This does not constitute advice. Professional advice should be taken prior to acting on any part of it.
Dental and Medical Financial Services Limited is an appointed representative of Best Practice IFA Group Limited, which is authorised and regulated by the Financial Conduct Authority.
What do mortgage providers look for when determining how much mortgage you can afford?
One of the first steps in the house hunting journey is to work out exactly how much you can afford. It’s important to know how much you can borrow because that will help inform the rest of your search. How much you’ll be able to borrow may vary from lender to lender, but in general, they’re all looking for the same criteria, so it’s a good idea to have a general estimate.
Here’s what you need to have in order before you attempt to work out what your magic number is.
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In the past, your income was pretty much the only factor lenders would need to determine how much they would be willing to lend to you. Nowadays, while your income is still an important factor in their decision, it’s most certainly not the only one.
On top of the exceptional work circumstances medics often find themselves in, the pandemic might have exacerbated those issues over the last few years. Being able to prove to providers where your income comes from and finding the right lender who understands the special circumstances that come with working in the medical industry will make all the difference.
Your credit score is a reflection of your financial history and habits, and it highlights any issues with your credit that you may have had over the last six years. If your credit score is poor, it will have an impact on which mortgage lenders will be willing to lend to you, how much you can borrow, and what interest rate will be available to you.
In the case of a deposit, bigger is always better. If you have a large deposit, that lowers the risk to providers when lending you their money, so more lenders will want to work with you.
Thanks to affordability tests, not only will you need to prove you have the income to support your monthly payments, but you’ll also need to provide all other current expenses – essential and otherwise.
You need to know how much you spend on:
- Debts (if applicable)
- Everyday living cost
- Other non-essentials like entertainment, holidays, etc.
As is the case with all these considerations, the earlier you get started on improving your spending habits, the better.
An eye to the future
Mortgage deals are generally long-term contracts, so providers will evaluate you through that lens. Lenders will look to see if you can afford your repayments during the entire term, even if circumstances change or interest rates sky-rocket – bad news for those with variable rate deals.
Let the professionals help you
Finding the right provider for you might seem like a Herculean task. After all, you’re a busy medic, so it’s hard to find the time and brain power to dedicate to the task.
Working with a broker who knows the ins and outs of the medical community, as well as the best providers for the industry could be the difference between a happy hunt and a horrible one. You can find one of our expert specialist mortgage advisors here.
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