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Mortgages for locum doctors- a detailed guide

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Mortgages for locum doctors- a detailed guide

Locums are in a unique situation among doctors when applying for a mortgage. Unfortunately, the circumstances can make it tricky to secure the mortgage you want.

The complex nature of your earnings makes it vital to be well prepared in advance of a mortgage application. You'll need to be able to document and prove your income lenders will understand, and, unfortunately, this can be harder than it sounds. 

Can I get a mortgage as a locum doctor?

Believe it or not, many doctors - not just locums -can struggle to get a mortgage. This is due to a range of circumstances, and everyone’s application is unique. However, very often this is simply down to quirks of the medical profession that many high street lenders simply don't understand.

  • The long training period and comparatively late entry into the workforce
  • Large amounts of student debt
  • Short-term contracts and rotations as a junior doctor
  • A frequent history of moving and multiple addresses
  • Inconsistent income and a low base salary (even if overall compensation is high)

As a locum doctor, your circumstances can unfortunately be even more challenging.

Depending on your earning structure documenting your true income can be a complex task.

If you've historically operated as a limited company structure, you may have income in the form of dividends mixed with salaried income as a company director. Again, this creates additional complexity and many high street lenders will not appropriately take these factors into account. 

It's therefore important to use the services of a specialist mortgage broker who understands the medical profession.

Getting a mortgage as a recent locum

If you are a recent locum, unfortunately, it may not be possible to secure an income straight away that is provable to gain a mortgage if you are seen as self-employed.

In the case of self-employed individuals, lenders look for a minimum of 2 years of accounts in order to make a lending decision. Typically you will also need to supply 3 months' worth of bank statements.

Lenders simply require additional history when dealing with self-employed applicants as opposed to salaried employees. If you’re wondering about your potential eligibility, why not book a consultation with one of our mortgage advisers? They will be able to assess your eligibility based on your individual circumstances, and the initial consultation is free of charge. 

How using a specialist mortgage broker can help

Mortgage Brokers who understand doctors mortgages are able to access high street lenders as well as specialist lenders who would consider providing a mortgage to a locum with a small number of payslips (if locuming as a hospital doctor) or using a short term contract to prove ongoing affordability. This does limit the mortgage options available to you, however, usually we are able to help you gain a mortgage with a limited financial history as a locum. Get in touch to book a consultation and discuss your personal circumstances with us.

Past tax efficiency can be an issue

Many accountants prioritise tax efficiency when preparing accounts and making recommendations. While this can be valuable in helping you minimise your tax liability when it comes to a mortgage application this can cause issues as your income may appear low to lenders.

Being a locum doctor via a limited company

Whilst using a limited company to locum through can be useful to maximise the income you can derive, there are limitations. You will technically be a director of a limited company and will need to file annual accounts to companies house. If you are seeking to gain a mortgage within the first two years of setting up a limited company, this will likely cause you great difficulty. You also need to consider how much income you derive from the limited company by way of salary and dividends. Your affordability will be impacted by these income levels. There are a limited number of lenders who will consider using your gross profits for how much they will lend you, however this is a small number of lenders only.

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Specialist broker or high street lender? What is best for locums?

For the reasons above, it may be advisable to use a specialist broker. Unlike a high street lender, a specialist broker will help you prepare for your application and document your income in a way lenders will understand. They will also be able to work with specialist lenders who can take into account your circumstances as a locum. These lenders are not available on the high street to typical applicants. 

Ideally, you want to work with a broker who has specialist knowledge and experience working with locum doctors.

Time considerations

Depending on your schedule, choosing a specialist broker can be advantageous by simply saving time and taking the stress of the mortgage application off your hands. If you find yourself strapped for time, or finances aren’t your bag, a specialist broker may be the best choice for you. 

Check and improve your credit score

Regardless of which route you take - high street lender or specialist broker -your credit score will be an important factor in your mortgage application.

Your credit score is determined by a variety of factors, and in fact, you will likely have multiple credit scores with different agencies. In the UK there are several credit reference agencies, these are organisations that determine your creditworthiness such as Equifax, Experian and Transunion.

Don't know your credit score? Use these tools to find out

Each of the big three credit reference agencies has free tools to help you find your credit score.

Clearscore, Experian and CreditKarma are free tools to help you find out your score.

Simply answer some simple questions and you'll be able to view your score.

What factors determine your credit score?

There are a variety of factors that affect your credit score (and many are easy to change): 

  • Are you on the electoral roll at your current address?
  • Your previous address history
  • How you use credit (lenders are looking for responsible use of credit cards, loans etc)
  • Joint credit history (if you have joint accounts with your spouse/partner)
  • Any county court judgements, insolvencies or bankruptcies
  • Your immigration status and time resident in the country
  • Any inaccuracies

The best first step is to check your score and see where you stand. From there you can take steps to improve and change your score.

If you are concerned about your credit score, specialist brokers will be able to guide you through the application process.

Talk to us for impartial advice

Talk to us for further information. Click here to enter a few simple details and one of our specialist mortgage advisers will be in touch. Your initial consultation is free of charge. 

Thinking of applying for a mortgage? Go through this checklist first

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