Doing additional hours and shifts through locum work can be a great way to top up your income. Providing you can prove to the lender that the income is regular and sustainable it will be considered for a mortgage application. The lender is likely to take an average over the last few months or potentially even the last year, typically evidenced through a P60 or payslips.
If you are a full-time locum, a lender will typically want to see a work history of 12 months to evidence the sustainability of the income.
Our depth of knowledge and expertise in the mortgage market will help us find the right lender for your circumstances to maximise your income to achieve the best mortgage for your circumstances
The information contained in your credit file will influence which lenders will be available to you. If you have had late or missed payments this may mean certain lenders are unwilling to accept your application. If your credit history has more severe issues such as multiple missed payments, defaults, debt repayment plans, etc. this will make finding a lender significantly harder.
One of the first things we would recommend if you believe you have an issue with your credit file is to send us a copy of your credit report. We will then be able to analyse the report and let you know what issues will potentially cause you a problem with lenders. It is important that we see the report so that we know exact dates and amounts when certain events have happened. Once we have this information we will then be able to try and find a lender who would be willing to consider your application.
Generally, the more severe the issues are in your credit file the greater risk a lender is perceived to be taking. As a result, the interest rate they will want to charge you is highly likely to be higher than if you had no issues with your credit file, although this is not always the case and depends on the severity of the issue.
In most cases we are able to find a lender that will be willing to lend, and you will then have a decision to make as to whether you are prepared to pay a premium in the rate or product charges that the lender will charge. We cannot guarantee this will always be the case, but we can assure you that we will be extremely diligent in the work we do to find the best lender for your circumstances.
Due to the additional work that is involved we often increase our usual broker fee, however we are committed to our fee costing a maximum of £1,000. However, this is not always the case and once we have seen a copy of your credit file we will advise if this is necessary. No fee is payable upfront, and we offer a free initial service to look into your situation. It is only when we submit an application does the first half of our broker fee become payable.
Some Healthcare Professionals are self-employed and paid a daily rate. In recent years lenders have introduced a simplified way of calculating your income rather than the traditional way self-employed clients are typically assessed. The exact calculation varies by lender but typically involves multiplying by 5 (weekly rate) and then by a certain number of weeks. This simple calculation then provides a gross income figure that will be used to evidence your earnings.
Each lender then has other specific requirements that you will need to meet which is likely to include at least the following:
An advantage of this method of calculating your income is that your current day rate is used meaning your gross annual income for the year is used before any costs and tax are taken into account by your limited company. Typically, the latest years income is used so historic earnings are discounted which might be lower and you don’t always have to have a long history of contracting. For instance, one lender can lend as soon as you start contracting providing you have worked in the professional field previously.
Once we have assessed your income we may advise that it is better to calculate your income in the traditional method. This may add some complexity but there may be an advantage of allowing you to use a lender who has a preferential rate. Our experienced brokers will be able to look at all the options and have a discussion with you about which way you would prefer to approach your situation.
One final point to note is there is no such thing as a contractor mortgage. The terminology only refers to the method in which your income will be calculated.
Many of our clients have moved from abroad to come and work in the UK. The opportunity to purchase a home in the UK is possible for many circumstances and an experienced broker will be able to find a lender willing to lend in most circumstances.
Because of EU law all EU citizens will be considered for a mortgage in the UK provided they are employed in a permanent role and they currently reside in the UK. The longer you have lived in the UK the more lenders will be available to you. If you are self-employed then you will need to evidence at least one year’s income.
For clients that are in the UK from outside Europe then restrictions can apply, and your visa status will be an important factor. If you have an indefinite right to remain then you will be treated as a permanent UK citizen by all lenders. If you don’t have indefinite right to remain then the majority of lenders will cap the Loan To Value (LTV) to 75%, however we have access to certain lenders that maybe willing to lend at a 95% LTV depending on individual circumstances.
As a qualified professional there are lenders who have tailored their mortgage products & underwriting giving you access to additional lending and competitive products. Typically, when applying for a mortgage you can achieve a mortgage of around 4.5 to 5 times your annual income. As a professional there are lenders available who will potentially lend up to 5.5 times your income. With certain lenders there may be more attractive products available as a professional client.
The definition of a professional will vary by lender but will typically include Dentists, Doctors, Optometrists, Pharmacists, and Vets
Many Healthcare Professionals are classified as being self-employed. This is an added layer of complexity when evidencing your income, but it doesn’t have to be complicated. Our brokers are very familiar with the different ways that Healthcare Professionals are paid and can advise on how lenders will use your income to calculate affordability.
Most lenders will classify you as self-employed if you own any more than 20-25% share of a company, or you are a sole trader or a partnership. Provided you have at least 1 years of accounts covering the UK tax year (6th April to 5th April the following year) we have a good chance of finding you a suitable lender. If you have two years or more of accounts, then nearly every lender in the UK will consider your income.
There are different ways your income can be calculated, and we will work with you to understand whether we should look at the income on your tax return or whether we should look at the income within your company. For tax reasons many self-employed healthcare workers choose to retain profits in a Ltd company and therefore earnings on your tax return will not reflect your true earnings. In these cases, we can present the Ltd company accounts instead which will look at the profit of the company and usually you can add any salary you are paying yourself on top.
It is a myth that there are special products for the self-employed and providing you have the accounting history it shouldn’t impact on your ability to evidence your income. Once you have furnished us with the accounting information we will be able to advise the best way to calculate your income and work with lenders to understand the borrowing options. Your mortgage will be like any other mortgage and processed in the same way we have described in our Purchase, Remortgage and Home Mover sections.