Many medical professionals are often stumped on how to get a home loan.
One of the most common questions is whether or not you can apply for a specific home loan as a medical professional.
The answer is yes!
Home loans for medical professionals differ from those who work in other professions.
As medical professionals earn consistently higher incomes, home loans for medical professionals come with more perks and benefits than standard home loans.
For example, home loans for doctors, dentists, medical research scientists or any other medical practitioners registered with the Australian Medical Council or the Australian Dental Council could allow them to buy their home sooner than they had initially planned.
So, here are three main home loan benefits you can qualify for as a medical professional.
What Are the Benefits of a Medical Professional Home Loan?
Home loans for medical professionals have three main perks, each of these home loan perks come with their benefits:
- Waived lenders mortgage insurance (LMI)
- Higher maximum borrowing capacity with no LMI
- Discounted interest rates and fees
How Waiving Lenders Mortgage Insurance Can Save You Money
Lenders mortgage insurance is a policy lenders take out on a home loan to protect them against a borrower defaulting on repayments – this is generally a cost to the borrower.
Lenders consider a 20% home loan deposit sufficient enough to avoid paying lenders mortgage insurance. If the borrower can no longer honour their home loan mortgage repayments, the house can be repossessed, and the 20% deposit can cover any depreciation on the property value, legal and selling cost.
Capitalising lenders mortgage insurance could cost you in the long run due to interest charges on the premium, that’s why many people try to waive their lender’s mortgage insurance or save up enough to avoid, or at least minimise it.
Fortunately, certain medical professionals don’t need to pay 20% deposit while getting lenders mortgage insurance waived, they could pay as little as 5% deposit and pay zero lenders mortgage insurance.
The notion behind LMI waiver is that lenders and banks typically consider medical professionals low-risk borrowers because they are generally higher income-earning individuals. Their incomes are usually stable so they represent a lower risk for defaulting on their loans.
Why Would You Want a Higher Maximum Borrowing Capacity With No LMI?
While your exact borrowing capacity depends on your personal financial situation, medical professionals who belong to the Medical Practitioners Board can borrow up to $5 million.
Home loans for medical professionals can offer a high LVR of up to 100% of the property value – with zero lender’s mortgage insurance provided that they are eligible for “Gap” finance.
The most significant benefit of a high borrowing power is that it allows medical professionals to take out a home loan and buy property sooner, as it’s a benefit where they can borrow to cover some or all of the deposit, rather than having to wait until they’ve saved up enough money.
Therefore, the only things needing to be paid upfront for the home loan are:
- legal fees;
- stamp duty;
- statutory charges; and
- transaction costs.
What Discounted Interest Rates and Fees Are Available to Medical Professionals?
Lenders assess medical professionals as unlikely to default on their mortgage repayments and see them as lower risk. Therefore they’re awarded lower interest rates based on their higher LVR in comparison to others.
In turn, this could provide a boost in borrowing capacity because of the lower interest rate used for assessment.
The rule of thumb is, most professionals and everyday consumers are immediately eligible for a discount to their final interest rate, it’s just a matter of what LVR your end loan is. But medical professions under this package generally are provided with a larger discount.
How a Specialised Mortgage Broker Can Help
At the Mortgage Agency, we don’t just see you as a number. We build personal relationships with all our clients to establish their current financial position and property goals and aspirations.
We have extensive experience working with home loans for professionals, and in particular, loans for doctors.
We know precisely what home loan benefits you are eligible for, such as discounted interest rates and what products best suit you. Lenders have an appetite for borrowers within certain professional fields, thus we know how to work this to our advantage.
Our mortgage brokers can assist you with which documentation is needed for different home loans, including an owner-occupied home or investment property. The better your home loan application is packaged up, the more likely you are to receive approval.
Home loans for medical professionals offer this elite group the opportunity to buy a home sooner and save money simultaneously.
Standard loans require lenders mortgage insurance when the deposit is less than 20%, while if you have a 20% deposit or have a guarantor to cover the 20% deposit, no LMI is payable. Medical professionals can avoid lenders mortgage insurance completely and receive home loans of up to 100% without having to fork out any deposit.
You might think that you can’t afford to buy a home just yet, but we’re here to help you reach your goals sooner rather than later. We assess your current financial situation and provide you with manageable, actionable steps under our guidance.
To find out how much you can save on a home loan as a medical professional, contact a specialist mortgage broker in this field today.
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.