How Do I Get a Mortgage as a Locum GP Part 1
Post by Ben Parry from Barr Financial Services
Step 1: Getting Started
You've probably heard stories from friends and colleagues (or heaven forbid experienced it yourself) of the trials and tribulations of trying to get a mortgage as a locum GP. You might have heard stories about the dreaded 4 hour phone interview with a mortgage adviser in a call centre somewhere, only then to find out it was a complete waste of time!
So why is this happening? How can mortgages for doctors be so difficult to get? How do I get finance to buy a house? Surely it can't be that hard and why am I hearing people I know struggle? Well my friend, we have helped a few locum GP's all over the country and we have seen it all, so let me tell you why it is difficult and what you can do about it. Not only will I tell you what to do, but I'll also provide you with some free tips to help you prepare and ensure you don't waste any time.
Need some help and divine inspiration? This blog is designed to help:
- Getting Started
- Typical problems we are seeing
Step 1: Getting Started
Self employed - locum mortgage
How do I get a mortgage as a locum GP? The first critical question you need to ask yourself is; can you actually get one? I'm not expecting you to know this answer right now, but this is the first critical step.
A locum GP is self employed so let’s forget about the fact you were employed and now you no longer are. I know it’s a very secure job and there is an unlikelihood of people getting well all of a sudden, but unfortunately now you need to satisfy a lenders self employed criteria and getting a locum GP mortgage is not necessarily straight forward.
One of the major critical points here is how long have you been self employed? Most lenders will require you to be at least two years self employed. However there are some lenders who will consider you with one full year self employment (one full year set of accounts). They won’t look at projections, bank accounts or anything else without at least one or years set of accounts.
Income - how to get mortgages for doctors and locums
One of the next critical steps is establishing income and you need to plan ahead for this. Just remember if you want to borrow money you need to have the income evidenced to prove it.
An accountant’s job is to file your tax return and legitimately reduce your tax liability by offsetting costs and I'm sure there are other great things they do too.
However a good accountant who understands the world we live in now should also be seeing if you are planning to borrow money and make appropriate plans when it comes to your income. For example someone who is Ltd (Director of their own Ltd Company) may choose to take more dividends than they otherwise would to help with future borrowing needs. It is slightly different for those who are sole traders, however the principle is the same, plan ahead. Otherwise if you don't, you might have to wait another year before you can do anything!
Step 2: Problems
Two Years self employment, two years full set of accounts - what's the difference?
Just because you have been self employed for two years (sometimes one year is okay too) doesn't necessarily mean you can still get a mortgage!
Lenders will require you not only to be self employed for two years but also have two full years set of accounts. So what's the difference I hear you ask between two years self employed and two years accounts?
It’s all in the detail you see...let’s say George has contacted us looking to see if he can get finance. He is of course a locum GP and started working on a self employed basis in August 2012 so he has been self employed for 2 years and 6 months. Let’s assume for now his year end for his financial year is March 31st. In this scenario his first year set of accounts is only a part year (Aug 2012 - March 2013), and he has only completed one full tax year (March 2013 - March 2014). Of course in a few months’ time (assuming you read this blog in February 2015) he will have completed another full tax year, however if he wants to buy right now he can't. He has to wait until the end of March this year, even though right now he has been self employed for longer than the minimum requirement. Of course in reality waiting a few months might not be an issue, but you get my point (he can’t buy now).
Let’s look at the exact same scenario, except this time George has a different financial year end of December 31st (instead of March 31st) for his business. In the previous scenario, George could not get the mortgage right now. However in this scenario he can. By having a different year end date, it has meant George has met the lenders criteria.
So you can see how having a different year end date for your business can have an impact when you are looking to satisfy the two full years set of accounts rule.
Now you know how to get started and some of the typical problems we see, our next blog will cover off:
- Things you need to do
- What deals are available for locum doctors?
Of course if you would like help sooner, or just want to bounce some ideas off someone, drop us an email at firstname.lastname@example.org and one of our advisors will be happy to help answer your questions.
Alternatively if you would like to carry out some research of your own, please download our guide for free: http://www.barr-fs.com/free-top-tips-guide-for-getting-a-mortgage-when-self-employed
Oh and don’t forget to get your special voucher to save money: http://www.barr-fs.com/download-your-50-off-mortgage-arrangement-fee-voucher-
Ben Parry is the owner of Barr Financial Services
Phone: 01237 472321