What is a Professional Mortgage?
Professionals, including doctors, lawyers, accountants, engineers, architects, dentists, and other similarly qualified individuals, often face unique hurdles in the mortgage market.
That's where a professional mortgage comes in, designed specifically for their needs, offering the potential to borrow a higher multiple of your gross annual income, with some lenders offering up to six times. These hurdles and needs can include:
- Complex Income Structures: Fluctuating bonuses, self-employment income, and partnership shares can be difficult for traditional lenders to assess.
- Student Loan Debt: Large student loan balances can impact affordability calculations, even with high earnings.
- Career Transitions: Moving between roles or starting a private practice can create gaps in employment history that lenders may view negatively.
- Cost of Living: Professionals often live in expensive cities, requiring larger loans and higher deposits.
Traditional mortgage lenders sometimes struggle to understand these nuances, leading to frustrating rejections or less-than-ideal loan terms.
For example, lenders may use more flexible underwriting criteria that consider your long-term earning potential rather than just your current income. They may also offer higher loan-to-income ratios, allowing you to borrow more, and potentially better interest rates, recognising the lower risk profile of professionals.
Mortgage lending is subject to individual circumstances and lender criteria. Speak to a professional mortgage broker for personalised advice.
Who is eligible for a Professional Mortgage?
What is a 'Working Professional'?
For the purposes of professional mortgages, a "working professional" typically refers to individuals who have attained a recognised professional qualification and are actively working in their field.
This often involves membership in a professional body or registration with a regulatory council. The key is that their profession requires specialised knowledge, skills, and often a formal qualification. This is why these mortgages are tailored to them – their qualifications indicate a stable and high earning potential.
- Medical Professionals: Doctors (including GPs, specialists, and consultants), dentists, surgeons, pharmacists, veterinarians, and other licensed healthcare practitioners.
- Legal Professionals: Solicitors, barristers, judges, and other qualified legal professionals.
- Financial Professionals: Accountants (chartered, certified, etc.), financial advisors, investment managers, actuaries, and other qualified finance professionals.
- Engineers: Chartered engineers, civil engineers, electrical engineers, mechanical engineers, and other similarly qualified engineering professionals.
- Architects: Registered architects.
- Other Professionals: This category can include professionals in fields like education (university professors, lecturers), technology (highly skilled software developers, data scientists), and other specialised areas. Eligibility often depends on the specific lender and the individual's qualifications and earning potential.
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Which profession suits your situation?
Professional mortgages are typically designed for individuals with stable and high earning potential in recognised professions.
This includes both employed and self-employed professionals. While specific eligibility criteria vary between lenders, the following professions are commonly considered:
Important qualification notes
- Purchase applications only.
- Maximum 6x income multiplier.
- Minimum income requirement for the professional applicant is £35,000.
- Joint applications are acceptable but at least 1 applicant must be a professional and the professional must meet the minimum requirement.
It's important to note that this list is not exhaustive, and some lenders may consider other professions. If your profession isn't listed, it's still worth contacting a mortgage broker to explore your options.
Mortgage Lender Criteria: How much can you borrow for a Professional Mortgage?
Lenders assess professionals based on a range of criteria, some of which are tailored to the unique circumstances of their professions. These same criteria directly influence how much you can borrow:
Income History and Projections
Lenders will look at your past income (typically the last 2-3 years) and, importantly, your future earning potential.
They understand that professional income can fluctuate, so they often take a longer-term view.
Professional Qualifications
Your professional certifications, licenses, and registrations are crucial. They demonstrate your expertise and commitment to your field.
Credit Score
Good credit indicates responsible financial management.
Debt-to-Income Ratio (DTI)
Lenders calculate your DTI to assess your ability to manage debt. Professionals often have higher DTIs due to student loans, so lenders may be more flexible if they see a clear path to debt repayment.
Employment History
Career transitions are common for professionals; lenders will want to see a history of stable employment or a clear plan for self-employment.
Deposit
The required deposit can vary, but some professional mortgages may offer lower deposit options, recognising the financial constraints professionals may face early in their careers.
Loan-to-value (LTV) ratios
Professional Mortgages can offer generous LTV ratios. For example, a newly qualified doctor with a stable employment contract and a good credit score might be eligible for a 95% LTV mortgage.
This would allow them to purchase a £600,000 property with a deposit of just £30,000.
Conversely, a self-employed accountant with a fluctuating income history might initially qualify for a lower LTV, such as 80%, requiring a larger deposit.
