How To Get A Mortgage As A Locum Doctor
This article was written with contributions from expert mortgage advisors. For contact details of the experts and definitions of key terms, see the bottom of this article.
Let’s face it, most doctors don’t fully understand ‘legal’ or ‘finance’ talk. This is particularly true when it comes to mortgages. We are scientists, and while the World of Home Ownership is an alluring destination, we are stuck at the border negotiating with a guard whose whose language we don’t speak.
It doesn’t help that doctors’ work patterns and careers are incomprehensible to most, and for locums in particular, can change at a moments notice. Many mortgage lenders find that very hard to comprehend and therefore, locum doctors can struggle obtaining mortgages when it comes time to buy a house.
Despite having the savings and the income to afford to buy a property, successfully getting a mortgage means being able to navigate the red tape that comes with the application and many mortgage lenders just flat out won’t consider you at all.
We spoke to two mortgage advisors, one of whom specialises in locum doctor clients, to answer all of your mortgage-related questions and give advice on how to best set yourself up for success in obtaining a mortgage as a non-training doctor.
In this article you will learn:
👉 What lenders are looking for when deciding whether to make you a mortgage offer.
👉 What are the common difficulties that locums face when applying for mortgages?
👉 How locum doctors can put themselves in a strong position to get a good mortgage offer.
👉 Top tips from the experts in getting your mortgage as a locum.
Note: This article is specifically aimed at locum doctors who work through agencies or staff banks but not those who work as sole traders or through limited companies. If you want to know how being a sole trader or limited company affects your mortgage application, read this article.
If you want to know how doctors on fixed-term contracts such as clinical fellows or trust grade doctors can get a mortgage, then head over to this article here.
What are the main factors that determine whether a locum doctor can get a mortgage?
There are three things that mortgage lenders care about most:
✅ Income: Do you earn enough to pay back the mortgage and the interest? An affordability calculation is done to check that you can make the payments.
✅ Employment History: The length of time that you have been working matters, and whether that employment has been steady without fluctuations in earnings.
✅ Debts: Are there any major debts or commitments that would make this mortgage unaffordable?
What issues do locums typically encounter?
Usually, locum doctors struggle to demonstrate stable income and good employment history as, by its nature, locum work can vary from month to month.
Try to schedule your work in the months before you apply for your mortgage, to show the highest and most stable income that you can.
How much can I typically borrow?
The amount that you can borrow will vary from lender to lender, and depends on lots of factors but as a general guideline the amount may be somewhere around 4x your annual salary but in some cases can be up to 6x.
Some lenders have calculators on their websites to give you a rough idea of how much they may offer, but this is more of a guideline than a promise!
Over what period is income assessed?
Depending on the lender, it varies how far mortgage lenders look back over your income history. As a minimum, it is 3 months. But the longer you have to look back on, the more mortgage lender options you may have.
What is the biggest mistake that locum doctors make before applying for a mortgage?
The worst thing to do is to work really hard and earn lots of money, and then take a few weeks off before trying to buy a house.
It looks really bad when the mortgage lenders are basing the affordability calculation on the last 3 months of payslips and one of them shows significantly lower earnings than usual.
In some circumstances, there may be other ways to do the affordability calculation, but sometimes you may simply need to wait until you have at least 3 months of consistent earnings.
Consider this scenario of three different doctors:
Dr. A travelled for 6 months in F3 and then came back to locum and earned £50,000 in 6 months.
Dr. B started locuming part-time right away and earned £50,000 over 12 months by working consistently.
Dr. C locumed for 6 months and earned £50,000, and then spent 6 months travelling.
Which doctor would be most likely to get a mortgage?
While all three of the locum doctors have earned the same amount of money in the last year, there is one who would appear much better to a mortgage lender, and one who would almost certainly not be able to get a mortgage at all. It all comes down to the affordability assessment.
When mortgage lenders look back at your earnings over the last 3 - 6 months, they like to see a positive trend or at least consistency, but certainly not a negative trend.
