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Diagnosing and curing mortgage problems for doctors

by: Chris Lloyd, associate director at Enness
  • 24/07/2017
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Diagnosing and curing mortgage problems for doctors
Chris Lloyd, associate director at Enness, begins a series of articles looking at the trickier scenarios surrounding finding mortgages for professionals with unusual incomes. In this first piece he considers the problems doctors can experience when seeking a mortgage.

Requiring years of essential study and a huge personal commitment, qualifying as a doctor is no mean feat.

One of the rewards for years of hard work should be financial security, and the ability to secure a mortgage. Unfortunately, many doctors find this is not the case.

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.

High street lenders are less likely to understand and therefore lend against income structures with many variances.


Salary vs self-employed

Doctors’ contracts are more complicated than traditional PAYE employees. GPs, for example, might be salaried employees of a primary care organisation—but practice partners qualify as self-employed workers.

Despite being in a position with excellent job stability, being self-employed still makes it more challenging to get a mortgage. Without two years of accounts, securing finance can be very difficult.

Within the profession, there are wide discrepancies between what different types of doctors are paid; specialty doctors can earn anywhere from £37,000 to £70,000, while GPs can expect to earn in the range of £50,000 to £85,000.

However, the main problem is how much an individual doctor’s pay can vary from their expected basic salary within a year.

There is huge scope for taking on extra responsibilities such as educational training or management positions. And if a mortgage is being calculated from basic hours, this is also unlikely to represent actual earnings.


Variable hours

Doctors can often end up working a significant amount of overtime, and are also liable for enhanced pay for working nights, weekends, and being on-call.

And for those in training schemes, who are earning but moving post every six months to gain exposure to different medical areas, it can be almost impossible to secure a mortgage with a transient working history.

Rejected applications will be noted on an applicant’s credit record, which can damage their chances of future success, so it is important to approach this carefully.

As ever, this is where brokers can make the process significantly easier and increase the likelihood of being accepted, particularly where they are well versed in dealing with complicated applications from clients with unusual income structures.

Although complicated, a correctly structured application placed with the right lender has every chance of being successful.

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