How to get a professional mortgage
Your hard-won qualifications and structured career path can win you 8 money-saving advantages when looking for property finance.
Doctors, architects, teachers, pilots… you’ve been sitting exams while your peers have been down the pub. Is there a payoff in terms of mortgage borrowing power? Yes.
And there ought to be, considering the amount of time (and money) you’ve invested in your education and training: two to five years (and £120,000) for you pilots, four to five years for teachers, five years for pharmacists, up to six years for vets and solicitors, seven years for pharmacists, and up to 16 years for doctors.
You’re still putting in the long hours, carrying some serious professional responsibility, and many of your contemporaries in sunrise industries earn a lot more than you.
So why do lenders want to give you special treatment?
What banks and building societies like about "a profession" is:
- The structured career path: lenders can assess what you’re earning now and predict what you can reasonably be expected to make.
- Security: with many public-sector-funded professions, there’s an understanding that the professions offer more stable employment prospects than private businesses and entrepreneurial start-ups.
- Stability: having invested heavily in your training and professional development and hopefully enjoying some autonomy and role direction, you’re less likely to jack it all in and become a house painter.
- Employability: internationally-recognised professional qualifications make it easier to find a new job if you’re relocating or looking for a promotion.
While you're here, see our guide and services for High Net Worth Mortgages.
Who do mortgage lenders count as professionals?
The careers which usually allow you to apply for a professional mortgage are:
- medical doctors
- police officers
- civil servants
- officers in the armed forces
You’ll need to be fully qualified, registered, practising in your profession, and a member of your professional association.
But some lenders will consider trainees, most usually in the accountancy, legal and actuary professions.
Suppose you’re unsure about whether you might qualify for a professional mortgage. In that case, an experienced mortgage broker can advise you and also tell you how much you may be able to borrow.
How do you get a better deal with a professional mortgage?
1. Get a better interest rate
Some lenders will offer a reduction against their standard lending rates – because they want your business.
But don’t get fixated on chasing a boastably-low interest rate. The rate you pay is significant – but it may not be the most crucial issue. Depending on the stage you’re at in your career, the amount of money you can borrow might be a vital issue for you. And saving on other fees and charges (arrangement fees, valuation fees, and legal costs) might significantly impact you at this point.
2. Get a mortgage with a smaller deposit
Some of the new lending products for professionals offer 95% mortgages, which can be extremely useful to first-time buyers with only a small amount of money to put down.
That’s a significant advantage compared with the maximum 85% loans, requiring a 15% deposit, which is generally available to borrowers in other types of work.
3. Borrow more from a lower income
This is because lenders can consider your likely future earnings in a clearly-structured career. This is relevant for a loan that will be repaid over 20 or 25 years.
Standard mortgages will usually allow you to borrow around 4 times your salary. The new “professional mortgages” offer up to 5.5 times your salary, sometimes as much as 6 to 7 times your income.
If you’re making a joint application, and only one of you qualifies as a “professional”, the other applicant’s salary will be subject to the standard income multiplier.
4. Borrow more on a higher income
A range of lenders a willing to write bigger mortgages for professionals with higher incomes – usually above £50K.
The most significant discretion is used for professional borrowers earning more than £100K a year.
5. Structure your mortgage repayments more flexibly
This is an important issue for effectively self-employed professionals, such as GP partners, architect partners, solicitors in legal cooperatives, barristers in chambers, and pilots working as independent contractors. As well as those who are fee-earners and whose annual incomes are heavily bonus-related.
- Structuring your mortgage repayments around "lumpy income" can be a great advantage: you can borrow a more significant amount that your overall annual earnings can support but which your monthly salary may not service.
- For example, professionals well-established in their careers may be amongst the limited numbers of borrowers who could be well-advised to take out a low-cost interest-only mortgage.
- Not usually a recommended option if it will leave you with an entire capital sum to repay at the end of the mortgage.
- But for professional earners who have irregular fee payments, or annual bonuses, the best borrowing might be an interest-only mortgage with lower-cost monthly repayments, with a facility to make penalty-free substantial lump-sum repayments against their capital borrowing each year.
- Even on a standard repayment mortgage, an Enhanced Overpayment Facility Options for professional borrowers may allow for 10% or even 20% annual lump-sum capital repayments on interest-only mortgages or even unlimited overpayments.
6. Borrow back
Just as professionals can have lump-sum payments that make it easy to overpay, they’re more likely to want to make investments or more significant expenditures when opportunities arise.
Various mortgage products will allow you to take back capital payments you’ve made or to apply for additional funds without going through a formal application process.
One arrangement is an offset mortgage allows you to make substantial overpayments with your bonuses or accumulated client fees and then access the funds later.
7. Take a repayment holiday
If you want to step off the career ladder for a time – to do postgraduate study, manage family responsibilities or backpack around Asia – you might want to break from mortgage repayments.
Once you’ve established a repayment record, many professional mortgages allow you to miss payments if you agree with them.
8. Become a consultant / self-employed
Most people considering going into consultancy will need to put any property-purchase plans on hold until they’ve established a solid earnings record.
But for professionals with marketable credentials and experience, some lenders will make a mortgage offer on just one year’s accounts, even if you have some adverse credit.
Get experienced, independent mortgage advice.
Understanding all these different mortgage features and their impact on the cost of your borrowing is relatively complex.
This is why it’s important to get the advice of an experienced mortgage broker who can look at the range of borrowing options across the market that are available to a professional with your circumstances.
We will help you evaluate what will be the best mortgage offer for you, prepare your application, so it fits the criteria of our targeted lender, and negotiate on your behalf.
Call Clifton Private Finance to set up a first, no-fee discussion of what you need:
Please read our blog about mortgages for doctors
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