All About Home Loans for Doctors and Medical Professionals
The average Australian might think it’s easy to get a home loan when you’re a doctor. After all, ATO reports show that 5 out of the top 10 highest-paying jobs in Australia are all within the medical profession. But when it comes to home loans for doctors and other medical professionals, it’s not always that simple.
Doctors have to spend years studying, which can lead to substantial HECS/HELP debt. While newly qualified doctors could be earning a substantial wage, they may have been unable to save for a deposit while studying. And even though a doctor may receive substantial amounts of overtime pay, not all lenders will factor this in when calculating borrowing capacity.
Fortunately, there is a solution.
Home Loans for Doctors
As a medical doctor finally working in your chosen field, you’re understandably ready to start climbing the property ladder. But realistically, it could take you years to achieve this goal if you have to save for a 20% deposit first.
This is where doctor mortgage loans offer the perfect solution. A medical doctor mortgage is a specialised home loan tailored for medical professionals. It gives those in the medical profession access to favourable lending criteria customised to suit the unique needs of doctors.
So, what home loans for doctors are available? And how can a mortgage broker help with financing for doctors?
Why Do Lenders Offer Special Home Loans for Doctors?
Mortgage lenders are all about minimising risk. Every home loan application is carefully assessed for risk because lenders don’t want to issue loans to borrowers who will default on their repayments. Borrowers who work in the medical profession are typically deemed low-risk. This is because, statistically, doctors have some of the lowest mortgage default rates in the country.
Additionally, even qualified doctors who are just starting out will usually receive an income that is considered ‘above average’ for most first-home buyers. And as they develop more experience, this income is likely to grow.
So, when a lender looks at an application from a doctor, they see a low-risk borrower who has a high potential for ongoing future investment. This is why some lenders are willing to offer special home loan deals to those working in the medical profession.
What Are Doctor Mortgage Loans?
A home loan for doctors is a type of specialist mortgage product exclusively available to select medical professionals. It is characterised by having more relaxed qualifying criteria when compared with a typical home loan.
A medical doctor mortgage may also come with some great perks, such as discounted interest rates and more flexible loan terms. This is fantastic news for those in the medical profession who are ready to dip their toes into the real estate market, whether as a first home buyer or as an investor.
What Home Loans for Doctors Are Available?
There are a few different medical doctor mortgage products available for those working in the profession. Some lenders offer discounted interest rates, while others will relax the typical first-home buyer lending criteria. The most common home loans for doctors will usually include some of the following features:
- The option to borrow 105% of the total property value if you have a guarantor.
- The ability to apply for a loan with just a 5% deposit and no need to pay Lenders Mortgage Insurance (LMI).
- Relaxed criteria for accepting “genuine savings”.
To find out more about what home loans for doctors are currently being offered, contact the team at Professional Lending Solutions.
Lenders Mortgage Insurance Waiver on Home Loans for Doctors
A borrower is typically charged Lenders Mortgage Insurance if their deposit is lower than 20% of the property value. With LMI, a borrower will ultimately end up paying thousands of dollars extra on their mortgage.
This is where home loans for medical doctors and a medical mortgage broker become incredibly valuable. If a doctor is purchasing a property that they intend to occupy, their LMI could be waived for doctor mortgage loans up to 95% LVR (loan-to-value ratio). This means you’d only need to save for a 5% deposit.
While the LMI waiver can be an excellent option for first home buyer doctors, it’s important to keep in mind that specific lending criteria will still apply. Some lenders may impose postcode restrictions, meaning properties purchased in high-risk postcodes would not qualify for the LMI waiver. There may also be added restrictions on interest-only doctor mortgage loans.
The LMI waiver can apply for doctor mortgage loans up to the value of $4.5 million. This waiver is available with most home loans for doctors, provided you’re a member of an approved industry organisation. To find out more about specific eligibility requirements, talk to the experienced brokers at Professional Lending Solutions.
Eligibility Criteria: Who Qualifies for a Medical Doctor Mortgage?