👉 Dr. A would look best to a mortgage lender (who is happy to accept only 6 months of payslips) because their salary over the last six months would be annualised as 100K.
👉 Dr. B would be able to get a good mortgage too, because they could demonstrate consistency of earnings (and they may also have more lender options as they can provide 12 months of payslips).
👉 Dr. C would be unlikely to get a mortgage at all, as their income over the 3-6 months prior to buying the house would be £0.
However, this is not true if the doctors are registered as sole traders or are working through a limited company. To see how this would be different, read this article on how to get a mortgage as a sole trader or limited company.
Can I get a Mortgage in Principle / Agreement (MIP/MIA) as a locum?
Mortgages in Principle or Mortgages in Agreement (MIPs or MIAs) prove the seriousness and readiness of a buyer to estate agents.
Locum doctors can get MIPs/MIAs but it can be tricky when your income changes monthly. Working with a mortgage advisor to get all of your paperwork prepared in advance of putting in an offer can increase your chances of a successful bid.
How much deposit do I need?
In most cases, a deposit of 10% of the property price will be sufficient, although some mortgages are available with just a 5% deposit.
The advantage of a bigger deposit is that the loan from the bank is a lower proportion of the value of the house (known as the loan-to-value ratio). This generally means better interest rates, making the mortgage cheaper over the long term.
Do locum doctors have to accept worse mortgage rates than contracted doctors?
While it is true that locum doctors do often have a restricted panel of mortgage lenders to choose from, it is not true that this results in worse mortgage rates.
Conventional, big high street lenders are often rigid in their lending criteria and have so much red tape that it is very hard to meet their strict specifications.
Specialist lenders, who also offer very good mortgages, can be very flexible and open-minded in their assessments of an individual and are willing to look past the non-conventionality of doctors' work patterns and contracts.
Sometimes, specialist lenders have better rates than high-street lenders so even if you have the option of either, you may still choose to go with the specialist lender. It just depends on what is available at the time. Just because you have fewer options doesn’t mean you have worse options.
Do I need to worry about my expenses?
As part of your affordability assessment, lenders look at your outgoings and financial obligations. This includes any debt, student loans, and regular payments like school fees and car finance.
It is worth reviewing your monthly outgoings to ensure that you are being frugal with your expenses and consider not taking on new debts or big expenses in the 3-6 months prior to applying for a loan.
How can I improve my credit score?
Doctors’ busy working patterns can make staying on top of finances more difficult, particularly if you need to phone services to challenge or pay bills.
Generally, lower credit scores among doctors result from a marriage breakdown or very unique personal circumstances. Doing a soft credit check to optimise your credit score can be helpful.
Using a credit scoring platform such as ClearScore will give you insight into your credit report and tell you where your credit weaknesses lie.
Simple things that you can to do improve your credit score are:
✅ Obtain a credit card that you use and then pay it off in full each month.
✅ Register your details on the electoral roll.
✅ Pay any outstanding debts or charges in full and on time.
✅ Ensure that lenders providing a mortgage in principal are only doing soft credit checks as lots of hard credit checks done around the same time can damage your score.
What about if you are buying the house with a partner who is not a doctor?
If your partner is a very high earner on a permanent contract, you may be able to use their income alone to obtain the mortgage to purchase the property. If you can do this, then you would be able to use any mainstream lender without the restrictions of needing a specialist lender.
However, if you need to factor your income into the mortgage calculation, then the rules of needing a specialist lender still apply (for both of you).
What if you are a foreign national doctor on a visa?
There may be red tape around what type of visa you are on and how long is left on it, how many years of employment or address history you need to provide, and whether or not you can use a gifted deposit.
Again, each mortgage lender has their own stipulations in what documentation they want to see, so speaking to a mortgage advisor for bespoke advice would help.
What is an SA302 and do I need one?
An SA302 is a tax calculation for the HM Revenue and Customs (HMRC) that is filed annually as part of a self-assessment tax return. You only get one of these if you are self-employed - if you are only paid PAYE through your hospital or agency then you do not need to worry about this.
If you have one, this document is often requested by the bank as part of the proof of income.
