Home loans for doctors

Doctors are renowned for being high income earners. Recent figures would suggest that this is true, showing that, of the top ten highest-paying jobs in Australia, five are in the medical profession. Surgeons, anaesthetists and internal medicine specialists top the list in terms of average earnings, with psychiatrists and those in the ‘other medical practitioners’ category also rounding out the list.

So it makes sense that banks and lenders typically consider doctors as desirable customers when it comes to taking out a loan. According to specialist mortgage brokers and lenders websites, reasons for this view include that doctors are generally perceived to have stable employment, a higher-than-average earning capacity, as well as a lower risk of default. This means that if you are a doctor, and you match up to the perceptions, you may be offered a more enticing loan deal in order to attract your business, such as discounts on fees, a lower rate or more flexible terms.

What are the benefits of home loans for doctors?

While there is no such thing as a specific doctor home loan, lenders may consider doctors to be low-risk borrowers, and may therefore offer (to eligible applicants) such things as:

• The potential to avoid lenders mortgage insurance (LMI)  when purchasing a home with a deposit of less than 20%
• Discounted or reduced interest rates, as well as potential fee waivers
• A more streamlined approval process

How can doctors get LMI waived?

Generally speaking, a borrower with less than a 20% deposit saved will be required to pay LMI, an added amount of money that is effectively an insurance policy for the lender in case the borrower defaults. In the case of a large home loan, LMI can be substantial, and the cost can easily be in the tens of thousands of dollars.

As a doctor, however, you may be perceived as a low-risk borrower, and lenders may be willing to approve you for a loan of 90% or even 95% of the purchase price of a home without charging LMI. This means that you could purchase a property while paying a deposit as low as 5% of the purchase price, and also avoid LMI.

It is worth keeping in mind, though, that lenders in Australia are bound by responsible lending laws. This means that they can only lend you an amount that they reasonably believe you will be able to pay back, so the property you buy will need to be within your financial means, even if the lender is willing to waive LMI. And, you’ll be subject to the approval process which includes a credit score check and having to provide expense and income information. Belonging to a certain profession does not guarantee that you will be approved for a home loan.

How can doctors get interest rate discounts?

Given that lenders may see doctors as desirable candidates for a home loan, they may offer lower interest rates to medical professionals than they would to standard borrowers. Whether you are seeking a loan from a standard lender or a specialist lender, it may be worth your while attempting to negotiate a lower rate with your lender. Likewise it may be worth your while to work with a mortgage broker who can connect you with a lender that offers competitive interest rates to doctors. Researching what loans are on the market could help you to work out what is a good deal at the time you apply.

Likewise, because lenders may see doctors as low risk borrowers, they may be willing to waive certain fees associated with home loans. Depending on the lender, this could include waivers or discounts for application fees or ongoing fees. As with interest rate discounts, it is worth being proactive and asking your lender what fees they are willing to waive for you.

Is it easy to get a home loan as a doctor?

As with any home loan applicant, doctors need to go through the mortgage approval process, and provide financial details. While doctors may be high income earners, providing proof of that income when applying for a home loan may be a more involved process than it would be for a standard borrower. This is because lenders typically ask to see documentation such as pay as you go (PAYG) payslips as proof of income, but doctors may have a more unusual income structure.

The home loan application process can be more complex for self-employed borrowers than for standard PAYG earners. For doctors, some of whom may be self-employed and work as contractors, this could make for a lengthier home loan application process. For example, as a self-employed borrower, it is possible you will need to provide such documentation as:

• One to two years’ worth of business tax returns
• Two years’ worth of personal tax returns
• Your most recent notice of assessment from the Australian Tax Office (ATO)
• Two years’ worth of bank and financial statements from your business.

How can you find home loans for doctors?

If you’re a doctor looking for a home loan, a place to start might be to use Canstar’s comparison tables to research the market to see what is on offer. If you find a loan product that suits your needs, you may choose to contact that lender, explain that you are a medical professional looking for a loan, and negotiate for a better deal. There is also the option of seeking out a lender who specialises in dealing with medical professionals and understands the complexities of doctors’ finances. These kinds of specialist lenders may offer specific benefits and streamline the lending process for doctors who are in the market to borrow for a house.

You may also engage a mortgage broker who can connect you with a relevant lender. Some mortgage brokers may even offer certain perks to encourage doctors to do business with them – for example, there are specialised mortgage brokers who advertise that they are willing to cover the cost of home loan fees for doctors for home loans above a certain amount. If you are thinking about engaging the services of a broker, it may pay to ask if they will do this for you.

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