Everything you need to know about Professional Mortgages in the UK

A professional mortgage is often the key to lower interest rates, higher affordability, and even better customer service. In this post, we will take a look at this type of real estate mortgage, analyse its features, and answer key questions. If you are a qualified professional, be sure to read this article to the end.

What is a professional mortgage?

Professional mortgages are a group of mortgage loans offered to people in professions that are generally considered stable, well-paid and with high potential for future income growth. Although not every lender offers this type of product, it is becoming more popular every year. Mortgages for professionals are offered by both large banks and small loan and building societies.

Who is eligible for a professional mortgage?

Each lender has its own list. However, there are professions that every bank considers ‘professional’. These include:

• Doctor;

• Accountant (sometimes narrowed down to chartered accountant);

• Barrister and solicitor (lawyer);

• Dentist;

• Veterinarian;

• Teacher and academic teacher.

In addition, some lenders also focus on other professional groups. For example, Scottish Widows grants such mortgages to actuaries and engineers, as well as to people who are just obtaining legal or accounting qualifications. Other banks extend their lists to include nurses, police officers, soldiers, firemen and social workers, for example.

What distinguishes professional mortgages from ordinary mortgages?

As we have already mentioned, professional mortgages are offered to people who are considered more ‘reliable’ customers from the bank’s perspective. A good professional position and often higher earnings translate into, among other things:

Greater affordability

In the case of standard mortgages, banks rarely agree to lend more than 4.5 times the annual income of the people applying for financing. There are, of course, lenders who make exceptions to this rule, but this usually comes at the cost of higher interest rates.

In contrast, when applying for a professional mortgage, you can obtain up to six times your annual income. Although this mortgage parameter still depends on the borrower’s individual financial situation, underwriters are usually more inclined to issue a positivedecision in principle when, in addition to high earnings, the person applying for the mortgage also has a stable and sought-after profession.

Low deposit level

Although mortgages with an LTV of 95% are available to everyone, obtaining such a mortgage usually involves relatively unfavourable terms – it is not uncommon for offers with a 10% deposit to have interest rates that are up to 0.5% lower. Due to the specific nature of professional mortgages, this phenomenon is less significant in their case, although it is still clear that the higher the value of the collateral in relation to the mortgage amount, the lower the instalments will be.

More lenient income assessment criteria

It is widely known that people studying to become lawyers, doctors or actuaries earn significantly less than those who have already obtained professional qualifications. For this reason, underwriters sometimes agree to take future (albeit rather cautiously estimated) income into account when calculating a customer’s creditworthiness. This is obviously due to the fact that it is relatively easy for a barrister or doctor to find their first job – unemployment in these professions is practically non-existent.

Lower interest rates

Due to the lower risk, with the same loan-to-income ratio, the bank may offer you a lower interest rate. Of course, this will not be a significant difference, but it is worth being aware that even 0.1% per annum on an amount often exceeding £300,000 translates into considerable differences.

Which lenders offer professional mortgages?

As a whole-of-market credit broker in the UK, we work with over 250 lenders (both banks and building societies), of which, at the time of writing, around 30 offer products aimed directly at professionals. It would be pointless to provide a full list, but it is worth mentioning a few specific companies.

As a side note, we obtained all the criteria for granting these mortgages from documents intended for credit brokers.

Kensington Mortgages

Professional mortgages from Kensington** stand out primarily due to their very high affordability, which can be as much as six times the applicant’s annual income**. In addition, there are no application fees, and each application is reviewed exclusively by a human being, guaranteeing an individual approach to each case.

However, the main disadvantage of this bank is the required deposit, which is a minimum of 10% of the property value.

NatWest

NatWest’s offering for high-income individuals is the Premier Mortgage Service. The main advantage of this product is the ability to obtain a Decision in Principle within minutes and extended support for mortgages of £500,000 or more.

Coventry Building Society

Coventry Building Society is primarily known for its highly flexible assessment of the financial capabilities of self-employed individuals. Thanks to a more favourable creditworthiness assessment algorithm, individuals who are just starting their professional careers will most likely be able to borrow more funds. This is particularly evident if you are a doctor, solicitor, or veterinarian.

Are self-employed individuals eligible for a professional mortgage?

There are two ways to answer this question.

As a rule, your employment status does not directly affect your access to products aimed at professionals. Regardless of whether you are employed, self-employed or run your own limited company, if you are a qualified professional, you are likely to receive a positive credit decision (provided, of course, that you meet the other criteria).

However, if you are an entrepreneur from a different industry and run, for example, a wholesale business or a construction company, running your own business will not give you access to professional mortgages. All is not lost, though – entrepreneurs in a good financial situation can count on fantastic financing terms. Of course, we work with banks that specialise in this customer segment.

What if I apply for a mortgage with my spouse?

If your partner does not have a profession that allows them to obtain a professional mortgage, the situation becomes somewhat more complicated.

In the vast majority of banks, it is sufficient for only one person to have professional status – the only exception to this rule that we are aware of is Metro Bank. However, it is worth mentioning that your partner’s income may be treated less favourably and receive a lower multiplier. To illustrate this, let us use an example:

Jan and Magda are married. Jan is a programmer earning £60,000 per annum, while Magda is a vet and also earns £60,000. As Jan is not in a profession considered particularly stable, his affordability has a standard multiplier of 4.5, while Magda can count on a multiplier of 5.5. As a result, Jan can borrow £270,000, while Magda can borrow as much as £330,000. In total, the couple will be able to borrow £600,000.

Sometimes, the bank may also require that the professional be the main (first) applicant. However, this is a minor detail.

Summary

If you are a highly qualified professional, a professional mortgage will probably be a very advantageous choice. Considering that taking advantage of this type of offer does not involve any additional obligations on your part, it would be a shame not to take an interest in this segment of the market. However, you must remember that when applying for a special type of mortgage, especially for a large amount, you should definitely use the services of an advisor who will select the most advantageous offer for you. It really pays off!