How Just Mortgage Brokers Can Help You
For many people in regular employment, the process of getting a mortgage can be a relatively straightforward affair – often using a high-street bank and proving their income with payslips and bank statements. Self-employed people and freelancers may find it trickier to find a lender that will accommodate them, usually verifying income by providing accounts or HMRC tax documents. For GPs, doctors and many other medical professionals, the complexity of getting a mortgage can be pushed a stage further.
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GPs who have become a new practice partner
You might be in salaried employment or self-employed, on a permanent contract or doing locum work (or both), and are likely to be doing regular overtime above and beyond any basic contracted work hours, or perhaps work variable shifts. Many mainstream lenders don’t have the underwriting flexibility to take account of the often more complex work patterns and finance flows of doctors and medical professionals – despite being in a profession with a high potential income range. However, there are lenders out there who are more flexible in their mortgage assessment criteria, and who specialise in offering mortgages to doctors.
If you have moved into a new practice and are newly self-employed, you might find it difficult to get a mortgage with a mainstream lender. The majority of mortgage lenders look for self-employed applicants to have at least two or, more often, three years’ accounts to verify income and assess whether you can afford a mortgage. There are, however, more flexible niche lenders in the mortgage market who may be willing to use other financial track records as a basis for assessing your application – for example, some lenders will look at the practice track record and make a lending decision based on what your predecessor made in the same role.
If you work as a locum, your job may by its very nature have irregular shifts, variable hours and even gaps in employment, whether you are doing locum work exclusively, or in addition to another role. While more traditional lenders might find the irregular nature of locum pay problematic when it comes to verifying a sustainable income for mortgage purposes, fortunately, a number of smaller lenders take a more realistic and flexible approach. In the absence of a permanent contract or a regular number of hours worked, specialist lenders will look at an average of your income over a number of previous months or years to establish an income level on which to base their mortgage affordability calculations.
How much can you borrow?
The key to how much you borrow lies in establishing a base income figure, which could be from payslips, self-employed accounts or HMRC documentation, or via one of the alternative methods mentioned above. Once the lender has established this figure, they will carry out affordability checks to establish the maximum amount you can borrow. This is typically in the range of four to five times the income figure but can be affected by other factors such as adverse credit records.
Most lenders limit mortgage borrowing to 95% of the property value (this is referred to as the loan-to-value ratio) meaning that you would have to put down a 5% deposit. However, it’s not unusual for lenders to require a larger deposit – such as 10% or 15% – in more complex cases that fall outside their standard underwriting criteria. By limiting the loan-to-value ratio, the lender reduces its exposure to risk in the event of defaulted mortgage payments. Depending on the different mortgage products offered, you may also find that putting down a bigger deposit will give you access to better mortgage rates.
Contact us today
At Just Mortgage Brokers we have years of experience in securing mortgages for GPs, consultants, locums and all manner of medical professionals. Contact us now to discuss how we can help you find the lender and the mortgage that are right for you.