To read more about mortgages for sole traders or limited companies, click here.
What are your top tips for locums looking to get a mortgage?
If you want to take a long time off work, do that first so that you don't have £0 income in the 3-6 month period being assessed by the mortgage lender. Once you start working, aim for a continual and steady income each month and think about how your monthly income trend will look to a lender.
🙌 Maximise your earnings in the months leading up to applying for the mortgage and purchasing the house. You don’t need to work yourself to death, but doing as much as you can manage will maximise how much you can borrow. Check out our locum salary calculator to figure out how much you can earn as a locum.
🙌 Save at least a 10% deposit but remember that a larger deposit can get you better interest rates.
🙌 Optimise your credit score to put you in a strong position with lenders.
🙌 Timing matters when you are a locum doctor. Get in touch with a mortgage advisor as soon as you decide you want to buy a home.
🙌 Income protection and life insurance are vital as you won’t have any sick pay benefits from employment as a locum doctor. Make sure that once you have the mortgage, you have the means to continue to pay it each month, even if you have to unexpectedly stop working.
Finally, why should locum doctors hire a specialist mortgage advisor?
Often, working with a mortgage advisor will save you time and stress, and provide you invaluable help in securing a mortgage.
While some mortgage advisors do charge a fee for their services, some do not. Instead, their business is based on their reputation for getting clients the absolute best mortgages that they can get, without costing their clients anything.
They get paid by the mortgage lender when a mortgage goes through (it’s called a nomination fee and is pretty much the same whatever lender you go with so they are not incentivised by commission or sending you to a lender that will pay them more).
If you want to know more about mortgages for clinical fellows and trust grade doctors then check out this article.
If you want to know more about mortgages for doctors working as a sole trader or a limited company then check out this article.
Barry Jeans is a mortgage advisor at Medical & Professional Investment and has worked in the industry for 30 years. For nearly a decade he has specialised almost exclusively in mortgages for doctors, and non-training locum doctors makes up a large proportion of his client base. www.doctorsmortgagesonline.co.uk, www.mpionline.org.uk, firstname.lastname@example.org
Solomon Tourgeman is a mortgage advisor at Kudos Mortgages. He has been worked in the industry for 5 years, with clients all over the UK from a variety of career backgrounds. www.kudosmortgages.com, email@example.com
Nothing in this article constitutes professional and/or financial advice, nor does any information constitute a comprehensive overview of the issues relating to mortgages for doctors. Please do your own research.
Definition of Terms
Fixed-Term Contractor - A doctor who is employed with a contract that has a defined end date. This could be a training doctor, a clinical fellow, trust grade doctor, or a doctor working in a private company.
Locum - A doctor who works irregular shifts to cover rota gaps. This can be done through a bank or an agency, as a sole trader, or through a limited company.
Mainstream Lender / High Street Lender - A more well known mortgage lender, such as the names of the banks you might recognise on the high-street.
Mortgage - A mortgage is the name given to a loan specifically for the purpose of buying a property. They are regulated and secured to the property you buy. This means that if you don't repay the loan, the mortgage lender can repossess the house to sell it and recover the money owed to them.
Mortgage Advisor / Broker - A professional person who assists a client in finding and applying for a mortgage, and liases between the mortgage lender and the mortgage applicant.
Mortgage Lender - The bank or building society that is providing the mortgage loan.
SA302 - A Tax Calculation for HMRC that is filed annually if you are working as a sole trader or limited company. It is an overview of your personal tax return, not your company tax return.
Specialist lender - A mortgage lender that caters to applicants with a specialist type of income. This may still be a mainstream lender but the term is used to describe how flexible they can be in who can apply to them for a mortgage.
Your Ultimate Guide to Succeeding as a Locum Doctor
This article is part of a wider series of resources and guides that are designed to support you as a locum doctor, covering areas such as getting your first job, managing your finances, understanding your rights, and many more.
Additionally, if you're considering an F3 year, you might also find it useful to look through the selection of resources we've put together in our F3 Resource Hub.
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