You’ve probably heard stories from friends and colleagues (or heaven forbid experienced it yourself) of the trials and tribulations of trying to get a mortgage as a locum GP. You might have heard stories about the dreaded 4 hour phone interview with a mortgage adviser in a centralised call centre somewhere, only then to find it was a complete waste of time….AARGH!
Why can a locum GP mortgage be difficult?
Why is this happening?
Why is getting mortgages for doctors so difficult?
How do I get a mortgage to buy a house? Surely it can’t be that hard and why am I hearing people I know struggle?
Well my friend, we have helped a few locum GP’s all over the country and we have seen it all, so let me tell you why it is difficult and what you can do about it.
Not only will I tell you what to do, but I’ll also provide you with some free tips to help you prepare and ensure you don’t waste any time. Of course if you want to cut to the chase and speak to one of our mortgage brokers, just get in touch
Can you get a self employed locum mortgage?
How do I get a mortgage as a locum GP then?
Well I am going to throw the question, right back at you!
The first critical question you need to ask yourself is, can you actually get one? Of course, I’m not expecting you to know this answer right now, but this is the first critical step.
So let me help you work through it.
Mortgage lending criteria for locum GP’s
Cutting to the chase, a locum GP is self employed and that is critical!
So let’s forget about the fact you were employed and now you no longer are.
I know it’s a very secure job and there is an unlikelihood of people not getting ill! But unfortunately now you need to satisfy a lenders self employed criteria and getting a locum GP mortgage is not necessarily straight forward.
One of the major critical points here is how long have you been self employed?
Most lenders will require you to be at least two years self employed. However there are some lenders who will consider you with one full year self employment (one full year set of accounts). Even better there is sometimes the possibility of even less time, however it will depend on your circumstances and what you were doing before and what you are doing now.
As a locum you need to plan your income!
One of the next critical steps is establishing income and you need to plan ahead for this.
Just remember if you want to borrow money you need to have the income evidenced to prove it.
An accountant’s job is to file your tax return and legitimately reduce your tax liability by offsetting costs and I’m sure there are other great things they do too.
However a good accountant who understands the world we live in, now should also be seeing if you are planning to borrow money and make appropriate plans when it comes to your income.
For example someone who is Ltd (Director of their own Ltd company) may choose to take more dividends than they otherwise would to help with future borrowing needs. It is slightly different for those who are sole traders, however the principle is the same, plan ahead. Otherwise if you don’t, you might have to wait another year before you can do anything!
The challenges of getting a locum mortgage
Two Years self employment, two years full set of accounts – what’s the difference?
Just because you are two years self employed (sometimes one year or even less is okay too) doesn’t necessarily mean you can still get a mortgage. Sometimes lenders will require you not only to be self employed for two years but also have two full years set of accounts.
So what's the difference I hear you say between two years self employed and two years accounts?
Its all in the detail you see…lets say George has contacted us looking to see if he can get finance. He is of course a locum GP and started self employment in August 2012 so he has been self employed for 2 years and 6 months. Lets assume for now his year end is the same as the tax year (April to April).
In this scenario his first year set of accounts is only a part year (Aug 2012 – April 2013), and he has only completed one full tax year (April 2013 – April 2014). Of course in a few months time (assuming you read this blog in February 2015) he will have completed another full tax year, however if he wants to buy right now he can’t.
He has to wait until April even though right now he has been self employed for longer than the minimum requirement. Of course in reality waiting a few months might not be an issue, but you get my point.
Lets look at the exact same scenario, except this time George has a year end of December 31st (instead of April) for his business. In the previous scenario, George could not get the mortgage right now. However in this scenario he can. By having a different year end date, it has meant George has met the lenders criteria.
So you can see how having a different year end date for your business can have an impact when you are looking to satisfy the two full years set of accounts rule…but like I said there are lenders who do one year and less
So how do I get a mortgage as a locum GP?
Now you have planned ahead, your broker is speaking to your accountant and your accountant is actually speaking to them (shock horror, there are some good accountants that do actually speak to us), the income planned is looking good for the amount you hope to borrow. So once the accounts are submitted you need to:
- Request your SA302’s (a bit like a P60 for the self employed – don’t worry we can tell you how to get these).
- Get your signed Accounts
There are more things you will need, but I’m not going to bore you to death right now! However the documents above are key to evidencing income.
Now you have the correct documents, half the battle is won.
The key is to plan ahead, have someone plan with you and your accountant and get everyone working as a team for you.
With the correct documents in place, a mortgage adviser will be in a position to thoroughly research all your options and find the best solution for you. Without the correct documents it is all guess work.
Don't just rely on someone giving you a rough idea. You need a clear plan and strategy and a good mortgage broker can help guide you through this.
That’s it for your locum GP mortgage…Good luck
Now it’s time to say goodbye and wish you all the best with your exciting future.
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