Mortgages for Locum Doctors

Why can getting a mortgage seem harder as a locum?

Mortgage lenders need to be able to demonstrate that any borrower can afford the mortgage now – and in the future. One of the main issues a locum doctor faces is proving to lenders that (even though you’re self employed) you have a stable, regular income. Lenders will need to see evidence of your income beforedeciding to lend to you. That’s easy to show if you’re in full time employment, but can be harder if you’re self employed.

How are you paid?

Self employed

If you’re self employed, operating as a sole trader, lenders may look at the net profit of your business shown on your accounts. Alternatively lenders may accept your latest two self-assessment forms, known as SA302s, which are a bit like P60s for the self employed from the HMRC. As self employed borrowers’ income can fluctuate (as opposed to a fixed, basic salary) mortgage lenders may ask to see evidence of income over a longer period of time.

Limited company

If you work as a locum through your own limited company, lenders will usually take both your salary and any dividends you’ve received into account when working out how big a mortgage they’re prepared to offer you. As with sole traders you’ll normally need accounts or SA302s to prove your income.

PAYE

If you’re paid directly by your NHS Trust - with tax and national insurance deducted - lenders will look at the figures on your payslip and P60. It’s worth ensuring you keep all of your payslips going back as long as possible, the better the track record of steady work you can prove the easier it will be to get a mortgage and generally you'll need at least a 12 month track record.

Umbrella Company

Different lenders have varying approaches to people working via umbrella companies. Locums are often asked for a P60 and three months’ payslips when applying for a mortgage, however this doesn’t always represent the true value of the contract in place. Instead of payslips, some lenders will look at the contract you have and will work out how much you can borrow, typically using around 80% of the annualised income stated on the contract,Regardless of your employment type lenders may ask to see proof of your income. If you have your paperwork, it’s a good idea to keep it all to hand – ready for your mortgage application stage.

What if you’ve been a locum doctor for less than two years?

So, you don’t have a full two years worth of accounts? Don’t despair. Our message to locum doctors with a limited track history is ‘seek advice’ – a broker will be able to let you know which mortgage lenders take a more pragmatic approach. They will also have plenty of experience finding mortgages for locum doctors and so will understand how to avoid any potential pitfalls. L&C Mortgages work with a number of lenders who take a more flexible approach when lending to locum doctors - and even accept applications from locums with less than one years’ history. Their decision to lend to you will depend on your individual situation, including your career history and what you are currently doing.

Ways to boost your credit score

Remember that when you submit your application, lenders will check your credit score to see if you’ve managed debts responsibly in the past. Here are a few things that you can do to boost your credit score in preparation. For more tips and advice like this, check out our Facebook page, LinkedIn page or follow us on Twitter.