While the home loan application process for doctors is similar to a regular home loan application, there are a number of additional benefits that come with being a medical professional. Doctors are usually considered high-income earners and low-risk borrowers, and as such can often enjoy extra savings and flexibility when taking out a home loan.
Here are some of the factors lenders consider as part of the home loan application process, as well as special benefits for doctors.
As with all home loan applications, lenders consider a number of factors to gauge your ability to pay back debt and level of risk as a borrower:
Credit history - Having a clean credit history shows that you’re a responsible borrower.
Assets - Savings, property, and investments all count as accumulated assets and help demonstrate that you’re in good financial standing.
Ability to pay back debt - Lenders determine your capacity to pay off debt by looking at your current income against existing debts and the proposed loan repayments.
Character - How long you’ve been in your current job, how long you’ve lived at your current residence and other considerations are used to make an assessment of your character.
Practice standing - If you own a medical practice, your lender will look at the financial standing of your business to ensure your income is likely to remain steady.
Doctors are typically high earners with a steady source of income, meaning lenders tend to see them as low-risk borrowers, which can open up certain special benefits with home loans. As a doctor, you could be able to borrow a higher amount than the average person (up to 100% in some circumstances) without having to pay Lender’s Mortgage Insurance (LMI), which can save you thousands of dollars.
Your ability to pay back debt responsibly means you might also be able to secure a lower-than-average standard interest rate, so you’ll be saving for the entire duration of your mortgage. Above all, it’s important to find a lender with specialist expertise with doctors so you can get the best deal on your home loan.
When applying for a home loan, it’s important to choose a structure that allows you to save on repayments and manage your finances effectively over the long term – particularly if you have other debts to repay such as tertiary education fees or a practice loan. Some of the other home loan options for doctors include:
Offset account - An offset account is a transaction account linked to your home loan, which can be used to offset the amount you owe on your home loan – so you’ll only need to pay interest on the difference.
Accelerated payments - Making additional payments above and beyond your scheduled repayments is a good way to reduce your principal balance faster, meaning you can pay off more principal and less interest on subsequent payments.
Interest-only payments - Opting for interest-only payments for a certain period of time means you’ll have more money free during that period to invest elsewhere or pay off other debts, such as a practice loan.
Considering taking out a home loan? Find out more about BOQ Specialist’s home loans for doctors.
The information contained in this article (Information) is general in nature and has been provided in good faith, without taking into account your personal circumstances. While all reasonable care has been taken to ensure that the information is accurate and opinions fair and reasonable, no warranties in this regard are provided. We recommend that you obtain independent financial and tax advice before making any decisions.