Who can apply for a doctor mortgage loan? Eligibility criteria for exclusive discounts or LMI waivers will ultimately come down to your choice of lender. In general, lenders will be willing to accept applicants with a good credit history, stable employment, genuine savings and minimal debts (like credit cards or personal loans). They will also calculate borrowing capacity to ensure the borrower can service the value of the loan on their current income.
For medical professionals, eligibility must be verified on the Australian Health Practitioner Regulation Agency (AHPRA) website or, in the case of veterinarians, through a relevant veterinary board.
Typically, the following medical professionals will find that they are eligible to borrow a loan-to-value ratio of 95%, without having to pay for Lenders Mortgage Insurance.
- Doctors
- Dentist
- Optometrist
- Physiotherapist
- Psychiatrist
- Chiropractor
- Pharmacists
- Veterinarian
A Step-by-Step Guide to Applying for Home Loans for Doctors
1. Do the research: Start by identifying which lenders offer home loans tailored to medical professionals and review the specific eligibility criteria (to ensure you qualify).
2. Get your paperwork together: Collect the necessary paperwork that you’ll need to support your application. This usually includes:
- Proof of identity
- Proof of income
- Evidence of genuine savings
- Details of any existing debts
3. Confirm your status as a medical professional: Lenders providing home loans for medical doctors will require verification of your professional status, usually with the Australian Health Practitioner Regulation Agency.
- Choose a home loan product: Compare the various doctor mortgage loans available to identify which product aligns with your financial goals and offers favourable terms.
- Submit the application: Fill in the application form and attach the supporting documentation. Ensure all paperwork is complete and accurate before submitting.
- Approval and finalisation: The lender will assess the provided information to ensure you meet the eligibility criteria. Once approved, you’ll be provided with a contract to finalise the loan details.
- Settlement: It’s a good idea to work with legal professionals to ensure a smooth settlement process. Once settled, congratulations! You’re officially a homeowner!
Top 4 Tips when Applying for a Medical Doctor Mortgage
Applying for a home loan is one of the most significant financial decisions you’ll ever make. To ensure you make the best decision to suit your long-term financial needs, consider:
#1 Taking time to explore special features and discounts offered by lenders for medical professionals.
#2 Strengthen your application in advance by:
- Maintaining a good credit history.
- Obtaining stable employment and income.
- Building genuine savings.
- Minimising existing debts.
#3 Consider obtaining pre-approval before you start house hunting. This will give you a clear understanding of your borrowing capacity and strengthen your position when making offers.
#4 Talk to a broker who specialises in obtaining medical doctor mortgages.
How Can a Mortgage Broker Help with Finance for Doctors?
While it’s true that some lenders are willing to make special exceptions when it comes to finance options for doctors, this isn’t always the case. And not all lenders will offer the same deals, interest rates or loan structures on doctor mortgage loans.
To make sure you get the right home loan to suit your needs, the best thing to do is talk to a broker. This is because we can:
- Make sure you have access to the widest possible panel of lenders.
- Assess the various home loan products on offer and determine which represents the best solution for both your short- and long-term financial needs.
- Set up the loan in a way that will minimise complications should your circumstances change.
- Ensure you have access to the right home loan features (such as allowing for added repayments or the inclusion of an offset account).
How Can Professional Lending Solutions Help with Home Loans for Doctors?
At Professional Lending Solutions, we understand that, as a medical professional, you’re busy. You don’t keep standard office hours, and you don’t have time to waste on paperwork and unnecessary appointments. That’s why we offer flexible meeting arrangements that can accommodate your changing schedule. We’ll take care of everything relating to your application, and we won’t bother you with the little things.
In fact, we’ll jump through all the necessary hoops on your behalf (leaving you to get on with more important things). To find out more about home loans for doctors, book a virtual, phone or in-person appointment for a time that suits you.
Phil’s journey from banking to mortgage brokering reflects a career driven by a commitment to personalised service and tailored financial solutions. With a distinguished background in banking, including roles at NAB, ANZ and Lloyds TSB Bank in the UK, Phil spent 12 years developing expertise in personal and commercial finance, while also completing a Bachelor of Business (Finance), followed by an MBA majoring in International Business.