What challenges do locum healthcare workers face when applying for a mortgage?

The biggest challenge with locum healthcare workers is really down to the track record of how long you’ve been doing the locum healthcare work for. 

A lot of lenders will want to see a track record of anywhere between 6 to 12 months, but it’s also going to get impacted by the lenders on how much of that locum work they can use for affordability when applying for a mortgage.  

For example, some lenders might only use 50% or 60% of the income you receive as a local health care worker, whereas other lenders might allow you to use 100% of it, all of which will have a different impact on clients borrowing power, because it determines how much of that income can be used for affordability and how much of it can’t. 

How does student loan repayment impact their chances of getting a mortgage? 

Student loan repayments will have a big impact on people’s mortgage because what lenders will do is they will always look at someone’s gross annual income.  

This is anything before taxation. Since, it’s all factored in before tax, they initially do not take into account somebody’s student loan repayments as of yet. Then we would have to manually input this into the client’s affordability calculators. 

Anything shown on the payslip as a student loan deduction should be taken into account, as it is treated similarly to a loan or other credit commitments. 

This means that higher student loan payments can have an impact on somebody’s mortgage affordability because it does have the ability to reduce that overall maximum borrowing amount. 

What should people do to prepare before applying for a mortgage?

The best thing that people can do before applying for mortgages would be to, firstly, come speak to a mortgage broker like ourselves.

Firstly, we’ll go through affordability. We will go through important details and questions such as their monthly outgoings, if they have any outstanding student loans, and what kind of property they’re looking to purchase for example, an apartment or a house.

When purchasing a property that comes with a service charge, like an apartment, it is a big factor to consider for affordability because lenders need to make sure that the mortgage is affordable whilst maintaining aspects like service charge and any other financial commitments like credit cards, dependants and car payments.

So, what we do is because we know all of these criteria with the lenders, we can manually run these calculators to ensure that the borrowing power we’re giving to clients is the true and accurate representation.

Another important aspect clients should monitor and maintain is their credit report. Having a strong, healthy credit score means they’ve got a much higher chance of getting accepted for a mortgage, especially if they are putting down a 5% or 10% deposit, then credit score very much does come into play with lenders.

For those who are self-employed, what documents would they need before applying for a mortgage? 

For self-employed individuals applying for a mortgage, it very much comes down to what the lender asks for because there’s a lot of different documents out there, but every lender will assess them differently.  

For example, if you’re a sole trader, you would have to complete what is known as your tax return each year.  

After you complete your tax return and send that off to HMRC, they will then send you what is known as a tax calculation or also known as an SA302. 

This document will outline how much somebody has earned in a year and it comes alongside what is known as a tax year overview, which summarises the tax amount to be paid.  

When you are typically a sole trader or even a self-employed director of your company and you’re looking to use your salary and dividends, we’re looking to use your SA302s and your tax calculations. If you are company director, some lenders might ask to see a copy of the company accounts to look at how much profit the business has made in a yearly basis and what lenders will typically do is average all of this income out over a two-year track record. 

If you are paid through an umbrella company, does this affect your chances of getting a mortgage at all? 

When you’re getting paid through an umbrella company, you will typically get pay slips.  

Umbrella companies can sometimes take a cut before they give you your monthly income. Lenders will often look at your gross pay, but then they’ll also factor in how much an umbrella company is taking from that pay slip and then looking at what your net pay is.  

When we’re looking at more umbrella companies, sometimes it’s more down to how much somebody is receiving in their bank account versus what their actual gross pay is.