“Should I wait until I buy a house before I go locum?” “Do I need 2 years of accounts to buy?” These are two of the most common questions I hear from doctors and dentists considering a move into locum work.
The good news is that getting a mortgage as a doctor or dentist is often more straightforward than many people think. Lenders generally understand medical careers and recognise the stability and earning potential. In many cases, your situation may be viewed more favourably than that of someone in a less predictable self-employed profession.
Locum work has many advantages, including flexible working patterns, greater control over your schedule and potentially, higher earnings. However, your journey to securing a mortgage can become more complex depending on how you’re paid and how long you’ve been working as a locum.
Being a locum does not prevent you from getting a mortgage; it simply means lenders may assess your income differently.
Two factors will dictate your mortgage pathway
When assessing a mortgage application from a locum doctor or dentist, lenders will typically focus on two key factors:
- How you are paid.
- How long you have been working as a locum.
PAYE
If you are paid via PAYE, in most cases, lenders will want to see at least 3 months’ payslips before considering a mortgage application. Those who have been in the role for less than 3 months, lenders may ask for evidence of your previous employment. This could include: previous payslips, your employment contract or P60. Sometimes a combination of all 3.
Because doctors often move between roles, specialist mortgage advice can help ensure lenders understand the continuity of your employment history.
Fixed-term contracts
As you go through your training as a resident doctor, you tend to work on fixed-term 12-month contracts. This is perfectly acceptable for a mortgage. However, challenges can arise if your current contract is close to ending and your next contract has not yet been issued. In these circumstances, some lenders may require the new contract before proceeding, while others may accept a letter confirming your future employment.
As specialist advisers, we understand that NHS contracts do not always arrive on time. Where possible, we will explore alternative solutions to keep your application moving forward.
Self-employed through an agency
Some agencies engage locum doctors on a self-employed basis.
If you’re paid through PAYE, lenders will assess your application in the same way as any other employed applicant.
If you are genuinely self-employed, most lenders will require:
- 2 years of full accounts in the form of SA302.
- Corresponding Tax Calculations from HMRC.
These documents can be obtained from your accountant or downloaded from the HMRC website. Standard tax returns are not usually sufficient.
However, there are a small number of providers that may consider just 1 year’s accounts, but this is far less common and depends on individual circumstances.
Self-employed via a Limited Company
Some locum doctors choose to operate through a limited company. In this scenario, most lenders will assess affordability based on the salary and dividends you personally draw from the company. Money retained within the company is not usually included in affordability calculations.
There are only a handful of providers that will use retained monies held in a limited company, and their rates are not always competitive.
Should you wait until after buying a house to go locum?
No single answer suits everyone.
If you’re planning to buy a property in the near future, remaining in a PAYE position until after completion can sometimes make the mortgage process simpler. However, this should be balanced against your career goals, earning potential and lifestyle preferences.
Also, do consider any dip in income that may occur while you transition to locum work, as your mortgage payments will still be due even if your locum work is low for a period.
Why having the right accountant matters
Those who are self-employed, having an accountant can make a significant difference.
A medical specialist accountant will understand the complexities of NHS and locum income and can help structure your finances tax-efficiently while ensuring the documentation lenders require is readily available.
During the mortgage application process, lenders may ask for a letter from your accountant to verify your income. Having an accountant who understands medical professionals can help avoid unnecessary delays.
Specialist advice can make a difference
By now, it’s probably pretty clear that knowledge of the career paths and income structures of doctors and dentists is crucial when organising mortgages. What may appear unusual to a lender is often completely normal within the medical profession.
With decades of experience advising doctors and dentists, we understand the challenges, opportunities and common pitfalls that can arise when applying for a mortgage as a locum.
As independent specialist advisers with access to the whole mortgage market, we can identify the most suitable lender for you and your requirements. We want to make sure we find the best mortgage for you at the best rate.
Whether you’re actively looking to buy a property, planning a move, or simply considering a transition into locum work, we’re happy to discuss your options and help you plan.
We are always here to help.
Always remember that your home may be repossessed if you do not keep up with your mortgage repayments.