What are Professional Mortgages and who can apply?
What roles are classed as a professional?
Those in careers which require a qualification in order to gain employment are classed as professionals. In the UK, this includes the following:
- Chartered surveyors
- Medical doctors and nurses
You can also sometimes be classed as a professional for mortgage purposes if you have a higher income of £75,000 or above.
How do mortgage products differ if you are a professional?
There are no specific mortgage products intended solely for professionals, however mortgage applications are often handled more favorably if you have a job that requires a professional qualification. This is due to your overall career stability, as most of these professionals come with a clear path of progression and you benefit from relatively easy employability.
There are often products aimed at those professionals in specific careers, such as Doctors, as well as a range of other benefits offered to professionals in general. There are details below.
What are the advantages of a professional mortgage?
The main advantage a professional will experience is simply that a mortgage offer will be easier for you to obtain. You are generally classed as lower-risk borrowers and as such, your applications are more likely to be accepted by both high street lenders and private banks.
Other benefits will vary depending upon a number of factors, including what your specific profession is, how much you earn, and which lender you choose. The range of benefits could include:
Access to more competitive deals
You will often benefit from special deals from lenders which include a discount on their standard interest rates and reduced fees. Some fees may even be waived entirely.
Lower deposit requirement
A typical deposit for a standard residential mortgage is 10-20%, which means a maximum loan to value of 90% is possible. However, some lenders will only consider offering the 90% Loan to Value rate for those in qualified professions, meaning that you benefit from only needing a 10% deposit.
Certain lenders have recently introduced 95% Loan to Value mortgage borrowing for professionals, although there may be additional criteria, such as a minimum salary requirement. Speak to OB1 Mortgages today to find out more.
Higher loan offer
Perhaps the most sought-after benefit of being a professional is access to loans consisting of higher salary multiples than other borrowers. For example, whereas the average loan offer is between three and five times your salary, professionals are likely to achieve an offer at a multiple of five. Some lenders even offer professionals a multiple of five and a half times their salary or more, of their salary.
Increased overpayment allowance
More flexible mortgage products can offer the borrower the ability to make up to 10% in overpayments per year without incurring fees. As a professional, that offer can often be doubled to 20%, with some lenders even offering an unlimited overpayment facility.
Borrow back facility
Another flexible mortgage facility more likely to be offered to professionals is the ability to borrow additionally within your current mortgage. This is offered in a number of ways and will depend upon your individual circumstances. Offers can range from the ability to borrow back equity you have gained, to increase your loan without a full application, and in some cases cash up to a predefined limit is withdrawable from your mortgage at any time.
Professional mortgages are more likely to allow the facility of taking a payment holiday. This will usually be for an agreed duration and once you have made a defined amount of repayments on your mortgage.
More flexibility for Self-Employed applicants
Self-Employed mortgage applicants ordinarily have to provide evidence of at least three years worth of trading history prior to having their mortgage application considered. Professionals usually benefit from less scrutiny, however, with twelve months’ worth of accounts often being enough.
Newly qualified professionals in certain professions can often benefit from a mortgage offer even before they have completed a year’s service. Doctors are an example of this, with some lenders offering them access to a mortgage as long as they are due to start paid employment within the next six months.
How do you find the right mortgage deal and how can a Mortgage Broker help?
As a professional, you have access to a broad spectrum of competitive mortgage offers. To ensure that you find the most suitable deal for your circumstances, it’s important to seek mortgage advice from an authorised and regulated broker. At OB1 Mortgages, our advisers are always happy to help.
We provide full administrative support and advice throughout the entire mortgage application process, saving time and stress for busy professionals like yourself. We’ll make sure you are able to take full advantage of the exclusive mortgage benefits your career has afforded you access to.
There’s an impending change in the Bank of England’s base rate
Whilst this is currently only set at 0.1%, if plans arise for an increase, your mortgage repayments could be affected. It’s worth seeking advice before making changes.
You want to overpay, but your lender won’t allow this
If your financial circumstances improve, but your current lender won’t accept overpayments, remortgaging can help. Some mortgage terms allow for overpayments. It’s worth weighing this against whether your lender will charge an exit fee.
You want to switch from interest-only to repayment mortgage
Whilst a valid reason, you shouldn’t need to remortgage to do this. Most lenders will be able to make changes within your current mortgage to allow this to happen. It’s worth checking this before you consider remortgaging.
You want to borrow more or consolidate debt
If you’re looking to borrow for home improvements or a large one off purchase, remortgaging may be an option. This can be especially useful if your current lender won’t extend your credit.
You want a more flexible mortgage
Some mortgages allow you to take a payment holiday. This can be useful if you plan to travel or change jobs. There are lots of different flexible mortgage options. These usually come at the price of a higher interest rate, however.
What happens if I don’t remortgage after my deal expires?
You don’t have to remortgage.The only change if you don’t remortgage should be a transfer to the lender’s standard mortgage product with SVR. This can mean you are paying more than you need to.
When is remortgaging not a good idea?
Your remaining debt is small
If you owe less than £50k on your mortgage, it’s unlikely you will benefit from remortgaging. Often the fees will negate any interest savings.
You have high early repayment fees
Again, if you have a large fee to pay for an early exit, you are unlikely to benefit from switching. In some cases this may even cost you more.
A change in circumstances
If your financial circumstances are worse than when you took out your mortgage, it’s unlikely you’d be accepted for a remortgage. This is also true if you’ve had credit problems.
Your home’s value has dropped or you have low equity
Unfortunately if the value of your home drops, your LTV will be higher. This will result in low or even negative equity (you owe more than your home is worth). No lender will offer a remortgage in these circumstances
You’re already on a great rate
If your mortgage deal is already one of the best available, it’s unlikely you will benefit from remortgaging. It’s worth keeping a keen watch on the market, however, to ensure this is still the case.
How do I Improve my chances of getting a remortgage?
Much like your original mortgage application, you should ensure your credit rating is strong and your finances are in order. It can be beneficial to offer a deposit.
What fees are associated with a remortgage?
Although lower than with a standard mortgage application, there are still a number of fees involved in remortgaging. Arrangement, booking and legal fees are all common, whilst some lenders will also require valuation fees.
How can a mortgage broker help me to remortgage?
There are a plethora of remortgage options available and a mortgage broker has the expert knowledge to find the right one for your circumstances.