Another type of mortgage is the professional mortgage. You may indeed be a very high earning individual such as a Solicitor, an Accountant, a Doctor or an Architect running your own very successful business, but because of the way your income is structured, it may be difficult for you to prove your worth. By that, we mean that generally speaking, an employee can prove their earnings by way of payslip. However, this is probably not how your establishment works and you will need to approach a mortgage application a little differently.
Rest assured, Birmingham Money understands your predicament and can offer advice and wisdom for all types of professional mortgage. So if you are a Doctor, GP, Teacher, Accountant, Architect, Civil Servant or Solicitor, please get in touch with us and we can talk you through all the options available to you in more detail.
Mortgage options
A large proportion of mortgage lenders in the market place will provide a mortgage for a professional person, but not all. Some brand their mortgages as professional mortgages, whereas others may apply different regulations regarding the criteria and how much you could potentially borrow.
The reason for this is because despite using different criteria to assess affordability, degree-qualified professionals are generally deemed a lower risk as they often have a steadier/predictable career path and thus stable income. With that comes the potential to be a high earner too.
- Professional mortgage applicants can benefit from a more favourable affordability assessment when the lender is trying to determine how much can be borrowed. A lot of the time, the application will be looked at on an individual basis as opposed to using a generic formula.
- There will be more flexibility when considering income sources too such as bonuses, regular overtime and the like.
- Also, it’s possible you may be offer a higher loan to value (LTV). The usual offer is 85% whereby for a professional it could be 90%.
- Other benefits can include the option of making early part-payments, drawing down additional borrowing, possibly holiday payments and sometimes you can offset your savings to reduce the interest.
How would I prove my income as a professional?
It is quite usual for the lender to request full business accounts, prepared by a chartered accountant. The length of which will vary between different lenders, but usually between one and three years. This process may vary depending on the way your business is structured. Alternatively, (or in some cases, in addition to), you may also be asked to provide your HMRC Self-Assessment SA302 year-end tax calculations. This would generally be an original, not a copy.
It may be a requirement to provide additional forms of income also, such as bank statements or proof of your daily rate.
How much can I borrow as a professional?
As well as your expenditure in connection with factors such as secured or unsecured previous credit commitments, the lender will also consider your verifiable income streams. Assessments are quite complex and differ from lender to lender. It’s not as straight-forward as it used to be, no longer as easy as taking for example, 5 times your annual income.
However, as mentioned earlier in this section, lender may look upon professionals more favourably due to their earning power and stable career path, potentially allowing you to borrow more than your perhaps more non-professional counterparts. Also, it’s quite true that smaller potentially more specialist lenders will look to lend more than perhaps a generic mainstream bank or building society may consider.