Medical professionals often run into a variety of unexpected obstacles when looking to apply for a mortgage. From doctors to dieticians to psychiatrists to surgeons, qualifying for a mortgage as a medical professional is not always as easy as it sounds.

With the help and support of an experienced broker, competitive deals can be found through an extensive network of specialised lenders.

Why Medical Professionals Encounter Issues When Applying for Mortgages

The medical profession is typically associated with high earnings potential, so why is it that so many encounter difficulties when looking to take out a mortgage?

1. A complex combination of revenue streams

Medical professionals routinely collect their combined annual income from multiple sources. This could include private practice, locum work, and positions within the NHS. With most conventional lenders, the revenue streams of a medical professional are somewhat fragmented, and you can immediately count them out of the running. Even if their total pay is significantly higher than that required to qualify for a mortgage, the complex nature of their revenue streams could stand in their way.

1. You may be looking to obtain consent to let

Some doctors and medical professionals, particularly those at the start of their careers, may find themselves spending much of their time away from home. In this case, a prospective homebuyer may be considering the option of letting out the property from time to time while they are not using it. In order to let out a home that has been purchased using a conventional mortgage, the borrower needs to obtain ‘consent to let’ from the lender. As this is not a standard facility offered by many high-street banks, alternative financing options may be necessary from specialist lenders.

1. Your work may take you overseas for significant periods of time

For many doctors and medical professionals, a property purchased in the UK can subsequently become a second home if their work takes them overseas for significant periods of time. This is also something that can bring complications into the mortgage application process, should the buyer wish to let out their UK home to private tenants or as a holiday home at a later date.

1. You’re a newly-employed doctor

Qualified doctors and medical professionals who choose to work for themselves are subject to the same restrictions as other self-employed mortgage applicants. This will typically mean providing a minimum of two or three years of tax returns and extensive proof of income in order to qualify for a mortgage. It may also be necessary to offer the lender a higher-than-normal deposit to qualify for the most competitive deals available.

The importance of independent broker support

Enlisting the support of an experienced broker at the earliest possible stage is highly recommended in order to both simplify the application process and pave the way for a competitive deal.

For more information on any of the above or to discuss the mortgage options available for doctors and medical professionals in more detail, call or email a member of our team today.

Self-employed workers have always had a tough time qualifying for a competitive mortgage. Today, things are only getting more difficult.

In the wake of the COVID-19 pandemic, lenders are scrutinising self-employed borrowers more intensively than ever before, to such an extent that even having received financial support from the government during the crisis could count an applicant completely out of the running.

This paints a fairly gloomy picture for self-employed workers looking to own their own homes. However, there are steps that can be taken to at least tip the balance slightly in your favour.

While there are no guarantees, each of the following could significantly boost your chances of qualifying for a competitive self-employed mortgage:

1. Provide comprehensive proof of income.

You can expect to be asked for extensive proof of income from the last few years, at least. The more evidence you can provide of income that is both stable and adequate to cover the costs of the loan, the more likely you are to qualify.

You may also need to provide evidence on future contracts, projects, and general assurances of long-term income.

1. Use an accountant.

An application submitted via, or at least endorsed in some way by, an accountant always carries more weight. Banks and lenders instinctively see applications, projections, and financial documents as more accurate and reliable when they come from an experienced accountant.

Even if this means paying for the services of an accountant for a few months, it is a small price to pay for the added credibility they bring.

1. Boost your credit score

Your credit rating will be taken into account as a major indicator of your worthiness for a mortgage. In addition, your credit score will heavily influence the interest rate that applies to your loan if your application is accepted.

It is advisable to do everything you can in advance to boost your credit score. Even just a few extra points added by tidying up your accounts and paying off a few smaller debts could work in your favour.

1. Save a bigger deposit.

The bigger the deposit you are able to provide, the more likely you are to qualify for a mortgage. Again, this is something that will influence the overall borrowing costs of the facility. Larger deposits mean lower-risk transactions in the eyes of the lender, plus a lower sum of money borrowed.

Offering a larger deposit could hold the key to getting your application through the door with many high-street lenders. If pulling together a meaningful deposit is proving problematic, you may need to consider alternative options away from the High Street.

1. Work with an experienced broker.

Consulting with an experienced broker before applying is essential. This will enable you to not only determine your eligibility ahead of time but also begin building the strongest possible case to support your application.

Many of the UK’s specialist lenders offer their services exclusively via broker introductions. As it may be necessary to direct your application to specialist lenders as a self-employed worker, broker support could hold the key to qualifying for a competitive mortgage.

One of the few things all homeowners have in common is the desire to become mortgage-free. However, most mortgage payers simply resign themselves to the fact that they will be tied to their debt and all associated borrowing costs for decades to come.

Not realising they could be needlessly throwing away tens of thousands of pounds.

New figures published by the Homeowners Alliance suggest that the average homeowner now pays around £3,154 in interest each year on their mortgage. Given the average 25, 30, or 35-year mortgage terms, this equates to an astonishing amount of interest paid over the life of the typical home loan.

Both the Homeowners Alliance and the Council of Mortgage Lenders are advising mortgage payers to seriously consider overpaying where possible.

The vast majority of lenders allow mortgage payers to pay over the agreed monthly instalments, either on occasion or on a regular basis. Those who do so often stand to make significant savings by repaying their mortgage early and reducing overall borrowing costs.

According to the Homeowners Alliance, overpaying by just £60 per month can, for some mortgage payers, reduce the length of the mortgage term by as much as three years. Even when accounting for any early repayment fees that may apply, this could still amount to a significant saving.

The higher the monthly overpayment, typically limited to 10% without incurring additional fees, the faster the loan is repaid. Depending on the length of the term and the size of the mortgage, this could equate to tens of thousands of pounds in savings and becoming mortgage-free several years earlier.

