Home loans for doctors
It can be easier and cheaper to get a home loan if you’re a doctor. Banks and lenders may consider certain borrowers lower risk, with more stable employment and high earnings, and medical professionals are often top of the list. Many lenders have a ‘medico’ (medical professional home loan) policy, making special provisions for eligible healthcare workers.
If you’re a medical practitioner, you might find it easier to get approved, be able to dodge LMI, and potentially have access to lower rates.
LMI waivers for doctors
Doctors might be able to avoid paying for lenders mortgage insurance (LMI) when they otherwise would’ve.
You generally pay LMI when your loan to value ratio (LVR) is above 80%, unless an exemption applies. LMI protects the lender from loss in the event you can’t pay back your loan. It’s charged on higher LVR loans because they’re seen as higher risk.
Some lenders feel the risk of a medical practitioner defaulting is low enough to make LMI unnecessary. This means if you’re a doctor, you might be able to get a loan of 90% or even 95% of a property’s value without paying for LMI. However, you’ll generally still need to earn above a certain income threshold to qualify.
Many lenders offer such waivers, including some of the big four. LMI waivers may also be available to medical professionals who aren’t doctors, like nurses or physiotherapists. Often though, lenders won’t be quite as lenient to non-doctors. For example, LMI waivers for nurses may be capped at 85% to 90% LVR, while doctors could be able to go up to 95%.
Lower interest rates
If you’re a doctor you might also be able to get a lower interest rate.
You probably won’t see lenders advertise special discounted rate ‘doctor home loans’. It’s common though, to get a rate below what’s advertised if you negotiate.
Being a doctor may put you in a strong position here. As you’re considered a low risk borrower, lenders could be extra keen for your business and might be more willing to knock off a few basis points.
Waived or reduced fees
Lenders might also offer reduced fees to entice a doctor’s business, or even waive them entirely.
Another possibility is your broker might even cover your fees. This might sound fanciful, but there genuinely are brokers in Australia that advertise they will pay the annual loan fees for doctors. That should give you a good idea how much medical professionals’ patronage can be coveted.
How to apply for a home loan as a doctor
As with any borrower, your lender will need to verify you can pay back the loan you’re applying for. You’ll likely still need to show your spending history, disclose any existing debts, and prove your income.
If you’re an employee, proving income just means providing a few recent payslips. If you’re a contractor though, as many doctors are, it can be a bit more involved. You might need to provide some of the following:
- 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.
If you’re getting a doctor-related perk, you might also need to prove you’re in the occupation you say you’re in. This might mean having to offer up your qualification or AHPRA registration.
Are brokers worth it for doctor home loans?
Brokers may know which lenders are offering the best perks for doctors at the time you apply. A good broker may be able to leverage your career for lower rates and fees, and perhaps find a lender that won’t charge you LMI.
In Australia, there are brokerage firms that specialise in finding home loans for medical professionals. These brokers may have particular insight into the respective ‘medico’ policies at major lenders
