Mortgages for Doctors joining a GP Practice
For many GP’s, becoming a partner in a GP Practice is a natural career progression. But moving from an employed position with payslips and your taxes taken care of, to being a self-employed member of a partnership adds its owns complications when applying for a mortgage.
But getting a mortgage as a new partner, whether at full parity or not, doesn’t need to be difficult. But you will likely want to speak to an expert to ensure you’re getting the right deal.
What problems do GP's face after joining a GP practice when applying for a mortgage?
There are two main issues you are likely to face as a GP applying for a mortgage after joining a new GP practice.
If you start making enquiries with mortgage lenders yourself, you may strike lucky and chose the right lender first time. But most banks and building societies will make it very difficult for doctors who have just joined a GP Practice to obtain finance.
How long do I need to have been a partner for?
Most mortgage lenders will view new partners within a GP Practice as they would any self-employed person. This could mean having to wait for two to three years after becoming a partner to be able to arrange a new mortgage.
Whilst there are some mortgage lenders that would consider an application after just one year, these deals can sometimes be quite a bit more costly than you would find with your typical high street lenders.
What documents would I be expected to provide?
Many mortgage lenders will want to see the full partnership accounts for GP’s applying for mortgage finance. They would want to be able to see the turnover levels and how this compares with previous years and could want to see latest bank statements for the practice too.
It can be really difficult to get the other partners in a practice to sign off on these documents being released for mortgage purposes. And choosing the wrong mortgage lender could cause unnecessary delays in arranging the mortgage. And unnecessary complications with your colleagues.
What income will be used to assess how much a GP can borrow?
If you have been a partner in a GP practice for a number of years, you will likely be required to evidence your “profit from partnerships” income declared to HMRC.
This could be done just by providing your tax calculations and overviews from HMRC. However, as mentioned above many mortgage lenders would still need to see the partnership accounts.
Depending on when the financial year for the GP Practice ends, you may prefer to use the income declared on the partnership accounts as it could give a more up to date reflection of your level of income.
Can I use my monthly drawings to demonstrate my earnings?
Most mortgage lenders won’t allow this. As described above, they will want to see full partnership accounts evidencing a track record of sustainable income from the practice.
But yes, using your monthly drawings to demonstrate your income is exactly how many GP’s who have recently joined a GP practice will obtain a mortgage.
You would need to obtain a letter from your Practice Manager or Accountant confirming your level of monthly drawings. This figure can then be annualised and treated in the same way as a basic salary.
Remember, for most banks and building societies this wouldn’t be possible. So if you’re doing your own research don’t be surprised if you get a few funny looks when making this suggestion.
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Why speak to Maggs Financial Services?
“I have been helping to arrange mortgages for doctors for the vast majority of my career. So when I setup my own firm it made sense to continue this specialism.
“I take great pride in arranging mortgage finance for health care professionals with “non-standard” income streams. In my opinion, some of these deals just wouldn’t have been possible without the help of a specialist broker.
Mortgage & Protection Adviser