Home Loan Guide for Doctors
Specialist home loans for doctors can save you thousands by allowing you to borrow up to 100 per cent of the property value without any Lenders Mortgage Insurance.
Benefits of home loans for medical professionals
Applying for a specialist medical mortgage could allow you to enjoy one or more
No Lender’s Mortgage Insurance (LMI)
Other special offers may be available to healthcare workers applying for home loans.
A lower deposit/ higher Loan to Value Ratio (LVR)
Special offers may be available to healthcare workers applying for home loans.
Lower interest rates & Discounted fees
Other special offers may be available to healthcare workers applying for home loans.
Who is eligible for medical home loans?
- Anaesthesiologists & anaesthetists
- Cosmetic surgeons
- Doctors, Intern Doctors & General Practitioners
- Plastic Surgeons
- Psychiatrists & Psychologists
Of course, you will still have to meet the lender’s other requirements, such as having enough money saved for a security deposit, and having a reasonably good credit record.
Many banks and other lenders will offer special home loans and medical home loan deals to healthcare professionals, thanks in part to the importance and pay associated with their jobs. These exclusive mortgages may let you buy a home or investment property with a much lower deposit than other borrowers, and you may also be able to save money on interest charges and fees.
Whether you’re planning to buy a home for you and your family, or an investment to help secure and grow your wealth, home loans for medical professionals can make a big difference as you advance through your career. Medical professionals that may be eligible include doctors, dentists, surgeons, midwives and more.
In the hunt for a home loan as a medical professional, it makes sense speaking to a mortgage broker who is experienced in the different loans and rewards which might be available to you.
Specialist home loans for doctors
There’s an outpouring of praise and recognition for doctors and dentists across the country and rightly so. These selfless professionals have been working hard to save thousands of lives during the pandemic, and as they do every day. Besides their dedication and service to humanity, doctors are also recognised by lenders as low-risk borrowers.
This makes them eligible to borrow more (up to 100 per cent of the property price from some lenders) without the requirement to pay Lenders Mortgage Insurance (LMI). Several lenders also offer fee discounts and special interest rates to doctors and medical professionals, leading to further savings on their home loans.
If you’re a doctor, dentist, vet, or another medical professional that’s looking to climb the property ladder, the savings you can get with a medical doctor mortgage are worth checking out. Some of the top benefits of doctor home loans include:
Some of the top benefits of doctor home loans include:
- Borrow up to 100 per cent of the property value without paying LMI
- Access special interest rates for low-risk borrowers
- Specific lenders may offer additional discounts and fee waivers
- Get into the property market earlier without waiting to save a 20 per cent deposit or getting a guarantor
Dr Susan’s home loan: a case study
Dr Susan is a paediatrician based in Sydney and earns $100,000 per annum. She wants to buy an apartment worth $900,000 but has about $70,000 saved for a deposit. Susan decides to do some research to find out her options. She discovers, to her dismay, that she may be required to dole out several thousand dollars for LMI or ask her parents to go guarantor for her home loan to be approved.
While discussing her situation with a colleague, Susan discovers a lender that offers home loans for doctors. When contacting the lender, she’s told that she can borrow over 90 per cent of the property value without paying any LMI. The lender also offers a lower interest rate to doctors when compared to the other options she had checked. After crunching the numbers using an LMI calculator, Susan will save about $30,000 in LMI costs if she borrows $830,000 (more than 90 per cent of the property price) for a term of 30 years.
On top of these savings, Susan also gets a 100% offset account linked to her home loan. This will help her reduce the interest she pays each month as the balance in the offset account will be deducted from the pending loan amount to calculate the interest payable. So, if Susan has $20,000 in her offset account and a pending loan amount of $800,000, interest is calculated on $780,000 ($800,000 minus $20,000) rather than the full $800,000.
Like Susan, you can save thousands on your home loan with an LMI waiver. You can always connect with a mortgage broker that specialises in home loans for doctors to discuss your requirement in detail and find out about the offers and discounts that you can avail.
How much can an LMI waiver save you?
Lenders Mortgage Insurance (LMI) is a premium you pay that protects the lender against any losses if you (the borrower) default on your home loan in the future. It is usually payable on loans with a Loan to Value Ratio (LVR) of more than 80 per cent (which means the loan amount is 80 per cent of property value). However, doctors can borrow up to 90 per cent LVR (and even 100 per cent in some cases) without any LMI payment, saving thousands of up-front costs.
|Property Value||Loan Amount||Loan to Value Ratio||Deposit Amount||LMI Premium (excluding stamp duty)|
Source: RateCity.com.au LMI calculator
Who is eligible for special home loans for doctors?
Doctors, allied medical professionals, dentists and vets are eligible for home loans for medical professionals. However, intern doctors, pharmacists, naturopaths, optometrists and veterinarians may not be accepted by all lenders for specialist home loans. Therefore, it helps to check your eligibility with individual lenders or seek help from a mortgage broker.
To qualify for doctor home loans, you must fulfil the following two criteria:
- Your occupation (or specialisation) must be on the lender’s list of acceptable professions
- You must be a member of one of the recognised industry associations such as the Australian Association of Practice Managers, Australian Dental Association (ADA), Medical Practitioners Board of Australia, etc.
