When you’re a locum doctor, the prospect of getting a mortgage may seem rather daunting. The requirements of lenders will be different than for a doctor in a permanent position.
This doesn’t have to be a major obstacle, however. By developing an understanding of the requirements, or working with a broker, you can make the process of applying for mortgages for locum doctors much easier.
What are the challenges with mortgages for locum doctors?
Mortgage lenders are required to gather as much evidence as possible that a borrower is able to afford their mortgage. This means right now, and in the future as well. As a locum doctor, the challenge is to convince lenders that your income is stable and reliable, even though you’re self-employed. When you are in full-time employment, with a stated salary, consistent wage and PAYE status, this is easy to do. But for self-employed people, it’s somewhat more difficult to do.
How are you paid?
No matter the nature of your employment, you should be prepared for lenders to ask for proof of your income. It’s best to gather as much paperwork to hand as possible so that there will be no obstacles or curveballs at the application stage.
For locums who are paid directly by an NHS Trust, tax and national insurance are deducted automatically. In this case, lenders will usually look at figures on payslips and P60s. For this reason, it’s a good idea to retain payslips going as far back as possible. This way, you’ll be able to provide a comprehensive track record of steady work that will help your mortgage application.
If you operate as a sole trader on a self-employed basis, lenders will probably be interested in your business’ net profit, as shown on your accounts. Lenders may be satisfied with just seeing your last two self-assessment forms, which are known as SA302s. They are similar to a P60, issued to self-employed people by HMRC.
A self-employed borrower is likely to have fluctuation in their income. This is not usually the case for people with a fixed, basic salary. As such, lenders may ask to see proof of income covering a longer time period.
If you operate as a locum doctor through a limited company of your own, lenders will usually ask for a little more. They will likely ask to see your salary and any dividends you have received in order to calculate the size of the mortgage they can offer. Similar to sole traders, your accounts and/or SA302s will be required.
When you work via an umbrella company, you will find that different lenders take different approaches. A locum may be asked to provide a P60 and three or more months of payslips with their application. However, this won’t always be a true representation of the value of your contract, so some lenders will ask to see your contract to calculate the amount you can borrow. Around 80% of the annualised income that the contract states will be used.
Mortgages for locum doctors with less than two years’ accounts
If you don’t yet have two years worth of accounts, all is not lost. We recommend that any locum doctor with a limited track record should seek expert advice. Our specialist team at Think Plutus knows the mortgage lenders that will take applications on a case-by-case basis, and some lenders will accept just one years’ accounts. What’s more, our knowledge and experience will help you prepare an application with the minimum possible risk of problems arising.
Think Plutus has access to more than 10,000 mortgage products from over 100 lenders. We know the lenders that are more open to applications from locum doctors – there are even some who will consider an application with less than one year of accounts. We will help you find lenders that will consider your individual circumstances, including career history and current work. For specialist advice on mortgages for locum doctors, Think Plutus.