Wednesday 28 March 2018

Mortgages for those with unusual incomes: Doctors

Author: Editorial Team

Mortgages for doctors

Becoming a doctor takes years of hard work and a lifetime of dedication. Often involving long, unsociable hours, overtime and ongoing study, the job is one of the toughest around. One thing that doctors should be able to rely on in return for their hard work and dedication is financial rewards.

The average salary of a speciality doctor in the UK can vary between £37,000 to £70,000 while a GP can earn up to £85,000. This means the majority of doctors should be able to comfortably afford a mortgage in most parts of the country.

When it comes to applying for the loan though, many doctors will find this isn’t the case. As Chris Lloyd associate @EnnessGroup explains:

“Doctors may struggle to secure a mortgage because they are often paid in unconventional ways. High street banks and building societies are more comfortable with lending to those with a clear and recognisable income structure, because it enables them to accurately assess the risk.”

However, by doing a little homework and getting the right advice, finding a mortgage should be relatively easy for doctors on all pay scales. Keep reading to find out more.

Salary vs Self-employed

What many people don’t realise is that a large number of doctors in the UK are self-employed. For example, many GPs are practice partners. Rather than earning a PAYE salary, their income is from profits made by their medical practice. This means they’ve invested their own money in the GP surgery and are then paid by the NHS to run the surgery for the benefit of those living close by.

These self-employed GPs may well employ other GPs on a PAYE basis, but they themselves will be classed as self-employed when applying for a mortgage. Being self-employed always makes things a little more complicated when applying for a mortgage as most lenders will want to see at least two years of books before providing a loan.

Variable earnings

Thanks to overtime, management positions, educational training and other extra responsibilities, the earning potential of doctors can vary dramatically from year to year. In some cases, training schemes may require the doctor to move posts every six months, something that can impact earning potential and personal finances. This can make it difficult for a lender to assess exactly how much the doctor earns and could potentially cause problems with the mortgage applications.

While some lenders will take factors like overtime into account when calculating a loan, others won’t. If a doctor relies heavily on overtime for their income, they’ll need to speak to a financial advisor to find the best lender for their needs.

If you’re a doctor and are currently on the lookout for a good value mortgage, speaking to an expert financial advisor will help you to find the best deal possible. Get in touch with a member of our team today to find out more.

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Written by: Editorial Team