Mortgage for Dentists

Securing a mortgage as a dentist isn’t always easy to understand, particularly if your income varies between NHS and private work or changes from year to year. Our team at Davidson Deem aims to provide clear and straightforward advice to help dental professionals find the right mortgage for their circumstances.

To help make things easier, Peter Stokes will guide you through this episode on the questions which are asked the most. You will learn how lenders assess your income, what deposit you might need, and how factors like student loans, fixed-term contracts, or buying into a practice can shape your options.

Do mortgage lenders offer any special deals or enhanced borrowing for dentists?

I would not say there are any mortgage deals specific to dentists, but you do fall under the category of professionals. Some lenders will do different things for professionals.

Given the competitive nature of the lending market, there may be limited scope for lenders to reduce interest rates further. However, depending on the lender and your circumstances, you may benefit from more flexible underwriting criteria.

Some lenders may also consider higher income multiples, where there is evidence of future earning potential. While lower interest rates may not always be available, some lenders may offer alternative underwriting approaches that provide greater flexibility.

How do lenders assess income for dentists who split their earnings between NHS and private work?

This involves a PAYE income and a self-employed income, which means you essentially have two jobs. However, some lenders might reduce the income they accept for the second job because they do not realise that a full working week can be split between PAYE and self-employed work.

You just need to prove both income streams in the normal way. Your NHS work will generally require three months of payslips, while your private work is shown through your accounts or tax calculations. Two years of history is normally required, but one or two lenders might work off one year of figures.

The lender will pull those two incomes together. That combined figure then drops into the affordability calculator to give you your mortgage borrowing amount.

Can a newly qualified dentist get a mortgage before building up a full salary history?

It shouldn’t be an issue if we are talking about a salary here, so that would be PAYE. You will have payslips, or you may even have a signed contract giving you a set income.

The problem comes when there are variable elements to your income. Any element that is not guaranteed has to build up more of a track record.

If that track record shows the income rising over time, you would rather apply when that track record had a higher average. You may have to wait to get the borrowing that you want.

But any basic element of income can be used the moment you start. It can also be used before you start if you have a signed contract.

What deposit do dentists typically need, and does being a professional make any difference?

There are not really any differences in terms of deposit requirements for dentists. The generic rules apply, meaning the greater your deposit, the more it benefits you. This mostly helps you secure a better rate.

A greater deposit also gives the lender a higher degree of confidence and safety. This can make the underwriting criteria a bit easier to get through, as lenders are less likely to take risks when deposits are small.

In many ways, this can work against you as a dentist, because professionals generally earn more and want to borrow more. The general rule is that as mortgages get bigger, you require a bigger deposit.

For example, you can use a 5% deposit if you are buying a property at £250k. If you are buying at £1m, however, nobody is going to offer a mortgage with only a 5% deposit.

Anything up to a £500k purchase price generally means 5% deposits are acceptable, and this applies to dentists as well.

How does owning or buying into a dental practice affect your mortgage application?

The simple answer is that you will be self-employed. If you are moving from an employed role to a self-employed role, you are resetting the clock. Usually, lenders require a two-year history of that, although there are one or two that will consider one year.

If you have been self-employed before at that same practice and are now buying into it, there are probably some lenders we could speak to that would look at this differently. It is simply a material change. You are still doing the same job, the same hours, and in theory earning the same money.

From that point of view, that might be doable. While many lenders wouldn’t consider it, there will be some potential options.

The key point here is that you are only just starting to generate self-employed income. For all professionals – not just dentists – self-employed income generally requires a much longer track record before high street lenders are able to consider it as part of an application.

Can associate dentists who are self-employed get a mortgage with just one year of accounts?

Normally, this is a no. Because it is self-employed income, the vast majority of high street lenders require a two-year history.

However, there are one or two lenders who may consider this, so it can certainly be possible. Your first set of accounts must cover a full 12-month period, but if they do, you may have some options available.

What happens if you’re a dentist on a fixed-term contract – will lenders still consider you?

Fixed-term contracts are generally PAYE, so you do not need the same length of track record as a self-employed person, but there are still some quirks around them. Lenders will look at how long you have been employed on a fixed-term contract and normally want to see a 12-month continuous history with no major breaks.

A week here or there for holiday is fine, but if you have three months between contracts then that worries them. Alternatively, they will look at how much time is left on your current contract, and again, they normally like to see at least 12 months remaining.

If you have the 12-month history or the 12 months going forward, it is generally not a problem. If you are less than that in both categories, it becomes a lot more difficult. It is not necessarily impossible, but your options will be very limited.

Is it harder to get a mortgage if you’re a locum dentist working across multiple practices?

I would say, generally, no if this is on a self-employed basis. It will revert back to a two-year history, or occasionally a one-year track record of self-employed income.

If these roles are on an employed basis, you are going to have multiple payslips. So long as we can demonstrate to a lender that you effectively have multiple jobs while still working a normal working week, then it is not a problem.

Lenders get worried about multiple jobs if you are facing burnout because you are working excessive hours. If your total working hours are doable for the long term, the fact that it is made up from multiple practices is generally not a problem.

How do student loans from dental school affect how much you can borrow?

Student loans are generally not a problem on their own, because the amount you pay is limited to your earnings, meaning you do not have excessive credit commitments. However, student loans in addition to other credit can pull back your maximum mortgage.

Dental school student loans tend to be a set payment irrespective of what you have earned.

Because of this, they are treated just like any other credit commitment, like a car loan or an HP (Hire Purchase) agreement. Generally lenders allow for a certain amount of credit within their affordability calculators, and it will not affect your borrowing.

If it goes over a certain amount, that is when you see the maximum mortgage start to fall back. It really depends on the size of that commitment and how much that commitment is in relation to any other credit obligation that you have.

Can dentists use projected future earnings to boost their mortgage application?

This really is on a case-by-case basis, and it depends on the reason for the income increase. For example, I had a case where a dentist bought another practice. We had a lender combine the accounts for the existing practice with the accounts for the newly acquired one, even though my client was not originally on those accounts.

Allowances can be made in situations like that. However, if you are simply starting out and expect to earn more over the next few years, it becomes a lot more difficult.

In years gone by, we used to be able to use projected earnings quite easily. Unfortunately, lenders are getting a little bit tighter in that regard nowadays.

Summary:

While there are no special mortgage interest rates exclusively for dentists, our advisers can help you access flexible lending criteria and higher income multipliers. Lenders often view professionals differently, allowing for special underwriting and tailored assessments of your overall financial picture.

Whether you are balancing NHS and private work, working as a locum, or planning to buy a practice, our team is here to help you navigate the rules. We can find the right lenders who understand your career path and help you secure a mortgage suitable for your needs.

Key Points:

• You can get enhanced lending criteria and higher income multipliers as a professional, even though special interest rates are rare.
• Combining NHS payslips and private accounts is straightforward for some lenders, though private income usually requires a one or two-year history.
• Newly qualified dentists on a basic salary or signed contract can apply immediately, but variable or non-guaranteed income needs a track record.
• Standard deposit rules apply, meaning you can use a 5% deposit for properties up to £500k, while larger loans require more.
• Moving to self-employment by buying a dental practice resets your history, but our team can find specific lenders who accept a one-year track record.
• Fixed-term contracts are accepted as long as you have a 12-month history or at least 12 months remaining on your contract.
• Dental school student loans act like credit commitments and can affect your maximum borrowing if you also have other debts.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP TO DATE WITH YOUR MORTGAGE REPAYMENTS.

FOR SPECIALIST TAX ADVICE, PLEASE REFER TO AN ACCOUNTANT OR TAX SPECIALIST.