Getting a Mortgage as a GP Partner: Tips, Advice, and Options
In theory now that you’re a GP Partner this should be your easiest mortgage application yet! You’ve probably had a mortgage already for a few years and your credit is good so what’s the problem? Well to put your mind at rest, it’s not you – mortgage lenders will assess your application differently now that you’re self employed.
To help you get the best chance of approval here our 5 best tips for GP Partners getting ready to apply for a mortgage.
Tip 1: Prepare, prepare, prepare!
The earlier you start your preparation the more time you’ll have to get your accounts ready.
When we say get your accounts ready we are talking about your financial accounts and your bank accounts. The main difference now that you are self employed as a GP Partner is the mortgage lender will need to be reassured of your earning potential. Your future earnings will count not your past earnings.
Three recent payslips will suffice for employed GP’s and doctors but as soon as your employment status changes your previous earnings cannot be used.
Generally, mortgage lenders need a minimum of two completed years of trading and tax documents from self employed doctors. As new GP Partner your mortgage application will struggle to get past the first checks so some due diligence of specialist mortgage lenders wouldn’t go amiss. It is a good idea to talk through your situation with a mortgage broker who has experience of dealing with similar situations.
If you are a first time buyer you will be building up your deposit, ideally to 10 or 15% as a minimum. Our guide on saving a mortgage deposit is here and will give you the best options for saving and managing your funds.
Tip 2: Think about how long the mortgage process will take
The amount of work you’ll need to do for a successful mortgage application is significant, and frankly, GP’s doing it themselves might find it very time consuming.
GP’s will be exceptionally busy as a result of the Covid-19 pandemic and with an increasing workload it can be hard to juggle work and life pressures. An experienced mortgage adviser can be best used to outsource the process of applying for a mortgage.
GP Partner mortgage advisers can probably do the job in a fraction of the time. It could help keep your bank account, time and general sanity in check over the process.
When it comes to mortgage applications, there are a few more hurdles to jump over if you’re self-employed. And finding a lender which caters to these circumstances is not always the one with the cheapest rates.
Tip 3: Mortgage rates are important but so is finding the best lender that understands how a GP Partner is paid
Each mortgage lender has different criteria, affordability and underwriting. So, finding the right one for you as a GP is important. This could mean breaking away from your current bank or building society.
It is always tempting to simply apply to the lender with the cheapest interest rate. However, new GP Partners should shop around and broaden their search. We know you want to pay the lowest possible rate but before you apply for your mortgage as a GP partner you must ensure that you fit the lenders criteria. The best available rate is not always the right mortgage product for you when your income is changing.
Tip 4: Time to understand your credit file
Having the best possible credit file is important when applying for a mortgage, and not just for GP partners. There are 3 main Credit Reference Agencies in the UK and it is important that you (and your mortgage broker) know what data is held on you that will be shared with lenders.
Luckily, there are some simple things you can do to ramp-up your credit-worthiness.
One quick and easy boost is to make sure you’re registered to vote, and your current address is updated for bills and statements. As a doctor you may have moved frequently and it is important you don’t have any old addresses on bank accounts or credit cards.
In the UK, it’s estimated that over 9 million of us aren’t registered to vote with a current address. When it comes to updating our addresses, this is so important as your credit file can be negatively affected by having financial connections to property you no longer reside in. Following this simple tip could boost your credit-worthiness and make that approved mortgage application a step closer.
Tip 5: Be a GP Partner for as long as possible before applying for a mortgage
When you become a GP Partner you become your part of a business and self employed. Generally, as a self employed person there’s no guarantee of a steady income so mortgage lenders usually want to see that you’ve got a bit of history under your belt. You see, mortgage lenders won’t distinguish you as a self-employed doctor or GP partner and you will be judged as a new start up business.
They’ll be looking to see that you can sustain an income throughout the year and be able to afford your monthly payments. This is why you’ll normally need two full years of accounts before lenders will consider you.
A small number of lenders will consider an application with a minimum of one-year self-employment with accounts and tax returns finalised and submitted, the majority of lenders would require two years as a minimum.
The good thing is you will have considerable experience in the same line of work or industry which is a definite plus point. Mortgage lenders will look at an application much more favourably as a doctor who has changed their employment status but its not a guarantee of acceptance.
Despite the challenges ahead, new GP Partners shouldn’t feel put off. There’s lots you can do to get ahead and make sure you’re in the best position possible to buy your next home.
Can a GP Partner get a mortgage without 2 years accounts?
Yes, there are a few lenders we deal with regularly that will accept your mortgage application as a new GP Partner with no prior experience of self-employment. You wont be able to use your payslips from previous employment as tax status will have changed and you will be Self-employed as a GP Partner.
If you have previously been self employed or locum GP before becoming a Partner we can still use these mortgage lenders as they will recognise your new, projected income. This sometimes helps as you will likely be increasing your income by becoming a partner and using a projection can help you get a bigger mortgage if required.
As individual circumstances are unique it’s a good idea to discuss your plans with us and we can help you with your GP mortgage.
Frequently asked questions about getting a mortgage as a GP Partner
We have provided answers to some of the most frequently asked questions. If you have any others or want to discuss your own situation please get in touch.
What Documents would I need provide?
Mortgage applications will require supporting documentation from the following:
- utility bill (to prove current address)
- passport or driving licence (to prove your identity)
- last three to six months bank statements of your current account
- statement of two to three years’ accounts from an accountant if self-employed
- tax return form SA302 and associated Tax Year Overview (provided by HMRC) to prove past earnings if you are self-employed
- business bank statements showing regular income which supports the SA302, such as business bank statements.
Do I need 3 years accounts to apply for a mortgage as a GP Partner?
Most mortgage lenders will require a minimum of 2 years accounts (3 years avarage can be used where income fluctuates significantly).
If you have recently joined an established GP Partnership and don’t have any self employment history we can use a different method to verify your income.
How long do i need to be self employed to apply for a mortgage as a GP Partner?
We can apply for a mortgage for you from the day you join the partnership.
Do Lenders offer good interest rates if i apply for a mortgage with no accounts?
Yes, the interest rate will be the same as offered to all customers. You will not be penalised by having no accounts.
Can I get a Mortgage from day one as a GP Partner?
Yes, as long as you can provide the supporting documentation required by the lender.
My Bank has turned me down for a mortgage, can you help?
Yes, in most situations we can help. All mortgage lenders have different criteria and we will match you with a lender who can help.