Refinancing to save money

Another option that can lead to significant savings is refinancing at the right time. This can be particularly useful for homeowners approaching the end of the initial fixed-rate introductory period.

When the initial two-year, five-year, or ten-year fixed-rate period of a mortgage comes to an end, the loan is automatically switched to the lender’s standard variable rate (SVR). At this point, the APR on the loan could jump significantly, resulting in a much higher monthly payment and significantly greater long-term debt.

Prior to this automatic transition, borrowers have the option of comparing the market to find a better deal from a competing lender. With the help and support of an experienced broker, being switched to an uncompetitive SVR with an elevated APR can be avoided entirely.

Even at a later date, it is still possible to refinance to a more competitive deal and reduce overall mortgage debt by thousands, though the earlier action is taken, the higher the potential for making significant savings.

For more information on any of the above or to discuss the options available for reducing your mortgage debt, contact a member of the team at UK Property Finance today.

Once little more than a novelty, the UK’s build-to-let sector is slowly but surely finding its way onto the radars of major investors. In particular, Lloyds Bank has outlined an ambitious plan to build an extensive 50,000-strong BTL property portfolio by the end of the current decade.

Consequently, many private renters across the country could soon see their conventional landlords replaced with banks and businesses.

With available inventory at an all-time low and skyrocketing rents having become the norm, the future private rental sector has never looked brighter, at least for those buying or building properties to rent out to private tenants.

Build-to-let is the arm of the sector where new-build properties and flats are owned and managed by just one landlord after being built to order. Advocates of big business BTL insist that corporate ownership could solve many of the problems faced by renters today, ranging from unacceptable fees to “rogue” landlords and short-term leases.

Announcing its aggressive move into the BTL sector, Lloyds is establishing its own private home rentals subsidiary, Citra Living, with the intention of adding tens of thousands of homes to its property rentals portfolio by 2030.

This one corporate landlord alone would occupy a full 1% of the UK’s total rental stock.

Meanwhile, John Lewis has also outlined plans to build homes to rent out privately as part of its five-year strategy to expand “beyond retail” Specifically, the company said at least £400 million would be invested in new ventures, with the aim of generating 40% of its overall profits from non-retail activities within the next 10 years.

“Entering the ‘build to rent’ market also allows us to furnish properties using John Lewis Home products and deliver Waitrose food,” it said.

How private renters stand to be affected

Some analysts and experts are optimistic about the potential for larger banks and corporations to move into the buy-to-let sector. They believe that by taking control of the market at least partially away from smaller landlords, private tenants may be afforded more protection and rights.

“The hope is that a larger corporate landlord such as Lloyds Bank would have the infrastructure, expertise, and finances to ensure that they comply with their legal obligations, as opposed to smaller and ‘rogue’ landlords, meaning tenants should be provided with the information and protection they are entitled to,” commented Hodge Jones & Allen housing team partner Sophie Bell.

There are those who only envisage problems for tenants and the sector long-term, should the trend of corporate BTL property ownership become popular over the coming years.

By 2030, Lloyds Bank has set its sights on building at least 50,000 homes, which would subsequently make it the single biggest BTL landlord operating in the UK.

“The only upside for consumers is that it may, and I emphasise the word may bring lower rents if there are more properties to occupy,” warned Lewis Shaw, founder of Shaw Financial Services.

“However, the likely outcome is that the opposite will happen; it would be very easy for large institutional investors or lenders to monopolise large swathes of an area and increase prices.”

At the risk of jumping straight to the conclusion, the short answer is sometimes

Comparing a conventional repayment mortgage to an interest-only mortgage is a little like comparing apples to oranges. Both have their benefits and points of appeal, though they are completely different in nature.

For most people, the prospect of taking out an interest-only mortgage does not seem realistic. The idea of being left with a major debt to repay at the end of the mortgage term can be off-putting, and understandably so.

Just as is the case with all financial products, affordability and cost-effectiveness vary on a case-by-case basis.

The difference between the two mortgage types

Roughly summarised, this is what makes the difference between an interest-only mortgage and a repayment mortgage:

• With a repayment mortgage, you gradually repay the full outstanding balance of your mortgage over the agreed-upon term, and at the end of the term, the mortgage is paid off and you own your home.
• With an interest-only mortgage, your monthly repayments only cover the interest. When the repayment period comes to an end, you still owe the lender the full price of your home, i.e., the full outstanding mortgage minus interest.

The latter is considered the most undesirable option; the vast majority of home loans are issued in the form of repayment mortgages. Being left with the full price of your home to be paid when the term reaches completion is a legitimate cause for concern.

This does not necessarily mean that a repayment mortgage cannot be a viable and cost-effective option; it all depends entirely on your financial situation and long-term plans.

Initial vs. long-term savings

A homebuyer takes out a mortgage of £400,000 with a ten-year introductory fixed rate of 2.5% over the course of 25 years. If this loan was issued as a repayment mortgage, they would be paying around £1,795 each month to the lender. With an interest-only mortgage, their monthly payment would be reduced to £834.

The borrower in question would be looking at around an extra £1,000 in their pocket each month, giving them the option to save, invest, or inject cash into their business. At the end of the mortgage term, when the balance of the mortgage is due, they could have accumulated enough cash to cover the debt and pocket a profit in the process.

By contrast, a repayment mortgage would leave the borrower with much less to play with each month but with no final debt to pay 25 years later.

Choosing the right option

Interest-only mortgages are not suitable for everyone. For the sake of simplicity, security, and confidence, most people are better off considering the standard repayment option.

There are instances where borrowers meeting very specific criteria could find interest-only a more economical option.

Consulting with an independent broker before applying is therefore essential in order to ensure you fully understand the options available and which are suitable for your requirements.