How to Get a Mortgage as a Clinical Fellow or Trust Grade Doctor
This article was written with contributions from expert mortgage advisors. For contact details of the experts and definitions of key terms, see the bottom of this article.
Let’s face it, most doctors don’t fully understand ‘legal’ or ‘finance’ talk. This is particularly true when it comes to mortgages. We are scientists, and while the World of Home Ownership is an alluring destination, we are stuck at the border negotiating with a guard whose language we don’t speak.
Despite having the savings and the income to afford to buy a property, successfully getting a mortgage means being able to navigate the red tape that comes with the application and many mortgage lenders just flat out won’t consider you at all.
We spoke to two mortgage advisors, one of whom specialises in locum doctor clients, to answer all of your mortgage-related questions and give advice on how to best set yourself up for success in obtaining a mortgage as a non-training doctor.
In this article you will learn:
✅ What lenders are looking for when deciding whether to make you a mortgage offer.
✅ What are the common difficulties that clinical fellows and trust-grade doctors face when applying for mortgages.
✅ How clinical fellows and trust-grade doctors can put themselves in a strong position to get a good mortgage offer.
✅ Top tips from the experts in getting your mortgage as a doctor on a fixed-term contract.
Note: This article is specifically aimed at doctors on fixed-term contracts, such as clinical fellows, trust grade doctors, and trainees.
If you want to know how being a locum doctor affects your mortgage application then click here, or specifically for sole traders or limited companies click here.
What are the main factors that determine whether a clinical fellow or trust grade doctor can get a mortgage?
There are three things that mortgage lenders care about:
👉 Income: Do you earn enough to pay back the mortgage and the interest? An affordability calculation is done to check that you can make the payments.
👉 Employment History: The length of time that you have been working matters, and whether that employment has been steady without fluctuations in earnings.
👉 Debts: Are there any major debts or commitments that would make this mortgage unaffordable?
What issues do clinical fellows and trust grade doctors usually encounter?
Usually, doctors on fixed-term contracts (which includes trainees) struggle with income and timing. Sometime mortgage lenders want you to apply earlier into your contract, and some prefer that you apply later into your contract, at which point an impending change of circumstances may prove problematic. However, there are definitely options so don’t be alarmed!
How much can I typically borrow?
The amount that you can borrow will vary from lender to lender, and depends on lots of factors but as a general guideline the amount may be somewhere around 4x your annual salary but in some cases can be up to 6x. Some lenders have calculators on their websites to give you a rough idea of how much they may offer, but this is more of a guideline than a promise!
Can I still get a mortgage near the end of my fixed term contract?
The timing of when you apply for the mortgage matters. You need to have at least 3 months behind you to show consistent earning, and you have to have enough time left ahead of you to show that you won’t have a significant change of circumstances that will make the mortgage unaffordable in the foreseeable future.
If possible, get some kind of contract in writing to show you have made plan for the future after your contract ends, as some mortgage lenders will accept this as proof of upcoming employment.
If you are planning to locum after your contract ends then this is more difficult as you have no way of proving any earnings to come (even though you will likely be earning more are a locum). You may just have to wait until you have locumed at least 3 months consistently before being able to get a mortgage.
It is important to note that this only works if you don’t locum as a sole trader or limited company because you need payslips to prove this. To read more about how to get a mortgage as a locum, check out this article.
Can I apply for a mortgage whilst I have a contract then switch to locuming once the mortgage offer has been accepted?
If you are not honest about an impending change in circumstances prior to completion, your mortgage lender has the right to withdraw your mortgage offer and then the whole purchase can fall through.
Worst case scenario, if the mortgage completes and you have failed to inform the lender about a change in circumstances then the lender would be within their rights to seek to repossess your property if they deem the mortgage not affordable or suitable for you. However, if you have an unexpected change in circumstances after you have already bought the property, you may not need to inform the lender providing you can continue to afford the repayments.
What is the biggest mistake that clinical fellows and trust grade doctors make before applying for a mortgage?
The worst thing to do is to not get in touch with a mortgage advisor as soon as you are thinking about buying a home. The trouble with fixed-term contracts is that your circumstances change month on month depending on how long you have been working and how long you have left on the contract. This is even more important when you are in a shorter length contract (12 months or less).
Can I get a Mortgage in Principle / Agreement (MIP/MIA) on a fixed-term contract?
Mortgages in Principle or Mortgages in Agreement (MIPs or MIAs) prove the seriousness and readiness of a buyer to estate agents.
Doctors on a fixed-term contract can get MIPs/MIAs. Working with a mortgage advisor to get all of your paperwork prepared in advance of putting in an offer can increase your changes of a successful bid.
How much deposit do I need?
In most cases, a deposit of 10% of the property price will be sufficient, although some mortgages are available with just a 5% deposit.
The advantage of a bigger deposit is that the loan from the bank is a lower proportion of the value of the house (known as the loan to value ratio). This generally means better interest rates, making the mortgage cheaper over the long term.
Do fixed-term contract doctors have to accept worse mortgage rates than permanent employees?
While it is true that fixed-term contract doctors and locum doctors may have a restricted panel of lenders to choose from, it is not true that this results in worse mortgage rates.
The reason that the choice of possible lenders is restricted is because fixed term contracts and zero-hours contracts are treated differently by mortgage lenders. Some of the big high-street lenders are so rigid in their criteria that they aren’t open to applicants with these specifications at all.
Sometimes, specialist lenders have better rates than high-street lenders so even if you have the option of either, you may still choose to go with the specialist lender. It just depends on what is available at the time. Just because you have fewer options doesn’t mean you have worse options.
