Mortgages for NHS workers

Mortgage issues facing NHS workers

NHS workers could face difficulty securing the home loan they need to purchase the home they want. The exact challenges and details of these issues can vary from client to client, but many of them revolve around temporary contracts or shift work causing irregular income. There might even be issues regarding income that lenders are not willing to take into consideration, such as overtime pay despite how regularly it is accumulated. We have addressed some of these issues and others in more detail below.

Temporary contracts

Although the majority of NHS staff are on full-time and permanent contracts, there are still staff, including junior staff, who are on temporary contracts. Without the financial security of a permanent and ongoing position, securing a mortgage can become slightly more difficult. The good news is it’s still very much possible to get a mortgage as a temporary NHS worker due to in-demand skills. Our team has secured mortgages for temporary NHS workers quickly.

Minimal payslips

Temporary workers and permanent staff who have just started their NHS career - and may be within a probation period - can also face challenges. Mortgage providers usually want proof of income over many months before offering a mortgage. However, there are still several options for NHS staff who have only just started working. Public Sector Mortgages has even helped an NHS worker secure a mortgage before they started their NHS contract, which you can read about in our case study in the section below.

Shift work and overtime

NHS staff members could receive irregular income due to shift work, extra agency work and overtime payments. Unfortunately, some mortgage providers are unwilling to recognise additional types of income, even when the income is accumulated on a (semi-)frequent basis. NHS mortgage advisers can overcome this hurdle as they know which lenders are willing to recognise payments on top of a base salary.

Future earning potential

Some early career NHS doctors might be disappointed by the amount they can borrow considering their projected earnings potential. Some mortgage lenders will consider how a doctor’s salary is expected to increase over the coming months or years, which would allow the doctor to borrow more and purchase a better property. These lenders can be hard to find, so save time with an experienced NHS mortgage broker.

NHS client case study

Our team at Public Sector Mortgages has pulled off a lot of mortgage market results we’re extremely proud of, but one of our greatest achievements was for a deserving NHS worker.

The client was a first-time buyer who had signed a 12-month contract working for the NHS with an aspiration to extend the contract or gain a permanent contract in the future. Temporary contracts can be challenging in any case, but this situation was made even more challenging as the client wasn’t due to start the temporary contract for a further three months.

Despite these challenges, our team worked hard to source a lender that was willing to offer a suitable mortgage to the NHS worker. Not only did we secure a mortgage for an NHS worker on a temporary contract, but we even managed to do it before they started the job.
 

NHS mortgage how-to guide

Buying a property is likely to be your most significant life purchase, so it’s normal to feel overwhelmed by the process. We’ve made the process easier to understand with our mini how-to NHS mortgage guide below.

How to find an NHS mortgage

Getting a mortgage isn’t just about finding the lender willing to lend the most money or offer the lowest interest rate. The right mortgage will depend on personal needs and circumstances, especially among workers in the NHS who may have irregular income or be on a temporary contract.

There is a wide range of mortgage types to consider as well, including variable-rate mortgages and fixed-rate mortgages – and sub-types of each, such as tracker mortgages or offset mortgages. Your NHS mortgage broker can explain each type and answer your questions, so you can together identify the most suitable mortgage types before searching for the best mortgage deals that offer perks for NHS workers.

More people than ever are using mortgage brokers to find the right mortgage. The alternative is to carry out independent research, which can be time-consuming and neglect some of the market.

How to apply for a mortgage

Once you have identified the right mortgage type and mortgage product, it’s time to secure it with a mortgage pre-approval from the lender. A mortgage pre-approval, also known as a decision in principle, is an agreement that the lender will provide you with a mortgage for a certain amount with specific repayment terms. You can then use your mortgage pre-approval to search the property market for properties that are within your means.

You’ll need to apply for the mortgage pre-approval by supplying the lender with primary documents (identification, proof of income, proof of expenses/debts, etc.), and a search of your credit score will be completed. Your mortgage adviser is likely to prepare and submit the application on your behalf as part of their services.

It's not compulsory to get a decision in principle before looking for property and making an offer. However, it’s highly recommended because it ensures you only make offers within your budget and prevents any purchase from being delayed or falling through, which can have other costly consequences. Once an offer is accepted, the heavy lifting has already been completed within the pre-approval process, making the final application quicker and easier.

How to improve your chances of mortgage approval

You can take action to improve your chances of getting mortgage approval. The best time to do this is in the months leading up to your mortgage application. But try not to worry if you’ve left it a little late. There are still some things you can do to improve your mortgage chances within a short period.

Improving your mortgage approval chances is best achieved with personalised advice. Everyone’s situation is different and bespoke strategies should be used prior to the application. Mortgage advisers can make personalised recommendations within your initial consultation.

Yet, one of the most common strategies is to reduce your existing debt. By reducing your debt, you reduce your essential monthly expenses and improve your debt-to-income ratio, which is heavily considered by mortgage lenders. You might not be able to reduce your debt completely, but reducing your credit utilisation to 30% or less on revolving credit (e.g. credit cards) will usually make your application stronger. This action makes your application stronger because it suggests you’re not heavily reliant on any existing credit you’ve been approved for, which is an indication that you manage finances and credit well.

Your credit score is another important indication of your financial health, and it should also be improved and maintained in the lead up to a mortgage application. This can be done by keeping up with your bills and avoiding missing any payments. You can even improve your credit score slightly by registering on the electoral roll.

Mortgage resources and advice

Money Helper is a leading resource for anyone wanting information on buying property, taking out a mortgage, repaying a mortgage or even remortgaging. This free resource is provided to UK residents by the UK Government and the Money and Pensions Service, meaning it has no commercial motivation.

All information is provided for free to help you better understand mortgages without the jargon. The Money Helper website includes online calculators so you can see how much a mortgage and other fees will cost, and it discusses the latest government schemes that NHS staff could benefit from. On top of Money Helper, you can also gain mortgage help from Citizens Advice.