How to compare home loans for doctors?
When you are shopping for home loans, compare the following features from different lenders to narrow down the most suitable deals for you.
- Interest rates: The interest rate is a vital consideration for any home loan. You must compare the interest rates offered by different lenders and check if you are eligible for any discounts.
- Fees: Make sure you understand all the fees and other charges (including stamp duty charges) associated with a home loan to understand what it would cost you.
- Lenders Mortgage Insurance (LMI): An LMI waiver is one of the most attractive features of doctor home loans. It allows you to borrow up to 100 per cent of the property value (depending on the lender) without paying any LMI premium.
- High Loan to Value Ratio (LVR): LVR refers to the size of your home loan vis-à-vis the value of the property you are going to purchase. Lenders mostly allow home loans with 80 per cent LVR or lesser. For borrowing more than 80 per cent of the property’s value, you would need to pay LMI or get a guarantor to guarantee the home loan. However, doctors are considered low-risk borrowers by lenders. They can often borrow higher LVR loans amounting to 90 per cent (or even 100 per cent in some cases) of the property price without any LMI or guarantee requirement.
- Other features: Besides the interest rate and fees, you should consider other features that you need or want in your home loan that suit your financial circumstances. These could include benefits like a redraw facility and a linked offset account.
When comparing home loans, remember to compare ‘apples with apples’ and check the comparison rate to identify the true cost of a loan. The comparison rate sums up the total cost of a loan into a single percentage rate, by including the interest rate, and all other fees and charges. Therefore, by checking the comparison rate, you get a better idea of what you’re paying over the life of the loan, and this helps when comparing multiple home loans.
You can also use an online home loan calculator to work out your monthly repayments and find a loan offer that suits your financial circumstances. A mortgage broker can help you with financial advice and explain the nuts and bolts of various home loans to secure a competitive deal for you.
How to apply for a doctor home loan?
Applying for home loans for doctors is much like applying for a regular mortgage when it comes to the documents needed like identification details, proof of income and employment, expenses, etc.
Personal identification documents
- These include primary photo identification like your current passport, driver’s license, proof of age card, etc.
- If you can’t provide any of these primary documents, lenders will usually require a minimum of two secondary identification documents like your birth certificate, health care card
- and citizenship certification.
- You also need a copy of your employment contract or payslips to prove your vocation as a doctor.
Information about your income will help the lender understand your financial situation and assess your home loan application accordingly.
- Most lenders ask for two or three of your most recent payslips and a payment summary from your employer.
- If you are self-employed, you would be required to provide your ABN (Australian Business Number) and tax assessments from the ATO for the past two years.
- If you have rental income, you will also be required to provide a signed lease and a recent rental statement.
Besides proof of identity and income documents, lenders require some additional documentation like:
- A copy of your registration with the Medical Board of Australia or another equivalent professional body in your field
- Information about your existing loans and liabilities
- Bank account details with at least 5 per cent of the deposit amount in genuine savings
It is also vital to maintain a good credit score to get your loan application over the line. Lenders do consider doctors low-risk borrowers, but if you have defaulted on other loans or have other negative marks on your credit file, lenders may not feel secure lending to you despite your profession. To save any surprises, why not get a free copy of your credit score once every year and scrutinise it for any errors or issues that may bring your credit score down.
Can doctors get a specialist home loan from the big four banks?
ANZ, CommBank, NAB and Westpac are referred to as the big four banks because they dominate the banking and finance landscape, holding the majority of home loans in the country. Many consumers opt to bank with the big four banks because of their popularity, size and vintage, as well as the variety of deposit products and specialist home loans to choose from.
The big four also consider doctors low-risk borrowers and offer medico home loans to doctors and allied medical personnel for both owner-occupied and investment properties. If you meet all the eligibility criteria laid down, there’s no reason why you cannot get a home loan from one of the big four banks. However, whether you should take out a medical home loan from one of the big four is entirely your choice.
Remember, not all home loans are created equal. That’s why it is essential to compare the offers available to you and choose one that is best suited for your personal needs, in terms of the interest rate, fees and other features.
Do doctors need a mortgage broker to get a home loan?
No, you don’t need a mortgage broker to get a home loan if you are a doctor or any other medical professional. Like other borrowers, you can always choose to contact lenders directly to take out a home loan. However, if you do decide to work with a verified mortgage broker, you will receive expert advice and hand holding from start to finish, making your home loan journey much smoother and more productive.
There are several reasons why you can benefit from working with a mortgage broker, such as expert financial advice and information about home loan deals matched to your personal requirements. As brokers work with several lenders, they always stay up to date on home loan deals and eligibility criteria of most of the banks and non-bank lenders. This knowledge enables them to provide you with astute financial advice regarding your home loan. They may even have access to unique offers available only to mortgage brokers.
A mortgage broker also works around your timetable which means you don’t have to take a lot of time out of your busy schedule fishing for suitable home loan deals or to fill in lengthy forms when you’d rather be saving lives. In the end, it is entirely your choice whether you work with a mortgage broker or approach lenders directly to arrange your medico home loan. Either way, you can start researching your home loan options by comparing home loan deals from multiple lenders in Australia online.