Mortgages for teachers
In this brief guide, we will cover mortgages for teachers and if there are any specific mortgages classed as “teacher mortgages” which may be more suited for teachers or newly qualified teachers.
Getting a mortgage as a teacher will depend heavily on how you can prove your income to the mortgage lender. Mortgage lenders who look at mortgage applications from teachers on a case by case basis may likely be a good option for you as they will be able to analyze your circumstances better before deciding on if to offer you a mortgage or not.
If you are also a teacher who is on a contract then you may find that your mortgage options may be limited to fewer mortgage lenders as they may consider you less secure than someone on a permanent teachers role. This may be the case even if you have a contract for more than 2 years.
In these instances, your CV which dictates your experience and work history may be beneficial in order for you to get competitive teachers mortgage.
What is a teachers mortgage?
A teachers mortgage is a mortgage which teachers can get. There are very few mortgage lenders which have special mortgage products for teachers but you will find that teacher mortgages fit under the broad key worker mortgage term.
You may be able to get a teacher mortgage with 90% to 95% loan to value rates, variable-rate mortgages, fixed-rate mortgages and in some cases find mortgage lenders who offer specialist underwriting.
To qualify for a teachers mortgage you or one of your co-applicants will have to be:
A nursery nurse with an NVQ level 3
A supply teacher with a track record
A children’s therapist
A fully qualified teacher or lecturer
A teaching assistant with an NVQ level 3
A newly qualified teacher (NQT)
You will then need to be on at-least one of the below types of contract:
On full time contracts
On part time contracts
Agency based teachers
And those receiving other educational related income grants and bursaries
Do teachers get special mortgages?
There are very few mortgage lenders who offer special mortgages to teachers but teacher mortgages could be classified as key worker mortgages where most mortgage lenders will underwrite the mortgage on a case by case basis.
Do teachers get help with buying a house?
Teachers can get help with buying a house as part of the government’s first-time buyer or home mover schemes.
These schemes can help increase the mortgage deposit you may have in place for your teacher mortgage or even reduce the total cost of the property.
You may want to check to see if you are eligible for any of the available home mover or first-time buyer government schemes before you apply for a teacher mortgage.
If you are a first-time buyer then you can expect to have to sign a first-time buyer declaration confirming your status.
Some of the help you may be able to receive as a teacher from the government when buying a house 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.
Can I get a mortgage as an NQT?
As a newly qualified teacher you may find it much harder to get a mortgage as you may have a 1 year contract which you may hope will get renewed at the end of the 1 year term but most mortgage lenders may prefer to offer mortgages to NQT with 2 year contracts or rather teachers with permanent contracts.
When you are a newly qualified teacher it may also be much harder for the mortgage lender to work out what your average monthly income may be going forward as you may work odd hours due to overtime which may not be consistent from one month to another.
Increased mortgage deposit
To improve your mortgage affordability for a teacher mortgage you may want to consider putting a larger mortgage deposit down. An increased mortgage deposit will reduce the mortgage lenders loan to value rate on the mortgage and will make the teacher mortgage more secure to the mortgage lender.
One of the government first-time buyer and home mover schemes above may be able to help you increase your mortgage deposit.
Get a joint mortgage
If you are struggling to increase your mortgage deposit then you may be able to get a joint mortgage with someone who has a mortgage deposit which can help you reduce your loan to value and make the mortgage much more secure to the mortgage lender.
Your combined incomes and subsequent monthly disposable incomes may also make the monthly mortgage payments seem more affordable to the mortgage lender.
Family deposit mortgage
You could also potentially get a family deposit mortgage which acts as a type of guarantor mortgage.
Family deposit mortgages are commonly known as family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the lloyds lend a hand mortgage or the post office family link mortgage.
You may also be able to use a gift from your family member or friends to increase your mortgage deposit and hence your mortgage affordability for a teacher mortgage.
Not all mortgage lenders are keen on lending to borrowers who have been gifted their mortgage deposit by their family or friends.
The mortgage lenders who accept gifted deposits may insists on a gifted deposit letter which ensures that the gift is indeed a gift and not a loan which may have some claim on the first charge mortgage if the mortgage lender ever had to reposssess the property.
Build your credit history
You should also look to build your credit history to ensure well in advance of you applying for a teacher mortgage to ensure you are eligible for a teacher mortgage. You could build your credit history by following the best guides and tips on credit building.
Getting registered on the electoral roll, making sure you make all your credit repayments each month and avoiding bad credit behaviour such as payday loans.
Mortgages for supply teachers
When you are a supply teacher, being able to prove your income will be the hardest challenge you may face. This is because many mortgage lenders cannot rely on the fact that you will be able to find work easily as a supply teacher.
There are however mortgage lenders out there that will truly look at supply teachers on a case by case basis to determine if they are eligible for a teacher’s mortgage.
Your experience as a supply teacher will be a big factor to determine your mortgage affordabilty but also applying for a joint mortgage with someone who has a regular income may be very helpful.
Mortgages with a teacher’s pension
If you are a retired teacher then your pension can be used as proof of income to get a mortgage. There is no difference between a teachers pension and most other pensions when considering your mortgage affordability.
Teachers mortgage with bad credit
Getting a mortgage as a teacher 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 teacher 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 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 teacher mortgage.
Bad credit could include:
A debt management plan
A home repossession
Teachers mortgage calculator
There are very few teacher mortgage calculators out there but it may always be better to get full mortgage advice from a mortgage broker to see what your teacher mortgage options truly are.
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.