Everything you need to know about Professional Mortgages in the UK

Professional mortgages can offer qualifying professionals higher income multiples and more flexible criteria at some lenders. In this post, we look at how this type of mortgage works, who is eligible and what to check before applying. If you are a qualified professional, read on.

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. Not every lender offers this type of product, but professional mortgages are available from both banks and building societies.

Who is eligible for a professional mortgage?

Each lender sets its own list of eligible professions, and these lists vary. Professions commonly accepted include:

• Doctor;

• Accountant (sometimes only chartered accountants);

• Barrister and solicitor;

• Dentist;

• Vet;

• Teacher (at some lenders).

Some lenders also accept other professional groups, so it is worth checking each lender’s current list. Some lenders also offer separate key-worker mortgages, which are different products from professional mortgage ranges.

What distinguishes professional mortgages from ordinary mortgages?

Some lenders see people in these professions as lower-risk customers. Depending on the lender, this can affect the following areas:

Greater affordability

Bank of England rules limit mortgages of 4.5 times income or more to 15% of new mortgage lending across the market, so most standard mortgages are below this level.

With a professional mortgage, some lenders may lend up to six times your annual income, subject to affordability. The amount still depends on your individual financial situation and on how the lender’s underwriters assess your application. Some lenders view these professions as lower risk, which they may take into account when issuing a decision in principle.

Low deposit level

Mortgages with an LTV of 95% exist, but whether you can get one depends on your eligibility and affordability, and rates are generally higher at higher LTVs. A larger deposit also means a smaller loan and lower monthly instalments.

More lenient income assessment criteria

People training to become lawyers, doctors or actuaries usually earn less than those who have already qualified. Some lenders accept recently qualified or trainee professionals, although criteria vary by lender.

Lower interest rates

Interest rates on professional mortgages vary by lender and are not always lower than mainstream deals. Even a small difference matters, though: 0.1% a year on a large loan, such as £300,000, adds up over the mortgage term.

Which lenders offer professional mortgages?

Extend Finance has access to more than 100 mortgage lenders. Some offer products or potentially preferential rates to eligible applicants in particular professions, including doctors and solicitors. Availability and rates depend on individual lender criteria, affordability and circumstances.

Lender criteria – including eligible professions, income multiples and maximum LTV – differ between lenders and change often, so check the current criteria before you apply.

Are self-employed individuals eligible for a professional mortgage?

There are two ways to answer this question.

Being self-employed does not necessarily rule you out of products aimed at professionals. Some lenders accept self-employed or limited-company professionals, subject to their 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 – you can still apply for a standard mortgage, subject to the lender’s criteria. 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 work in a qualifying profession, the situation is somewhat more complicated.

Many professional mortgage ranges require only one applicant to meet the professional criteria, but this varies by lender. Lenders also differ in how they assess joint incomes: many apply one income multiple to your combined income, while others may treat your partner’s income less favourably and apply a lower multiplier. The simplified illustration below shows how this could work:

Simplified illustration: Jan and Magda are married. Jan is a programmer earning £60,000 a year, and Magda is a vet who also earns £60,000. If a lender applied a standard multiplier of 4.5 to Jan’s income and 5.5 to Magda’s, Jan’s income could support £270,000 and Magda’s £330,000. In total, the couple could borrow £600,000. Actual amounts depend on the lender’s criteria and an affordability assessment.

Summary

If you are a qualified professional, a professional mortgage is worth considering. Lenders may set conditions, such as current registration with your professional body or working in your profession. When applying for a specialist type of mortgage, especially for a large amount, it is worth using an adviser, who can compare criteria across lenders for your situation. Extend Finance has access to more than 100 mortgage lenders. Some offer products or potentially preferential rates to eligible applicants in particular professions, including doctors and solicitors. Availability and rates depend on individual lender criteria, affordability and circumstances.