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If you're a locum doctor and want to get a mortgage you may have found the application process challenging. We're here to make it easy for you.
As a mortgage broker with a deep specialism working with medical professionals, we work with lenders who understand your circumstances.
Put simply, mortgage lenders prioritise applications with proof of regular and stable income. While doctors are relatively well paid and have a stable profession, you may be surprised to hear that many locum doctors struggle to secure a mortgage.
Being a locum doctor and working on a self-employed basis you may find securing a mortgage more challenging than if you were employed. Typically, mortgage lenders prefer employed doctors and will offer a simpler application process and a better deal to doctors in full-time employment.
But, don't despair, we find that most locums eventually find a lender who will understand their circumstances and secure the lending they desire, despite the more challenging circumstances. Read more to find out who you can get on the property ladder as a locum doctor.
Operating on a self-employed basis, lenders will apply greater scrutiny when deciding whether to offer a mortgage.
Despite the unique circumstances locum doctors have as contractors working for the NHS, most mortgage companies will simply treat you as any other self-employed individual and do not understand the circumstances medical professionals face.
If you are working as a locum doctor, particularly if you have a complex earning structure, are not paid regularly, work varying hours, or have a limited track record of earnings, it may be valuable to speak with a broker who works with specialist lenders.
Specialist lenders may be able to take into account your circumstances with more detail and offer a deal better suited to you than what is available from high street banks.
If you have operated as a limited company or with a more complex earnings structure, you may find getting a mortgage harder. Many locums use their own limited company or operate under an umbrella company for greater tax efficiency. While these structures can be tax efficient, having less straight forward salary and earnings arrangements can make it harder to borrow.
Different lenders take limited company structures into account in different ways and specialist lenders or a broker may be able to offer deals where high-street lenders would not allow you to borrow. Generally, you will need two years' accounts in order to secure a mortgage if your income is derived from a limited company structure.
If you have paid yourself a small basic salary as a director of a company, then topped this up with additional money from dividends, you may find high street lenders might not take this into account correctly in a typical application.
Other factors such as your credit score, career history, existing debt, overall annualised income as well as the size of your deposit will be looked at by lenders. So, don't worry too much about making an application if you operate as a limited company or under umbrella companies with a basic salary today or in the past.
If in doubt, book a free consultation with one of our mortgage advisers who will be able to help you understand your options.
If you have worked as a sole trader, lenders will be looking for several key factors.
Lenders will want to see your self-assessment forms (tax returns) for at least the last two years. Your credit score will also be an important factor as well as your broader circumstances such as how much deposit you have, and how much you're looking to borrow.
You can also generate an SA302 calculation with HMRC to provide evidence of your earnings using this link.
You may be wondering what size loan you can get as a locum. This will of course depend on your overall income, as well as the other factors we discussed above - your income structure, credit history and the like. Contrary to public opinion, it is not just the deposit that affects the size of the mortgage you are eligible for.
What size mortgage you can take out will depend on the type of mortgage you are looking for. Fixed-rate mortgages may constitute the best deal in the current climate of rising rates, but you may be able to borrow less this way than taking a variable-rate product.
How you are paid, your income structure, whether you operate as a sole trader or a company, and how long you've been a locum doctor will all affect the size of the mortgage you can take on.
As a result, it is hard to estimate the size of a mortgage you may be offered without taking into account your individual circumstances. There are no specific locum doctor mortgage products available on the market, as such specialist mortgage providers typically require brokers to bridge the gap between them and the locum. Talk to one of our mortgage advisers for free and impartial advice.
The cost of a locum doctor mortgage varies considerably and depends if you use a specialist lender or a high street mortgage company.
No two locum doctors are the same, and their circumstances are often very varied. As a result, lenders may offer very different deals to different doctors.
As with all mortgages, there can be hidden costs that many borrowers simply don't think about. There are a range of costs that can crop up during the moving process, from surveyor fees to legal costs
So, you're interested in making an application, but where do you start?
As a locum, lenders will typically ask you for two or three years of trading history for any application and they are looking to see steady work patterns and a strong credit report. It's worth noting that some lenders will look for a longer period of accounts before offering a mortgage.
If you have less than two years' accounts, it will be worth speaking with one of our advisers to see what your options are, or what steps you can take today for a future application as there are options available to you.
When making an application for a mortgage as a locum you will need to gather a range of documents.
This will include bank statements from the last two years, self-assessment forms, national insurance receipts, and company accounts if you run your own company.
You will also want to have an idea of how much you want to borrow and how much you can afford to pay in monthly repayment.
Note: with the current climate of changing interest rates, you will want to ensure you can afford potentially larger repayments, particularly if you are considering a deal which is not on a fixed rate.
Your credit scores (yes, you'll have more than one) are an important factor any potential mortgage lender will look at as part of an application.
You can run a credit file check, with the main credit reference agencies in the UK at the following links: check your experian score, your credit karma score (TransUnion) and Clearscore (Equifax).
There are a range of factors that can affect your credit score such as your overall income, whether you pay your bills on time or any issues in the past such as bankruptcies, IVAs, or fraudulent activity.
As a general rule, everyone should ensure they are on the electoral roll. As a locum, you may move addresses a lot, so ensure you are on the electoral roll at your current address.
You may be wondering what size loan you can get as a locum. This will of course depend on your overall income, as well as the other factors we discussed above.
It always pays to shop around and find the best mortgage deal for you. This includes being prepared to switch lenders to save money if you already have a mortgage in place.
If you have multiple mortgages, for example on a second home, or investment property or have only recently become a locum we would typically recommend getting a mortgage from a specialist lender via a broker.
Brokers can also help advise you on other services in addition to mortgages such as any protection or other financial products you may want to consider.
