces and you’re more likely to pass. Secondly, the rates become cheaper. As your deposit increases in 5% bands, you will qualify for a better rate.
Better rates mean lower payments, which means if you put a bigger deposit down, sometimes lenders will lend you a little bit more. So a bigger deposit can get you better rates, you’re more likely to pass and potentially you can get a bigger mortgage.
How much can I borrow as a junior doctor?
A number of factors are taken into account on affordability, but the main ones of course are your income and outgoings. Potentially the term of the mortgage can be a factor, though for most junior doctors are looking for a long-term mortgage.
In terms of multipliers, if you have a fair bit of credit, you may only be able to borrow four times your income. If you don’t have much debt, there is the ability to get to 5.5 or six times your income, although that is slightly more difficult in the current environment with higher interest rates [podcast recorded in September 2024].
What eligibility criteria do I need to meet as a junior doctor?
There is obviously a minimum deposit requirement and an affordability check. The biggest eligibility factor is that internal credit score with a lender.
This can get interesting for junior doctors because as you rotate, your job changes more often. That’s one of the negatives with credit score. If you’ve been in your job for 10 years, you’re more likely to pass a credit score than if you’ve been in your job for three months or had three jobs in the last three years.
That’s quite normal for a junior doctor, which is something we have to overcome with a lender. Another component of credit score is how many addresses you’ve had in the last three years. Again, a junior doctor may be moving around frequently for that career progression. So it’s important to get through that credit score.
The flip side of that is when you fill out an application form for a Decision in Principle, you’re putting down your occupation as a doctor. That is a big plus on the credit score side.
What documentation do I need to prove my income? Can this be difficult, and why?
It can be. The normal proof would be three months’ payslips. However, I’m quite aware that often HR departments in hospitals can often make mistakes on payslips. Trying to get three months’ correct payslips can sometimes be a challenge.
I’ve frequently seen that clients have done weekend work, for example, and that has been missed off a payslip. Then two lots are added to the next payslip. Correct payslips are always a big help.
Often because of the job rotations, we see doctors applying in advance of their next position, wanting to use the income from a new job. We can absolutely do that, but you will need a signed contract from the new NHS Trust.
Again, in the NHS it’s not unusual to get your contract six months after you started work. If you want to use that future income, pushing the HR department to get that contract out is a big plus.
Remember that affordability is a two-way thing. Not only have you got to prove your income, you may have to prove some outgoings. Normally your credit report does that, but lenders will probably look at your bank statements as well. They check if there’s anything that may scale back affordability.
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How is affordability calculated for a junior doctor?
The simple answer is that there is a cap that a lender won’t go beyond, which varies from lender to lender.
It might be four times your income, or five times or 5.5 times. It doesn’t automatically mean you will get that, but lenders won’t go beyond the limit. It will depend on whether you’re applying for a shorter or longer term fixed rate deal and whether you’re a professional, like a doctor.
Each lender has different online calculators. You could give me the income and outgoings for a doctor and I could put that into five different high street lenders’ calculators and get five different results.
Some are better than others when it comes to the variable elements of a doctor’s income. Some are better for the self-employed, some will lend more if the deposit is smaller. It’s my job to work that out.
The affordability would be different wherever we go, but I can tell you the maximums. That varies from lender to lender. Nationwide might do 5.5 times income and Halifax might only do 4.5 times income, for example.
Do NHS staff get mortgage discounts? Are there any government schemes for junior doctors?
I am aware of one scheme where key workers might get a slightly better product. The problem is they tend to be offered by more ‘fringe’ lenders. That deal for an NHS worker is slightly cheaper than their normal products, but their normal products are not necessarily the best price.
The main high street lenders are already making their rates as cheap as possible, so they can’t necessarily go any cheaper for junior doctors. So if there are some out there, they’re not necessarily starting from the most competitive position.
As for schemes, one that springs to mind is the key worker mortgage scheme, which is basically an enhanced affordability model. You can borrow potentially a little bit more on that than a non-key worker.
I think they’re more targeted at lower income key workers and nurses. Junior doctors are already going to potentially access enhanced affordability, by being a professional or indeed as a First Time Buyer on an income in excess of typical criteria.
So although those are available, I’m not entirely sure that a doctor would benefit from them.
How important is it to have a good credit score as a junior doctor? Can I get a mortgage as a junior doctor if I have bad credit?
I wouldn’t necessarily say this makes much difference as a junior doctor. By being a doctor and a professional, you’re getting extra points on your credit score. If you’ve had a very minor credit blip, the positive points on your score from being a professional might still get you over the line.
That same credit profile for somebody who was not a professional might be just short. Being a junior doctor is helping you.
From a bad credit point of view, the biggest issue is the level of deposit. If you have a 5% deposit, a high street lender needs your credit report to be squeaky clean. It’s highly unlikely you’re going to get a 95% mortgage with credit issues in the background.
A bigger deposit will help, without doubt. Probably the magical figure is a 25% deposit and 75% borrowing. Lenders consider 75% borrowing as lower risk, so you can get away with some bad credit.
But bad credit doesn’t mean you can’t get a mortgage. Ideally we want to place you with a high street lender because that’s where the best rates are, and the cheapest payments. There are lenders on the fringes, in the secondary loan market, which might be able to get you a mortgage if your credit is an issue. You probably need a deposit of more than 5%, but you can still get a mortgage.
If your credit is absolutely awful, you’re going to have to tackle that first, but it depends how bad it is. Once a debt has been satisfied, we can look at the level of your deposit and determine whether we can get you in with a high street lender or somebody on the edges of the market.
Can I get a Buy to Let mortgage as a junior doctor?
Certainly, yes, although I would expect most junior doctors to look at a residential mortgage first. It doesn’t mean you can’t, but most Buy to Let lenders require you to be a homeowner.
You can still be a junior doctor, own your own home and then get a Buy to Let. It’s not a problem. But you might want to get an investment property prior to buying your own home. It’s not unusual, because a doctor doesn’t know where their career is going to take them.
You could be moving all over the country, so you don’t want to necessarily settle down yet but want an investment property. That can be done.
One thing to add, and of course this could change at any time, is that as a First Time Buyer you only get one hit at the currently lower stamp duty rates. If you use it up on the Buy to Let, you won’t get it on your residential purchase.
Generally, most people are looking at a higher value property to live in than as an investment, so you might want to reserve that stamp duty benefit for your main home.
How can I better my chances of getting a mortgage as a junior doctor?
We’ve talked about getting consistent and correct payslips, and getting the contract for a new job. One I’ve not covered off is that we often see junior doctors do bank work as additional hours.
Lenders won’t necessarily use all of that income because it fluctuates and isn’t guaranteed. But the longer and more consistent your track record of that, the better chance we have of using most of that income.
What lenders get worried about is if you’ve been doing bank work for 12 months, but in the last three months you’ve really hammered it to try and get a bigger mortgage. They worry about burnout, which can cause problems.
Whereas if you’ve earned pretty much the same amount through bank work for the last three, six or nine months, that gives them a greater degree of confidence.
What else do we need to know about mortgages for junior doctors?
It’s really important to talk to a good mortgage broker. A mortgage for any doctor, and particularly junior doctors, is not necessarily like any other profession. So find a broker that knows the medical professions.
For example, a doctor’s payslips will show a basic salary, and also show additional roster hours one weekend in three, or night duties. A decent mortgage broker knows that those parts of your income are guaranteed, even though they’re not within the basic salary.
We will get a lender to use all of that income. So definitely speak to a mortgage broker that knows junior doctors.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
