Because medicine is considered a stable high-income career, several lenders offer home loan benefits to medical professionals. The benefits are offered to medical practitioners, specialists, and dentists who are eligible to borrow up to 90 per cent of the property value. Additionally, mortgage insurance may not apply, allowing you to potentially save thousands of dollars.
Lenders consider medical professionals to be low-risk applicants with higher income, which is not only stable but increases over the years. Financial institutions also prefer medical professionals as clients because they may invest in other products or business loans.
The income for medical professionals is often different from the calculations used for regular PAYG or other self-employed professionals. For example, you may work as a general practitioner in someone else’s practice and raise an invoice based on the number of patients you see. You may want to consult an experienced professional who is familiar with how income for medical professionals is calculated before you apply for medico loans.
Lenders Mortgage Insurance (LMI) waiver
Lenders normally require LMI when you borrow more than 80 per cent of a property’s value, as protection against financial loss due to default or non-payment of the home loan. Most lenders pass the cost of LMI on to the borrower, which can be expensive.
However, LMI waivers are available to healthcare professionals taking out these home loans, allowing them to avoid incurring this cost and potentially save a significant amount of money. Some lenders may also waive off the LMI if you borrow 100 per cent of the property value.
This waiver is available to general practitioners, pathologists, nephrologists, urologists, neurologists, haematologists, and several other medical professionals. A few lenders may also offer this benefit to interns and residents.
Your income structure may be unusual, which may affect your eligibility for home loans with some lenders. Receiving medicare income guarantees, contractual employment, partner-style business, and self-employment, may all also affect your eligibility.
However, if you are a member of an association like the Australian Medical Association (AMA), Australian Association of Practice Managers, Medical Practitioners Board of Australia, or Australian Medical Council (AMC), you may enjoy certain benefits on your ANZ medico package. Membership with other associations may also be considered by the lenders on a case-to-case basis.
Benefits for first-time homebuyers
In addition to the LMI waiver, you may be entitled to several other benefits as a low-risk applicant. These include:
Discounts on fees and interest rates
Medical professionals may receive lower or discounted interest rates and fees, or other waived home loan charges. Generally, lenders offer these benefits if you borrow less than 80 per cent of the property value, and have strong employment history, as well as significant savings.
Higher loan-to-value ratio (LVR)
Lenders may allow medico package home loan applicants to borrow with a higher LVR than regular borrowers. Some financial institutions may offer to let you borrow up to 90 per cent of the property value, though an LMI waiver may not apply for higher LVRs.
The benefits available to doctors and medical professionals may allow you to build your property portfolio faster. Additionally, you may enjoy asset protection when you make your purchase with a trust or a company.
Home loans for medical professionals are unique, and you must know the available benefits before applying for one. When you choose the right lender and ask the correct questions, you can certainly maximise your benefits.