Professional mortgages offered by banks and private lenders have many complications. Lenders have different rates and terms for their products. Here are the methods of getting professional mortgages, their advantages and disadvantages, and tips that are essential for getting professional mortgages.
What Are Professional Mortgages?
The professional mortgage program is a credit program that banks or lending institutions grant to customers with high incomes, such as professionals, with more flexible conditions than conventional mortgages. The conditions lenders consider for mortgages for doctors and mortgages for lawyers will be around things like the amount of deposit, work history, credit score, and debt-to-asset ratio.
These mortgages are granted to professionals such as doctors and lawyers because lenders know the long-term earning potential. The risk of non-repayment of mortgages for doctors and mortgages for lawyers is less from the lenders' point of view. Therefore lenders are more inclined to give mortgages to them.
How Does Professional Mortgages Work?
Professional mortgages work similarly to conventional mortgages. But lenders have fewer restrictions on borrowers. For example, if the borrower's deposit amount is less than 20%, similar to conventional mortgages, applicants must also pay Private Mortgage Insurance (PMI). But in many cases, lenders consider lower limits for mortgages for doctors and mortgages for lawyers. For example, lenders accept signed employment contracts of professionals as proof of their income, and unlike conventional lenders, they do not include borrowers' tax statements.
Lenders consider suitable conditions and criteria for mortgages for doctors and mortgages for lawyers. But professionals, in general, must meet various conditions to qualify for getting professional mortgages. The most important qualifications for getting professional mortgages are credit scores, current contracts, deposits, and other things.
Advantages and Disadvantages of Professional Mortgages
Advantages of Professional Mortgages
The most important benefits of professional mortgages are:
- No need for Private Mortgage Insurance (PMI)
PMI is not required for deposits between 0% and 10%. Depending on the property's location, the borrower's credit score, and the mortgage amount, lenders typically finance between 90 and 100 per cent of the property's value.
- Higher mortgage amount
Professional mortgages have larger amounts than conventional mortgages. Typically, lenders finance 90-100% of properties up to £1 million and 90% of properties up to £2 million. Lenders also consider the potential future earnings of professionals in a structured profession. A standard mortgage typically allows borrowers to borrow about 4 times their salary. But in professional mortgages, professionals can borrow up to 5.5 times and sometimes 6 to 7 times their income.
- Flexible conditions for repayment
Many professional mortgages' "lump sum" repayment structures can be a huge advantage. Professionals can borrow a substantial amount to support their overall annual income, but their monthly salary may not be enough to repay the monthly mortgage instalments. So for professionals with irregular fee payments or annual bonuses, the best option may be a mortgage with flexible repayment terms. Lenders usually offer more flexible repayment terms for mortgages for doctors and mortgages for lawyers.
- Criteria for getting professional qualifications
Many lenders consider the professional's signed and approved current contracts as the basis for evaluating their income. Therefore, in many cases, professionals do not need to provide their bank and tax statements.
- Getting professional mortgages with a smaller deposit
Some new professionals' mortgage products offer 95% mortgage down, which can be very useful for first-time buyers and newcomers with only a small amount of money. Compared to conventional mortgages, this is a significant advantage.
- Credit score
For getting mortgages for doctors and mortgages for lawyers, the credit score of doctors and lawyers must be between 720 and 740. However, some lenders consider a lower credit score for professionals, considering other conditions. In this case, professionals should either increase their cash reserves or take necessary measures to increase their credit scores.
Disadvantages of Professional Mortgages
Some of the most important disadvantages of professional mortgages are:
- Buying a property is more expensive than what professionals can afford
Just because a lender can lend more money than normal doesn't mean the professional has the affordability to repay the instalments. In this case, borrowers will face many challenges. Therefore their monthly expenses will increase to a great extent.
- Find the right lender.
In many cases, finding a lender who knows the needs and goals of professionals and considers suitable conditions for them is difficult. Therefore, professionals will have a difficult time finding lenders.
- Paying attention to the interest rate and costs of getting a mortgage
Some lenders determine lower rates on mortgages for doctors and mortgages for lawyers than standard mortgage rates because they know the business of professionals. But the costs of getting a mortgage are also important. Considering other costs (valuation, underwriting, and legal) may result in significant savings for professionals.
The Importance of Using AWS Mortgage Advisors Advice
AWS Mortgage advisors will be with you throughout the mortgage process so that you will be in touch with the same person the entire time. You do not need to be in contact with the lender. AWS Mortgage advisors do everything from applying to getting the mortgage for you.
AWS Mortgage advisors directly access underwriters and lenders who provide mortgages to professionals. This relationship enables us to help borrowers to find the best mortgage options based on their circumstances and needs.
Borrowers and professionals will find that going directly to lenders may not always be the best option because not all lenders offer mortgages for doctors and mortgages for lawyers or do not consider appropriate rates and conditions for professionals.
Ensuring the mortgage arrangement is very important for professionals, as they can sometimes have complex income streams. This is where AWS Mortgage advisors can help professionals. AWS Mortgage advisors understand what lenders need for a professional mortgage and thus make the process of applying for and getting a mortgage stress-free for professionals.