Dental specialist financial Adviser Stephen Lart shares key steps to help you succeed with mortgages as a self-employed dentist.
The housing market appears more buoyant than originally expected at the start of the year, with house prices and transaction levels modestly above the expectations of market experts. While Halifax (one of the UK’s largest mortgage providers) predicted at the beginning of 2024 that house prices may fall between 2% to 4% in 2024, its latest index data (July 2024) has shown property prices growing by 2.3% annually.
For self-employed dentists, achieving the milestone of buying your dream home by securing a mortgage has an added layer of complexity due to the profession’s complex income streams, making the process of securing mortgages slightly trickier than the average applicant.
Here are a few key considerations:
Beware of long mortgage terms
Recently reported by The Guardian, more than one million people may have taken out mortgages over the last three years which will continue past the state pension age.
The percentage of new mortgages that will run past the state pension age is growing rapidly each year, rising from 31% in the final quarter of 2021 to 42% in 2023. The age group with the fastest-growing percentage increase is the under-40s.
Dentists working under the NHS who are reliant on the NHS pension scheme (NHSPS) could benefit from being aware that the NHSPS will fall in line with the state pension age shortly and so could be similarly impacted. This needs to be factored into your long-term financial planning to ensure you remain on track to retire when you want to with a retirement income that is generous enough so that you don’t have to make sacrifices.
Fluctuating approval rates
According to the Bank of England, net mortgage approvals for house purchases remained relatively stable at 60,000 in June, while approvals for remortgaging decreased from 29,300 to 27,500 over the same period.
To help improve your chances of securing a mortgage as a self-employed dentist, there are a few areas to be aware of.
If you are taking your first steps onto the property ladder as a young dentist, you are usually required to provide two or more years’ worth of certified accounts.
Then, when you are more established in your career or become a practice owner, the complexity of your income can throw you an unexpected hurdle and additional delays.
Often, dental practices are set up as limited companies from which you take dividends as your main source of income. This can cause you to struggle to obtain a mortgage.
Some dentists also work as sole traders or form partnerships. In most cases, these working models indicate that instead of a regular salary, your income is made up of sporadic dividends and drawings. Even though it’s common for dentists to follow a self-employed model, some lenders still view this as unstable and a risk.
Fortunately, dentists are part of a select group of professionals that can benefit from a ‘professional mortgage’. This is essentially an enhanced mortgage for professionals of a certain level within a specific industry. This can help dentists bypass the usual requirements for self-employed applicants.
Seek advice from specialists
At Wesleyan Financial Services, we work alongside a panel of leading lenders experienced in finding mortgages for dentists.
If you are looking for support with obtaining the right mortgage or exploring professional mortgages, you can speak to a dental Specialist Financial Adviser at Wesleyan Financial Services by booking a no-obligation financial review here or calling 0800 316 3784.
Wesleyan Financial Services is a broker, not a lender and will be paid commission by the mortgage lender upon completion of the loan. Product fees may be payable to the lender.
Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
This article is sponsored by Wesleyan Financial Services.
