Junior doctor mortgage affordability

hippocrates1

I’ve been working as a doctor for 18 months now. The problems with mortgages as a doctor as I understand are that
- we rotate jobs every four months so our contracts are seen as temporary even though we have job security.
 -Our pay changes with each job. 
-Our bay is broken down into basic pay plus banding.


At the moment I earn £43k but my ‘basic pay’ is £32k. Will I be able to get a mortgage as if I’m earning 43 or 32k? 

Windofchange

Just gone through it myself. You won't be seen as on a temporary contract. I have like you rotated around many hospitals and departments, but just give my continual NHS service years which is fine. You won't get penalised for rotating. In terms of pay, they will look at your last 3 months pay slips generally speaking. When we started seriously looking, I started to pull as much overtime as I possibly could. It might have broken me had the house hunt gone on for years, but we were quite lucky and found a home we loved within a couple of months. Thankfully, the mortgage application took into account my large amount of Xmas overtime. In terms of on call allowances, overtime pay etc etc, every mortgage lender is different. Some will consider none of it, some will consider 50 - 60% of it, and others 100% of it. This is where a good mortgage broker is worth their weight as if you are stretching yourself to the absolute max, you want 100% of overtime taken into account. They will take the last 3 months, add it up and then divide to give a monthly figure. My overtime is pretty much what took us from right on the line, to comfortably passing the affordability test. 

hippocrates1

Windofchange said:

Just gone through it myself. You won't be seen as on a temporary contract. I have like you rotated around many hospitals and departments, but just give my continual NHS service years which is fine. You won't get penalised for rotating. In terms of pay, they will look at your last 3 months pay slips generally speaking. When we started seriously looking, I started to pull as much overtime as I possibly could. It might have broken me had the house hunt gone on for years, but we were quite lucky and found a home we loved within a couple of months. Thankfully, the mortgage application took into account my large amount of Xmas overtime. In terms of on call allowances, overtime pay etc etc, every mortgage lender is different. Some will consider none of it, some will consider 50 - 60% of it, and others 100% of it. This is where a good mortgage broker is worth their weight as if you are stretching yourself to the absolute max, you want 100% of overtime taken into account. They will take the last 3 months, add it up and then divide to give a monthly figure. My overtime is pretty much what took us from right on the line, to comfortably passing the affordability test. 

Incredibly helpful thank you! The home I want to buy is 180k. My last three months are at 43k my next job in April is 41k do you think that will work? 

hippocrates1

(With a 5% deposit)

Sncjw

Probably not it’s usually 4 times your wages so I would think you would only get 160k max and even then they can lower the offer depending on the state of your credit files.  It’s pushing it a bit 

fred246

I think it looks very affordable but is at the limit. The problem may be the 5% deposit isn't enough. The lender wants to know that if you stop paying they can repossess and get their money back. If house prices drop they may not be able to sell the house for enough to get their money back. I think the combination of maximum multiple with minimum deposit may not work. I am not an expert though!

Whats_your_forte

4.5 times income is more realistic but you need to use a lender that will allow you to use all shift allowances etc.
However, key on a 95% mortgage is a very good credit score. Junior Doctors I've worked with have also had lots of addresses (as I understand you need to move around for the training) and multiple addresses tend to reduce the credit score.

If weekend allowances etc are showing on all 3 of the last 3 payslips, then you can use 100% of this income to get you ideally to your total income of £43k

hippocrates1

Whats_your_forte said:

4.5 times income is more realistic but you need to use a lender that will allow you to use all shift allowances etc.
However, key on a 95% mortgage is a very good credit score. Junior Doctors I've worked with have also had lots of addresses (as I understand you need to move around for the training) and multiple addresses tend to reduce the credit score.

If weekend allowances etc are showing on all 3 of the last 3 payslips, then you can use 100% of this income to get you ideally to your total income of £43k

Thanks again. All my stuff is registered to my parents house for that reason. Yeah 43k is my take home without locums.

amnblog

We do Doctors cases regularly.
The rotation is not an issue if handled properly (a problem if it isn't).
Look for 10% deposit which will help you past credit scoring and get you to the affordability you seek.

csgohan4

+1 on a broker, some lenders only take 50% of your extra banding, some higher. 

hippocrates1

amnblog said:

We do Doctors cases regularly.
The rotation is not an issue if handled properly (a problem if it isn't).
Look for 10% deposit which will help you past credit scoring and get you to the affordability you seek.

Obviously I don’t have a 10% deposit that’s why I’m putting five down