Using lending policies for doctors to your advantage
This article has been provided by Dean Menzies and Josh Holt at Cutcher & Neale Residential and Commercial Finance.
The dream of owning your first home is an exciting milestone that is very achievable for a doctor in training.
After years of hard work and dedication to your medical education, buying your first home is often a top priority. However, the path to homeownership can be challenging due to unique financial circumstances, including high student loan debt and limited income during residency.
These circumstances are recognised by a handful of banks that offer doctor specific lending policies that can accelerate the purchase of your first home.
Some of the outstanding benefits that Cutcher & Neale Residential and Commercial Finance can source to assist your entry into the property market include:
- 95 per cent Loan to Value Ratio (LVR) with no Lenders Mortgage Insurance (LMI)
- unique lending policies that can project your income higher in the first eight years of public system employment to improve borrowing capacity
- ability to use 100 per cent of overtime income to improve borrowing capacity.
95 per cent LVR no LMI
95 per cent LVR for doctors in training (and doctors in general) with no LMI can save you tens of thousands of dollars in up-front costs and can reduce opportunity cost as your career and income progresses.
LMI is an insurance premium a borrower would typically pay to protect the banks risk if funding is greater than 80 per cent of the property value.
Doctors can avoid this insurance premium at high LVRs whether it is for a first home purchase or your tenth investment property.
If you maximise the benefit of this policy, you can accelerate your property portfolio in conjunction with capital growth, debt reduction and known income progression.
Despite the years of study and training, you can be active earlier in the property market earlier than other professions through utilising the benefit of this fantastic policy.
This capability can also allow you to purchase at a lower cost average than someone requiring 20 per cent equity across properties to avoid LMI.
Over the course of your career, this benefit has the potential to provide multi-millions of wealth accumulation in comparison to someone needing 20 per cent equity across a property portfolio to avoid LMI.
Income projection
As a doctor in training, your base salary is a known quantity for the first eight years in the public system.
There are lending policies available where your base salary can be assessed at a future base salary level to improve your current borrowing capacity.
This can have a profound impact on the quality of property you can initially purchase and can be of great benefit when entering the property market.
We have seen many instances over the years where this policy has provided considerable improvement in borrowing power for doctors in training purchasing their first home.
This lending policy can ultimately make the difference between purchasing a quality first home in a desirable area or settling for a less optimal outcome.
100 per cent overtime income
The ability to annualise 100 per cent of your over-time income cannot be underestimated. Many professions that receive regular overtime income have this income shaded by up to 20 per cent by a bank when borrowing capacity is assessed.
As a doctor in training, we can assess 100 per cent of your year-to-date over-time income on an annualised basis to maximise your borrowing power. Along with the ability to project your base income, your first home purchase may not require as much compromise as you think.
In the current environment of higher interest rates and a relatively resilient property market, these awesome benefits can make a real difference to your entry into the property market.
Contact Cutcher & Neale Residential and Commercial Finance to learn how you can accelerate to purchasing your first home and your next home!