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Can you get a Professional Mortgage if you have debt?
Many professionals, especially those early in their careers, carry significant debt, often in the form of student loans. This can be a major concern when applying for a mortgage.
Student Loans
These are a common type of debt for professionals. Lenders do not consider student loans as negatively impacting your creditworthiness, unlike other forms of unsecured debt such as credit card balances, personal loans, or overdrafts.
However, they do affect affordability, which is a lender's calculation of whether you can comfortably manage mortgage repayments alongside your existing financial commitments, including potential interest rate rises.
Lenders consider monthly student loan repayments as regular expenses, directly impacting the amount they're willing to lend. The size of the total student loan doesn't matter as much as the monthly repayment amount.
For example, even if two professionals have similar salaries, the one with lower monthly student loan repayments may be able to borrow more for a mortgage. It is therefore important to understand how your student loan repayment plan will affect your mortgage affordability and to discuss this with your mortgage broker.
Debt considerations
- Credit Card Debt: Outstanding credit card balances are taken into account. Lenders will look at the total balance and your history of making payments. Keeping credit card debt under control is important for demonstrating financial responsibility.
- Personal Loans: Any outstanding personal loans will be considered. Lenders will assess the loan terms and monthly payments.
- Car Loans: Similar to personal loans, car loans are factored into the affordability assessment.
- Other Debt: Any other outstanding debt, such as overdrafts, late phone bill payments, or other loans, will be considered.
Credit utilisation
It is important to maintain low credit utilisation. This means only spending a small percentage of your available credit. Ideally, you should aim to keep your credit utilisation below 30%.
Spending over 50% of your credit limit can negatively impact your credit score. Conversely, using your credit card for small purchases and paying them off promptly can positively affect your score.
How to apply for a Professional Mortgage
Applying for a professional mortgage can be a bit different from a traditional mortgage application. Here's a step-by-step guide:
- 1
Gather your documents
- Proof of Identity: Passport, driver's license, etc.
- Proof of Address: Recent utility bills, bank statements, etc.
- Proof of Income: Payslips, P60s, tax returns, etc.
- Self-Employed Professionals: Additional documentation might be required, such as accounts, business plans, and profit and loss statements.
- Student Loan Information: Provide details of your student loan debt, including the lender, balance, and repayment plan.
- Deposit: Have your deposit funds ready.
- Other Financial Documents: This may include bank statements, credit card statements, etc.
- 2
Contact a Mortgage Broker and choose a lender
- Research lenders specialising in professional mortgages: Look for lenders with experience and expertise in serving the needs of professionals.
- Compare rates and terms: Shop around to find the best deal.
- Use a mortgage broker: A broker can help you compare offers from multiple lenders and negotiate the best terms. They can also protect you from negatively affecting your credit score, as any rejections are recorded for 6 months.
- 3
Get a Mortgage in Principle or pre-approval and complete your application
- A pre-approval letter is a soft credit check and does not affect your credit score, it gives you a clear idea of how much you can borrow and helps streamline the application process.
- Most lenders will require you to fill out a mortgage in principle application form before proceeding with a full application.
- 4
Solicitor Instruction and Application
- Before your mortgage is approved, you'll need to instruct a conveyancing solicitor to handle the legal aspects of the property purchase.
- Once the conveyancing process is complete, you can exchange contracts and complete the purchase.
- 5
Underwriting, valuation, and approval
- The lender will review your application and assess your creditworthiness and affordability.
- This process can take a few weeks.
- The property will be valued using a RICS-accredited surveyor (usually commissioned by the lender and typically paid for by you).
- Once the mortgage is approved, you will receive an offer.
Additional Tips
- Start early: Allow plenty of time for the application process, especially if you have complex finances or are self-employed.
- Use a mortgage broker: A broker can guide you through the process, negotiate better terms, and handle the paperwork on your behalf. They will also steer you away from mortgage products for which you're unlikely to be accepted.
- Be prepared for questions: Lenders may ask you detailed questions about your income, expenses, and financial history.
Our brokers will present the best options available to you, for any type of mortgage, including:
- First-time buyers, home movers and buy-to-lets;
- Employed; self-employed or director mortages;
- Mortgages for non-UK residents or non-UK citizens;
- Bridging loans;
- Bad credit mortgages;
- Guarantor mortgages;
- Joint borrower, sole proprietor mortgages; and
- Absolute, Possessory, Good, or Qualified Title.
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