Professional mortgage (A 3 point guide)
In this blog, we will cover professional mortgages, what you can expect from them and what sort of professions are included in professional mortgages.
Mortgages for Professionals
When considering professional mortgages there are many professions which may be considered eligible for professional mortgages, these include:
Key worker professionals
High earners earning ver £100,000
Asset rich individuals
What is a professional mortgage?
A professional mortgage is a mortgage which offers specific benefits to professionals based on their profession.
Professional mortgages may simply be a discount or perk offered by a mortgage lender on some of its mortgage products towards certain professions or it may be a whole mortgage dedicated towards a particular profession where the underwriting etc is completely geared towards the particular profession.
Some mortgage lenders may even be able to offer professional mortgages to those who have just started new jobs in particular professions as they can predict their future income or career path.
Can you get a professional mortgage if you have bad credit?
Getting a professional mortgage with bad credit may be difficult as mortgage lenders may usually want to lend to borrowers who have a good credit score and have shown a good repayment history on all their previous debts.
There are however mortgage lenders who will offer a professional mortgage to a borrower depending on what type of bad credit was and what the circumstances were.
If it was a CCJ which was satisfied and is a certain age then some mortgage lenders may be willing to lend. Other mortgage lenders may lend if the CCJ was a maximum amount.
When looking to get a professional mortgage with bad credit the requirements from different mortgage lenders will differ and a bad credit mortgage broker may be able to assist you in getting a professional mortgage.
Bad credit could include:
A debt management plan
A home reposession
Benefits of professional mortgages?
There are many benefits of professional mortgages which are based on what profession the borrower is in or plans to go into. Some mortgage lenders may offer a better deal on a particular professional mortgage if they deem the profession low risk.
This could be because the profession offers a reliable income, predictable career path or predictable future income and this combination of factors makes the profession less risky than others.
Increased overpayment limits
Some professions may have mortgage products which allow them to overpay on their mortgage with a much higher mortgage limit than what other mortgage borrowers on the same product will be allowed to do.
This could be because the profession is a high earning profession and the borrower may have a lot of disposable income and may want the ability to increase their mortgage overpayments without any fees or charges. An overpayment limit of 5% on a mortgage can easily be doubled to 10% for a particular profession.
Some professional mortgages allow the borrower the opportunity to drawdown or borrow back any mortgage overpayments they have previously made with no charge to them.
Some professional mortgages will allow you to simply increase your borrowing up to a particular limit per year without the need for further mortgage affordability checks.
Some professional mortgages will even give you instant access to cash up to a particular limit which you can borrow from your mortgage and have sent to your bank immediately.
This could be very helpful if you are in a financial space where the need for capital could arise at any time for emergencies, investments etc
Mortgage repayment holidays
Some professional mortgages will allow you to instantly start a mortgage repayment holiday without providing a reason. They may have a maximum amount of payments which you can take your mortgage repayment holiday before you can come back.
Lower mortgage deposit
Some professions will have lower mortgage deposit requirements in comparison to the mortgage deposit requirements of other borrowers for the same mortgage product.
Lower mortgage rates
Some professions will also have lower rates and fees in comparison to everyone else for the same mortgage product.
Some professions will have higher mortgage multiples on a particular mortgage product in comparison to what everyone may be receiving on the same mortgage product. This is especially the case if you are a higher income borrower.
Where can you find professional mortgages?
If you are in any of the professions listed above or are wondering how to get a professional mortgage then you may want to consider speaking to a mortgage broker who may have access to a whole of market mortgage products and search for a professional mortgage which meets your needs.
Use a Government scheme
Government schemes help you reduce the amount of mortgage deposit you may need to put down, reduce the price of the property or create a structure that increases your mortgage affordability much sooner than it would have been.
Some of these include first-time buyer government schemes whilst others in this list are accessible to you even if you are not a first-time buyer.
Government schemes are not available to you if you are getting a buy to let mortgage.
The Government schemes include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save a maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy– allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire– similar to the above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
Use a mortgage broker for your mortgage in principle
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.