Applying for a home loan can be a confusing process given how many options and lenders are out there. The good news is that as a dentist, you’ll generally be classified as a high earner, which means you’ll be seen as a low-risk borrower – and that comes with a number of benefits.
Here are some of the basic considerations that lenders make during the home loan application process, as well as special benefits to look out for.
When you apply for a home loan, your lender will consider a number of factors to determine your borrowing capacity and risk, including:
Credit history - If you’ve borrowed money in the past, your lender will want to make sure you’ve paid it back. Having a clean credit history shows that you’re a responsible borrower.
Assets - Accumulated assets such as savings, property and investments show that you’re in good financial standing.
Ability to pay back debt - Your capacity to make repayments will be measured by your current income against existing debts and the proposed loan repayments.
Character - This involves assessments such as how long you’ve been employed and how long you’ve lived at your current residence.
Practice standing - If you own a dental practice, your lender will look at the financial standing of your business to ensure your income is likely to remain steady.
As a high-income earner, dentists can be entitled to special home loan packages from certain lenders. For example, you may be able to borrow more than the average person for your home loan (up to 100% in some cases) and not have to pay Lender’s Mortgage Insurance (LMI), which can save you thousands of dollars.
Lenders see the dental industry as stable, so you might also be able to negotiate a discount off the standard interest rate, which means you’ll be paying less for the lifetime of your mortgage. Make sure to find a reliable lender with a dedicated department for medical professionals such as dentists, so you can discuss your options.
Choosing the right home loan structure is crucial to saving on repayments and effectively managing your finances in the long term – especially if you’re also managing other debts such as dental practice finance. Some of the other home loan considerations for dentists include:
Offset account - This is a bank account linked to your home loan used to offset the amount you owe on your home loan, meaning you only need to pay interest on the difference.
Accelerated payments - The ability to make additional unscheduled payments on your loan reduces the principal balance, which means more principal and less interest is paid off in later payments.
Interest-only payments - Choosing to make interest-only payments for a certain period can free up money to pay off other debts, such as a practice loan, during that period.
Considering taking out a home loan? Find out more about BOQ Specialist’s home loans for dentists.
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.