As a new GP Partner can you get a Mortgage?

As a doctor or dentist in hospital service or an NHS practice, mortgages are relatively simple to arrange. New job roles, a growing family or family breakups are just a few reasons you may need to secure a new mortgage and move location. Whatever the reason, it can seem like a confusing time to be securing a new mortgage and once you have stepped into the prickly world of self-employment maybe as a new GP Partner, mortgages become far from straight forward.

Thanks to the Stamp Duty Holiday the property market has managed to keep afloat, and enable most to move home relatively unscathed during these difficult times. But as the ‘gold rush’ of the Stamp Duty Holiday falls away, mortgages will return to some sort of ‘normality’.Can a new GP Partner get a Mortgage?

What if you are a new GP partner – can you get a mortgage?

We have seen a sharp rise in one particular group seeking new mortgages: New GP Partners – you are, in terms of the world of finance, a true anomaly!  You’re self-employed, yet you are in an occupational pension scheme and have arguably more job security than your Locum colleagues. The cannier mortgage providers have realised this.  

So, if you are about to become a GP partner and want to take a new mortgage here are my top tips and myth busting facts to help you towards securing your new home.

1. You need 3 years accounts to secure a mortgage if you are self employed don’t you?

This is the ‘fact’ I hear most from all self employed clients. In part it is true but there are some exceptions and happily new GP partners are one of them. 

Of course you won’t be able to provide 3 years of accounts as a new GP partner, but if you are taking over the exact session of a departing partner their income can be used as a guidance for your future income. Also, if you are not taking on the exact role a letter from the practice accountant stating the estimated income and how these figures have been reached can be obtained. For example; Dr Bones has taken over 60% of Dr Sneeze’s sessions and duties, therefore their income will be 60% of Dr Sneeze’s income in 2019/20 of £x. 

This is not the case for all mortgage providers but we can help to make the application to the right lender for you. 

2. You fail the affordability test with a lender because of the loan you had to take to buy into the practice

It’s an annoying catch 22, but it may be worth rolling this into the mortgage if the equity and affordability allows. Plus there is no penalty for early repayment of the practice buy-in loan. The reason being that the practice loan will probably have a higher interest rate and be arranged over a shorter term than the mortgage. Both of these factors make the repayments of a practice loan more per month than the equivalent lending on the mortgage. This higher repayment is then taken into account in the affordability calculation. 

This isn’t always appropriate so take independent professional advice before doing this, but it’s worth working the figures through and discussing the option with your mortgage advisor

3. Think ahead

You may have been working for many years to become a partner and feel like you have finally done it, but now is the time to identify the next stage of life and work that into your mortgage. 

Don’t get into the idea of this being the ‘forever home’ – you may need to move again when your children reach school age, or need to be in catchment for that great state school. Or, are you privately educating them? Do you have room to build on or convert the house if your family’s needs change? Maybe your partner / spouse needs space to work from home now or in the future. 

Remember that life can ‘throw a curveball’ at times so it may be worth thinking long and hard before tying yourself to one mortgage rate and provider for a really long time, no matter how attractive that 10 year fixed rate looks.

4.  Get into good (financial) shape

Fear not, I don’t mean you need to start doing your best impression of Joe Wicks in Lockdown. I mean cut any unnecessary costs, pay the last bit off your student loan (yay!!), cancel unused direct debits and streamline your outgoings before applying. I’m a fan of getting my clients to annotate the bank statements so the mortgage underwriter can see what is a one off or regular outgoing, what is stopping and what will continue after the proposed mortgage is in place. 

It’s amazing how much money ‘leaks’ out of your bank when you aren’t watchful!

5.  Don’t forget buying a house brings with it other costs

Forget them and you may be on a sticky wicket! Although not exhaustive the list of cost includes:

  • Stamp duty (now it is reinstated)
  • Mortgage application costs
  • Legal and solicitor costs
  • Surveyor fees
  • Valuation fees
  • Estate agent fees
  • Electronic transfer fees
  • Removal costs

6.  Check how your credit rating is looking! 

As part of the mortgage application process your credit rating will be checked. If it’s poor, no matter how much deposit you have they will not lend to you. Contact one of the credit agencies and get a cheap or free copy of your credit report to check this out before applying. 

That way if you have any errors you can sort them out before you find and fall for your perfect house!

7.  What about if you get ill or die?

A morbid but necessary question. As a GP partner you will most probably have a practice contract stating you have 12 months guaranteed drawings in the event of illness, with liability for the costs of a Locum in the 12 months falling to you. If you are an NHS pension scheme member, you will also have the NHS Death in Service or Ill Health Retirement

Although these benefits are valuable they won’t be enough on their own. Don’t forget to speak to your specialist independent advisor to review your current Income Protection (replacement regular income in ill health), Life Protection (payment on death) and Critical Illness (payment of a lump sum on the diagnosis of a Critical Illness). 

Consider the protection as part of the costs of buying the house. It’s vital. How would you feel if a survey found the new house didn’t have secure foundations? Less inclined to buy it? Protection is the foundation of your financial portfolio. Don’t ignore it!

So, although ‘silly season’ may be over for some, and house removal companies may be about to take a well-earned holiday, for many ‘now’ is the right time to move. 

If you are a new GP Partner, or any other medic or dentists for that matter, make sure you take specialist advice from an independent advisor who can make sure you get the best rate with a lender who understands your occupation.

As always, we are happy to help.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

Have you tried to get a mortgage whilst self employed and had no luck? Let us know by adding a comment below.


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