Unsurprisingly, one of the first things a mortgage lender will look at is an applicant’s income stream, but did you know that working in a certain profession might give you access to a specialist type of mortgage? If you’re an Architect, Solicitor, Barrister, Accountant, Actuary, Surveyor, Doctor, Dentist, Vet, Pharmacist, Teacher, Police Officer, Civil Servant or Military Officer you may qualify for what is termed a professional mortgage. But what do mortgages aimed at professionals offer that regular mortgages don’t? Our Founder & CEO Paul Welch tells us more…
Why are professional mortgages seen as specialist?
Professional mortgages usually offer several advantages and therefore they are a bespoke offering. That means they’re not generally available to mainstream brokers, and you usually need to work with a specialist mortgage adviser to access the full range of these products.
What are the benefits of a professional mortgage?
Professionals with a certain profile are considered a strong proposition by lenders and therefore private banks, building societies and mainstream banks who offer these products may be able to flex certain requirements to accommodate the client’s needs. Generally, we find professional mortgages will offer a slightly higher LTV and lenders may be more open to stretching income multiples. They may also offer lower fees to attract clients, and lenders will be more likely to take a view on certain issues such as fluctuating income, as they understand the business models certain professional work within.
What do lenders look for when offering a professional mortgage?
Generally, lenders are more open to understanding the circumstances of young, up and coming professionals who they can see are on a trajectory. For instance, a young GP with an ambitious borrowing target might not have the necessary income history for a mainstream lender if they had only been in a doctor’s partnership for a year. However, if presented correctly, a lender who regularly works with professionals would be able to grasp the future opportunity the client and their business presents, as long as the individual or practice/partnership can prove a previous solid track record.
Can I use bonus income when applying for a professional mortgage?
Generally, yes, bonus income is accepted by lenders who understand the profile of a professional. In COVID times, this is the type of restriction we have seen creeping in, purely because lenders are being more cautious. However, in the main, bonus or performance-related pay will still be considered by lenders who work with professionals and understand the different income structures employed by LLPs, for example. Often, we find professionals who approach us have been turned down for lending in the mainstream market and our understanding of the market allows them to find a solution which is tailored to their requirements and the structure of their remuneration.
Are certain professions seen as more attractive than others by lenders?
Certain lenders have a penchant for specific professions and there are even lenders set up to service the needs of certain professionals, such as teachers. In the main, lenders want to see realistic applications and proof of current and future income, which a specialist mortgage adviser will help you prepare. As a team, we work with these niche lenders on a regular basis, so we know what they’re looking for, the pitfalls they will spot and how we can best prepare and present our clients’ cases to ensure they’re considered fairly.
How has COVID-19 affected people looking for professional mortgages?
This area of lending has largely remained unchanged. Across the board, lenders are being cautious about LTVs, income multiples and bonus income and that means we have seen some clients approach us because their mainstream lending option has fallen through. Our access to specialists means we have generally been able to find them an option if we can help them prepare a strong application.
All mortgage applications are taking longer due to lender’s staff working from home, pent up demand and increased submissions due to the Stamp Duty holiday. Therefore, if you’re researching options, you need to consider your timescales very carefully and seek advice from your mortgage adviser.
What is your advice for professionals looking for a mortgage?
The future is very bright and solid. Yes, the economy has certainly taken a hit due to COVID, but certain professions have never been busier. No matter how complicated you think your situation is, pick up the phone and speak to an expert who can help you navigate the next steps you need to take. Usually, within the space of a few minutes, I can demystify the client’s situation and ask the questions I know the lender will need answered. That advice differs from case to case, so an individual approach is the way forward.
Lastly, be aware that the market is changing rapidly at the moment and some products are not staying on the market long-term. Therefore, you may need to act fast to access a lending option. We never like to rush our clients through any process and always caution against going quicker than they are comfortable with. However, it is the nature of the current environment. Therefore, if we’re advising you to act fast it’s purely due to market conditions outside our control.
If you’re a professional looking for a mortgage or you’re struggling to find a lender who understands the opportunity provided by your situation, don’t hesitate to get in touch with us.