Getting a mortgage, as a dentist
Julie-Ann Hawkins explains how to get a mortgage whilst working as a dentist.
Regulation in the world of finance is ever increasing. This can make obtaining a mortgage challenging, stressful and time consuming. With the spectre of Brexit looming and the impact it will have on interest rates in the UK adding uncertainty. Professional, bespoke and qualified advice can help you, as a borrower, navigate what may seem a daunting process. Below are some answers to the questions you may ask during the process.
Qualified and working in your first year of VT?
Many believe mortgage lenders require a minimum of two years accounts if self employed? Indeed, in most cases this is true. However, as a qualified dentist and with suitable supporting confirmations, it is possible to arrange your mortgage in advance of actually starting work as an associate.
With a deposit as low as 10%, banks can base lending on your new expected self-employed income and at very competitive rates.
Variation between Sole Trader Accounts and HMRC SA302?
If your accounts and SA302 (effectively HMRC’s confirmation of your earnings) do not match, this is normally a ‘red flag’ to lenders. However, lenders may agree with suitable explanations for any differences.
For example, it may be due to taking advantage of tax breaks; 100% deductions for capital allowances for example.
Are you trading as a Limited Company?
Most lenders will lend against an average of salary and dividends over the last two years. It may be possible just to borrow against the most recent year’s figures, if they are higher and therefore more beneficial. However, if your salary and dividends do not present very favourably, then increased borrowing is achievable by looking at your most recent year’s share of profit after tax and adding in your salary.
How many times my income can I borrow?
There are many factors to take into account; the lenders calculations, your own status and credit score. But it is often in the range of 4.5 to five times your income. An increase up to six times your income can be available.
Joining a practice as a partner?
The support of a reference from a practice partner can help achieve a mortgage agreement, with no minimum time at the practice.
If you have buy to lets already, it is a good time to review the structure of your portfolio. Seek the professional advice of your tax specialist, accountant and/or mortgage adviser.
We have seen an increasing demand for transferring the private ownership of buy to lets, into limited companies. The aim is to make them more tax efficient over the long term.
To let out a home you currently own, it is possible to re-mortgage this property onto a buy-to-let mortgage. At the same time you can release equity for use as the deposit and costs for your new residential purchase.
You will incur the additional 3% stamp duty on the new residential purchase, as you are not selling your residential property. This will need to be factored into the long-term plans for your property portfolio.
We know you’ve probably heard it before – a mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Julie-Ann Hawkins is a Cemap qualified mortgage adviser and also director at FTA Mortgages Limited. She specialises in advising on and arranging bespoke mortgages for healthcare professionals.