Home Sweet Home: Mortgage Advice for NHS Staff

Your home may be repossessed if you do not keep up repayments on your mortgage.

The information contained within was correct at the time of publication but is subject to change.

16th October 2024

Affordability is a big question on everyone's mind when it comes to mortgages. A general rule of thumb is that you can borrow about 5 times your income.

But there's some great news! Some lenders offer special "Hero Mortgages" for NHS staff, teachers, police officers, and firefighters. These mortgages can take into account 100% of your overtime and additional income, which can make a big difference in how much you can borrow.

If you're a first-time buyer, Halifax and Nationwide have even raised the bar. Halifax will lend up to 5.5 times your income, and Nationwide has gone even further, offering loans of up to 6 times your income!

The best way to get a clear picture of how much you can afford is to chat with me. I can run you through an affordability calculator and give you a personalised answer. Typically, I will look at your last 3 months payslips and also your outgoings. If you want to get a copy of your credit report, I recommend Check My File. Try it FREE for 30 days, then £14.99 a month - cancel online any time.

I’ve written a blog on How to Borrow the Maximum on Your Mortgage.

Job security is definitely something lenders consider. However, if you're in a full-time employed role, you shouldn't have anything to worry about.

There are even lenders like Nationwide and TSB that can accept income from a new job 3 months before it starts. They just need a copy of your contract and a reference from your employer.

If you're on a temporary contract, lenders will want to know more about your employment history. They'll look at how long you've been on contracts, your income, your plans after your current contract ends, and your overall employment history. Generally, if you've been on contracts for at least 12 months, they're happy to use the income figures from your P60 or the total of your last 12 months' payslips.

If you are working Bank, there are lenders who are more sensible than others. I’ve written a blog on Bank work here: NHS Bank Work & Mortgages: Your Questions Answered.

Things might get a bit more complicated if your partner's income has changed, or if you've had children and are now paying childcare costs. Your affordability might be different now than when you first applied. We can discuss this in more detail to see if it's a viable option for you.

Mortgage rates are always changing. Right now, fixed-rate mortgages are the most popular choice. They let you lock in your interest rate for a set period, usually 2 or 5 years, although other options are available.

5-year fixed rates are currently the lowest, but they also tie you in for 5 years. If you think you might move in 2 or 3 years, a 2-year fixed rate might be a better option, even though it has a slightly higher interest rate.

The best thing to do is talk to me about your options. We can figure out what works best for you.

The variable rates haven’t been that attractive for quite some time. The variable rates that are linked to the Bank of England Base Rate are called tracker mortgages as they are usually a certain percentage above the base rate. Sometimes these rates don’t have early repayment charges, unlike the fixed rates, which might be beneficial if you are expecting to receive a lump sum from inheritance, or the sale of another property, which you could use to reduce your mortgage.

Depending on what your situation is within the NHS, you might be better suited for the fixed rates or variable rates so as always, the best thing to do is speak to me and we can put together a recommendation suitable for you.

The ideal deposit size depends on your personal circumstances. Generally, a 10% deposit is a good starting point. It often comes with better interest rates and a smoother application process.

If you don’t have 10%, there are mortgages for people with a 5% deposit. The rates are a little higher and the underwriting is thorough, but I do them quite regularly.

You might have seen mortgages advertised with a £5,000 deposit or even no deposit. While these can seem attractive, they're often quite difficult to qualify for.

If you have a larger deposit, consider how much you want to put down. Interest rates typically improve with each 5% increase in your deposit. So, a 25% deposit might get you a better rate than a 20% deposit.

When I moved last year I put down a 35% deposit, but then wanted to immediately do a kitchen renovation. Looking back, I wish I’d have put down 25% as a deposit and used the rest to pay for the home improvements.

Yes, some lenders are more experienced and accommodating when it comes to NHS staff. While there are pros and cons to different lenders, many of the major banks and building societies have a good track record of working with NHS employees.

I’ve been a mortgage adviser since 2009, so I’m used to knowing which lenders will do what they say they’re going to do, when they said they’re going to do it, and which lenders make it up as they go along! As with everything, the best thing to do is speak to me as early as possible so that I can give you the best advice possible.

Most mortgage applications will ask for the same information, they’ll want your last 3 months payslips, a P60, your passport and driving licence, your council tax bill as proof of address, proof of deposit, copy of your credit report and 3 months bank statements. I’ve also got a mortgage questionnaire I send out which ask for important information that doesn’t influence the recommendation, such as your national insurance number, address of where you work, landlord details etc.

Make sure that all your documentation is registered to the right address. It’s easy to not update addresses and have them registered to parent’s addresses or your previous property. By having them all up to date, it will make your application easier.

With credit cards, try and keep your balances down if possible. Similarly, try not to use your overdrafts if at all possible. Being on top of your debts really helps to make applications smoother.

Do give me a call as early as possible and we can spot any issues that we can address before we get to applying for a mortgage.