Do I need to worry about my expenses?
As part of your affordability assessment, lenders look at your outgoings and financial obligations. This includes any debt, student loans and regular payments like school fees and car finance. It is worth reviewing your monthly outgoings to ensure that you are being frugal with your expenses and consider not taking on new debts or big expenses in the 3-6 months prior to applying for a loan.
How can I improve my credit score?
Doctors’ busy working patterns can make staying on top of finances more difficult, particularly if you need to phone services to challenge or pay bills. Generally, doctors with lower credit scores are to do with marriage breakdown or very unique personal circumstances but doing a soft credit check to optimise your credit score can be helpful.
Using a credit scoring platform such as ClearScore will give you an insight into your credit report and tell you where your credit weaknesses lie.
Simple things that you can to do improve your credit score are:
📈 Obtain a credit card that you use and then pay off in full each month.
📈 Register your details on the electoral roll.
📈 Pay any outstanding debts or charges in full and on time.
📈 Ensure that lenders providing a mortgage in principal are only doing soft credit checks as lots of hard credit checks done around the same time can damage your score.
What about if you are buying the house with a partner who is not a doctor?
If your partner is a very high earner on a permanent contract, you may be able to use their income alone to obtain the mortgage to purchase the property. If you can do this, then you would be able to use any mainstream lender without the restrictions of needing a specialist lender. However, if you need to factor your income to the mortgage calculation, then the rules of needing a specialist lender still applies (for both of you).
What if you are a foreign national doctor on a visa?
There may be red-tape around what type of visa you are on and how long is left on it, how many years of employment or address history you need to provide, and whether or not you can use a gifted deposit. Again, each mortgage lender has their own stipulations in what documentation that they want to see, so speaking to a mortgage advisor for bespoke advice would help.
What is an SA302 and do I need one?
An SA302 is a Tax Calculation for HMRC that is filed annually. If you receive a payslip through your hospital or agency then you do not need to worry about this. To read more about mortgages for sole traders or limited companies, click here.
What are your top tips for clinical fellows and trust grade doctors?
💯 Save at least a 10% deposit but remember that a larger deposit can get you better interest rates.
💯 Optimise your credit score to put you in a strong position with lenders.
💯 Timing matters when you are in a fixed-term contract. Get in touch with a mortgage advisor as soon as you decide you want to buy a home.
💯 Make a plan for what comes next after your contract ends and consider lining up another contract without a break in between your two jobs.
💯 Income protection and life insurance are vital as you wont have any sick pay benefits from employment after your contract ends. Make sure that once you have the mortgage, you have means to continue to pay it each month, even if you have to unexpectedly stop working.
Finally, why should locum doctors hire a specialist mortgage advisor?
Often, working with a mortgage advisor will save you time and stress, and provide you invaluable help in securing a mortgage. While some mortgage advisors do charge a fee for their services, some do not. Instead their business is based on their reputation for getting clients the absolute best mortgages that they can get, without costing their clients anything. They get paid by the mortgage lender when a mortgage goes through (it’s called a nomination fee and is pretty much the same whatever lender you go with so they are not incentivised by commission or sending you to a lender that will pay them more).
If you want to know more about mortgages for locum doctors then check out this article.
Barry Jeans is a mortgage advisor at Medical & Professional Investment and has worked in the industry for 30 years. For nearly a decade he has specialised almost exclusively in mortgages for doctors, and non-training locum doctors makes up a large proportion of his client base. www.doctorsmortgagesonline.co.uk, www.mpionline.org.uk, barry@mpinvestment.co.uk
Solomon Tourgeman is a mortgage advisor at Kudos Mortgages. He has been worked in the industry for 5 years, with clients all over the UK from a variety of career backgrounds. www.kudosmortgages.com, solomon@kudosmortgages.com
Nothing in this article constitutes professional and/or financial advice, nor does any information constitute a comprehensive overview of the issues relating to mortgages for doctors. Please do your own research.
Definition of Terms
Fixed-Term Contractor - A doctor who is employed with a contract that has a defined end date. This could be a training doctor, a clinical fellow, trust grade doctor, or a doctor working in a private company.
Locum - A doctor who works irregular shifts to cover rota gaps. This can be done through a bank or an agency, as a sole trader, or through a limited company.
Mainstream Lender / High Street Lender - A more well known mortgage lender, such as the names of the banks you might recognise on the high-street.
Mortgage - A mortgage is the name given to a loan specifically for the purpose of buying a property. They are regulated and secured to the property you buy. This means that if you don't repay the loan, the mortgage lender can repossess the house to sell it and recover the money owed to them.
Mortgage Advisor / Broker - A professional person who assists a client in finding and applying for a mortgage, and liases between the mortgage lender and the mortgage applicant.
Mortgage Lender - The bank or building society that is providing the mortgage loan.
SA302 - A Tax Calculation for HMRC that is filed annually if you are working as a sole trader or limited company. It is an overview of your personal tax return, not your company tax return.
Specialist lender - A mortgage lender that caters to applicants with a specialist type of income. This may still be a mainstream lender but the term is used to describe how flexible they can be in who can apply to them for a mortgage.
Your Ultimate Guide to Succeeding as a Locum Doctor
This article is part of a wider series of resources and guides that are designed to support you as a locum doctor, covering areas such as getting your first job, managing your finances, understanding your rights, and many more. Visit our Locum Doctor Hub for everything you need to know about locuming today.
Additionally, if you're considering an F3 year, you might also find it useful to look through the selection of resources we've put together in our F3 Resource Hub.
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