Home loans for professionals in specific industries are something not everyone is aware of. However, if you’re working in one of these industries (such as the medical field), it can be highly beneficial. Previously, these packages were only available for a strict number of people. Today, the criteria have become more flexible to include a wider variety of professions and high-income earners. Discounts include waivers on lenders’ mortgage insurance (LMI) and interest rate discounts for eligible professionals.
If you’re looking to purchase your first (or next!) home, read on to see if you’re eligible for these incentives.
What are home loans for medical professionals?
Most lenders offer special home loan perks for those in certain professions, such as doctors, dentists, and vets. These are offered due to the extremely stable income generated by these professionals, and the knowledge lenders have around these industries. Lenders recognise the significant contribution made by those in medical professions and know that these jobs are always in high demand, which is why they are considered ‘safe’.
Lenders are generally quite flexible, too and understand that situations change easily. For example, they may buy their property as an owner occupier, but in six months’ time, it becomes an investment property. Understanding the industry and nature of the job is how lenders can offer those in specific professions these opportunities.
What are the major benefits?
There are plenty of benefits that entice medical professionals to choose these home loans. These include:
A higher allowed Loan to Value Ratio
Loan to Value Ratio (LVR) refers to the amount borrowed from the lender compared to the value of the property being purchased. For example, if you borrow $480,000 to buy a property valued at $600,000, your LVR is 80 per cent. Essentially, this means those eligible for a home loan package may be eligible to pay a higher LVR than someone with a regular home loan. It also means that your deposit will be less, with some lenders allowing up to 95 per cent LVR.
Lower interest rates
Another benefit of medical home loans is the discounted interest rates you might qualify for. At a base borrowing level of $250,000, lenders may offer discounts on interest rates. These include more than 0.5 per cent for a standard variable loan or close to 0.25 per cent for a fixed rate. When you begin to borrow over larger amounts, the discounts may increase.
Lenders often offer special discounts for certain borrowers using this type of package. Lender’s Mortgage Insurance (LMI) is one of those. LMI is a one-off, non-refundable, non-transferrable premium that’s added to your home loan. It’s calculated based on the size of your deposit and how much you’re borrowing. A common misconception about LMI is that it protects you. However, this is not the case. LMI protects the lender against any loss they may incur if you default on your mortgage repayments. Lenders commonly discount or completely waive the LMI fee for eligible individuals looking to use this package, which can save a borrower thousands. They are generally happy to waive this cost due to the highly paid and secure work medical professions do, making them low risk to the lender.
However, conditions do apply to this where you will need to work in an eligible profession and be a member of an eligible industry body. More details are listed later in the blog.
Who is eligible for these packages?
Once upon a time, these home loan packages were reserved for a select group of professionals in specific industries. Today, a more comprehensive range of individuals are eligible for these loans. Home loan packages are generally suited for those who:
- Are looking to borrow over $200,000.
- Are wanting to save on multiple bank fees.
- Don’t mind changing lenders.
Home loans for medical professionals
While home loan packages are great for those looking to save some money and simplify their banking experience, professionals in the medical field can access exclusive benefits depending on their lender. Some of the benefits have been mentioned previously and include
- Borrowing up to 100 per cent of the property value and not paying LMI (Strict criteria).
- Borrowing up to 95 per cent of the property and not paying LMI (wider range of professionals considered).
- Access to lower fixed interest rates.
- Access to lower variable interest rates.
- Refinance cashback up to $4,000 (for eligible borrowers).
Which medical professionals are eligible for this type of home loan and LMI waiver?
LMI waivers and home loan benefits are available to those who meet specific criteria. These include a list of professions, such as:
- Doctors (GP)
- Emergency surgeons
Besides your profession, you must be a member of an association from an approved list. These include (but aren’t limited to):
- Australian Association of Practice Managers
- Australian Dental Association (ADA)
- Australian Medical Association (AMA)
- Australian Veterinary Association
- Royal Australasian College of Surgeons (RACS)
- The Australia and New Zealand College of Anaesthetists (ANZCA)
- The Royal Australian College of General Practitioners (RACGP)
- The Royal Australian and New Zealand College of Radiologists (RANZCR)
Some other high-income professions may be eligible for these loans, including accountants and actuaries, mining executives and experts, lawyers, barristers and conveyancers and professional athletes/entertainers. Speak to a finance professional to see whether your profession applies.
Doctors with unusual incomes
Not all eligible doctors work typical 9-5 hours. Some are self-employed, partners in business, contractors or even some who are earning Medicare income guarantees. If this is the case, you may not be able to provide recent payslips as they might not be an accurate representation of your income. You may be able to produce the following instead:
- BAS statements
- Tax returns
- Past, present, and future contracts (if you’re a contractor)
- Six months of bank statements (trading or personal)
- Any other documents proving your income and employment status
Before applying for one of these loans, it’s important to do your research. Enlisting the help of an experienced mortgage broker is essential. These brokers have extensive access to a wide range of lenders and often can access exclusive deals. They will also determine what type of home loan package best suits you and your profession. To find out whether you’re eligible or to speak to a mortgage broker expert, get in touch with an Inovayt professional today.