Are you a dentist looking for a new mortgage?
Banks and building societies are eager to attract borrowers who work in industries with well-established earnings progressions, such as dentistry.
There are plenty of mortgages available on the market, but it can be difficult to know which one is right for you.
We work on your behalf, so you don’t have to disrupt your busy schedule to track down mortgage options. Drake can offer mortgages for dentists wishing to finance residential or buy to let property in the UK.
We outline the different types of mortgages available to dentists in the UK, and help you decide which one is best for you.
Self-employed mortgages
What mortgages are there for dentists?
Lenders use a variety of criteria to determine whether you are an acceptable borrower, so it may just be a question of finding the best lender for you — some are better equipped to meet the demands of dentists than others.
Nonetheless, there are still some general recommendations to bear in mind before you start looking for a mortgage as a dentist.
The most important factor in any mortgage application is affordability. Lenders will want to see that you have a strong and steady income and that you are not overstretching yourself financially. As a dentist, you should have no problem meeting these criteria.
Another key consideration is the deposit.
For most dentists, this is likely to be a significant sum of money. Lenders will generally require a deposit of at least 10%, but the higher the deposit, the more favourable the terms of the mortgage are likely to be.
How do lenders calculate mortgage loans for dentists?
Borrowing limits are determined by a variety of factors, including:
- Your income
- Your deposit
- The value of the property
- Your credit score
- Your other financial commitments
As a dentist, you are likely to be in a strong position when it comes to applying for a mortgage. Your income is usually high and stable, and you should have no problem securing a competitive interest rate.
The key issues for dentist mortgages
A Dentist’s income can often be hard for inexperienced high-street banks or building societies to comprehend. What’s more, because of how self-employed dentists’ incomes are taxed, some lenders view them as higher risk.
This means that it can be difficult to find a mortgage if you’re a dentist — but it’s not impossible. You may just need to put in a little extra legwork to find the right deal.
First, we need to establish some of the basics, starting with your employment status: are you an employee, or are you self-employed?
If you’re an employee, your income is taxed at source, your dental practice is responsible for paying your salary, with any tax due already calculated and paid to HMRC through a regular (usually monthly) payroll – this is known as Pay As You Earn (PAYE).
Self-employment, on the other hand, means that you are considered to be in business for yourself. This might be as a sole trader, in a partnership, or through a limited company. If you’re self-employed, it’s your responsibility to calculate and pay any tax you owe to HMRC. Many associate dentists, for example, are self-employed.
To assess affordability, most lenders will request at least one year’s worth of accounts from self-employed applicants. They could also ask for some recent SA302’s. This is because they need to establish your level of income and calculate an average earnings figure.
If you have only recently become self-employed, some lenders may accept a copy of your contract with your dental practice, along with HMRC tax returns for the previous year.
In addition to income, student debt is a significant factor for many dentists.
Dental school can leave graduates with substantial student loans, which can impact their ability to save for a deposit and make monthly mortgage payments. However, lenders understand this and will factor in your student loan repayments when assessing your affordability.
It’s worth bearing in mind that some lenders may have different criteria for employed and self-employed applicants – so it’s always best to check with your broker.
If you’re an employed dentist, you’ll probably find it easier to get a mortgage than if you’re self-employed. This is because most lenders will use your salary as proof of income, and employment contracts tend to be more secure than self-employment.
You may find our Guide to Self-Employed Mortgages helpful.
Professional Mortgages
Professional mortgages are specialised mortgage products designed for specific professions, including dentists.
These mortgages recognise the unique financial circumstances and earning potential of professionals, offering tailored benefits that may not be available with standard mortgages.
To be eligible for a professional mortgage, you typically need to meet certain criteria, such as:
- Professional qualifications: You must hold a recognised dental qualification.
- Registration: You must be registered with the General Dental Council (GDC).
- Income: You must meet the lender’s income requirements, which may vary depending on your experience and specialisation.
Professional mortgages offer several advantages for dentists, including:
- Higher income multiples: Lenders may offer income multiples of up to 5 or 6 times your annual income, allowing you to borrow more than you might with a standard mortgage.
- Lower deposit requirements: Some lenders may require smaller deposits from dentists, making it easier to get on the property ladder.
- Preferential interest rates: Due to the perceived lower risk associated with professional borrowers, you may be offered more competitive interest rates.
Can Junior dentists get a mortgage?
It can be more difficult for junior dentists to get a mortgage, as they often do not have a long track record of income. However, some lenders are more flexible than others and may be willing to consider other factors such as the amount of deposit you have saved up.
Generally, junior dentists are on much lower incomes than more experienced practitioners. This can make it difficult to afford a mortgage, particularly if you are looking to buy a property in an expensive area.
Will I be able to get a mortgage if I’m a self-employed dentist?
It can be more difficult to get a mortgage if you’re self-employed, as most lenders will require proof of income. This means that you will need to provide accounts or tax returns for the previous year.
If you have only recently become self-employed, some lenders may be willing to accept a copy of your contract with your dental practice, along with HMRC tax returns for the previous year.
Many general practice dentists looking for a mortgage are self-employed contractors, frequently mixing NHS with private work. To assess affordability, most lenders will request at least one year’s worth of accounts from self-employed applicants. This is because they need to establish your level of income and calculate an average earnings figure.
Ask your broker what each lender may ask for.
Can I get a mortgage if I’m a locum dentist?
Most lenders will require proof of income in order to assess affordability. This can be difficult for locum dentists, as their income can vary month to month.
Some lenders may be willing to consider your average earnings over a period of time, while others may require you to have a minimum amount of income to qualify.
- Moving home mortgages
- 90% mortgages
- First time buyer mortgages
- Offset mortgages
- Remortgages
- Buy to let mortgages
- Holiday let mortgages
How can a mortgage broker assist me with my mortgage?
A mortgage broker can help you to compare different deals from over 100 lenders and find the one that’s right for you.
They will also be able to advise you on the best way to approach a certain lender and can negotiate on your behalf to get the best deal possible.
There are several benefits to using a mortgage broker:
- You can save time by having someone else do the legwork for you
- Our brokers are experienced in helping dentists
- A mortgage adviser can help you to find deals that you may not be able to find on your own
- They can negotiate on your behalf to get the best possible terms
- If you are self-employed, a broker can help you to put together the necessary documentation to support your application.
Commercial Mortgages for Dental Practices
If you own or are considering purchasing a dental practice, you may need a commercial mortgage.
These mortgages are specifically designed for business properties and have different terms and conditions than residential mortgages. Lenders will assess the financial health of your practice, including its profitability, assets, and liabilities, to determine your eligibility for a commercial mortgage.
Some lenders may offer up to 100% loan-to-value against the dental practice and up to 80% loan-to-value against the goodwill valuation of the business.
Frequently Asked Questions
Not so much special mortgages but certain lenders do look more favourably on the dental profession as they are generally low risk borrowers.
Yes, and we arrange many mortgages for self-employed dentists, including buy to let and holiday let.
Yes of course, this is quite a common situation.
The specialist lenders that we work with understand that many practitioners will have multiple sources of income.
Newly qualified dentists don’t have much of track record to prove their income position. Our brokers know the lenders that understand this issue and are happy to work with new dentists.