Mortgages for Junior Doctors

Can you get a mortgage as a junior doctor? Is this hard to do?

Yes, junior doctors can get mortgages, although the process can feel a bit complex due to their unique financial situation. Lenders recognise that junior doctors often have high earnings potential, but they may also have short-term contracts and do overtime shifts and training rotations, which can then make affordability assessments more nuanced.

In terms of the process, the first thing is assessing eligibility. Lenders look at income, employment contracts, credit history and financial commitments.

The next stage is determining borrowing capacity. This is around income, expenses and Loan to Value ratio. After that, lenders check the necessary documents against what’s been declared – proof of income, bank statements and ID are all essential.

The final step is applying for that mortgage. Once you’ve found a property and we submit an application, the lender carries out credit and affordability checks before making a mortgage offer.

It’s definitely recommended to speak to a mortgage broker, because we can help you navigate these steps and identify lenders that are familiar with NHS professionals.

What deposit do I need? How much can I borrow as a junior doctor?

Deposit requirements will vary by lender, but typically you need a minimum of 5% to 10% of the property value. Some lenders will accept lower deposits if you’re using a government-backed scheme or you have a strong financial profile.

How much you can borrow depends on a couple of factors – income, salary, overtime, additional allowances, your outgoings (such as student loan repayments), credit commitments and general expenses. The Loan to Value is also important: the percentage of the property’s value you’re borrowing.

A lower Loan to Value may provide more favourable terms and rates. Your credit profile can also affect a lender’s willingness to lend and the amount of borrowing that they will offer.

Because these factors and affordability change all the time within borrowing calculations, it’s always best to go through a mortgage broker. We keep you updated on the market and will liaise with the lenders on your behalf.

What eligibility criteria do I need to meet as a junior doctor?

Lenders’ underwriting can be complex. It’s similar to the previous question in terms of the factors: employment status and whether you’re on a fixed term contract, a training contract, or moving between hospitals; your income; the base salary; how much overtime you do; how regular that is and any additional allowances – both guaranteed or variable.

A good credit score helps, but isn’t always essential. Then it’s about affordability. Lenders will assess income versus outgoings to ensure repayments are manageable.

Junior doctors sometimes move hospitals as part of their training, which might cause concern to some lenders. But many lenders that operate in this market will understand that it’s standard within the profession.

What documentation do I need to prove my income? Why can this be difficult?

Lenders typically request the latest pay slips – normally the last three months – bank statements to verify those salary credits, and the employment contract, especially if you’re on a fixed term contract.

The reason this can be tricky for junior doctors is because income can vary due to overtime and shift differentials. Rotations and contract changes might make employment history seem less stable, but that might all be part of the NHS contract because you’re moving hospitals.

Some lenders can misinterpret NHS payslips, as there can be a number of variable pay components. But a broker that’s familiar with medical professionals can present your income accurately to lenders.

How is affordability calculated for a junior doctor?

Lenders have affordability calculators where certain factors have to be entered in. These include income, base salary, overtime and any additional allowances, depending on whether they’re variable or or guaranteed.

Then they subtract fixed expenses – student loan repayments, childcare and credit commitments. If you’re buying a flat, they want to factor in service charges and ground rent.

Next is lifestyle spending. Some lenders assess discretionary spending habits, while others rely on figures from the Office of National Statistics. Other factors are interest rates and loan term, as these can affect the borrowing limits.

Five year fixed rates typically allow you to borrow more than sub five year rates, just because of the way lenders calculate the interest rate.

Lenders typically use a Loan to Income (LTI) ratio, and that can range from four to 5.5 times your annual income, depending on your circumstances.

For precise calculations, a mortgage broker can utilise the relevant lender’s affordability calculator, or speak to a relevant lender’s underwriting team, which can be invaluable.