PRACTICE MAKES PERFECT NO . 9
PRACTICE MAKES PERFECT NO . 9
ARRANGING A RESIDENTIAL MORTGAGE ? – A GUIDE FOR DENTISTS
BY JULIE-ANN HAWKINS ,
Julie-Ann is a CEMAP qualifed Mortgage Advisor and Director at FTA Mortgages Limited , who specialise in advising on and arranging bespoke mortgages for healthcare professionals .
� Regulation in the finance world is ever increasing and this can make obtaining a mortgage a challenging , stressful and time consuming process . In addition , with the uncertainty following BREXIT looming , there is the added question of just how long the UK ’ s interest rates will remain low . With these factors in mind , it ’ s always advisable to seek professional , bespoke and qualified advice before hopping on to or even up the property ladder .
The key to getting a competitive deal on a mortgage – and that means the most flexible option , as well as the cheapest - is being armed with as much information as possible . Here are some key points that might help you along the way .....
I ’ VE RECENTLY QUALIFIED AND AM WORKING IN MY FIRST YEAR AS A FOUNDATION DENTIST - DO I NEED TO PROVIDE A MORTGAGE LENDER WITH A MINIMUM OF 2 YEARS ’ ACCOUNTS ? Generally speaking , this is true if you are self-employed . However , as a qualified dentist , it is possible to arrange a mortgage in advance of actually starting to work as an associate , as long as you can provide suitable supporting confirmations . With as little as a 10 % deposit , lending can be based on your new proposed self employed income , at very competitive rates .
WHAT HAPPENS IF THERE ’ S A VARIATION BETWEEN SOLE TRADER ACCOUNTS AND HMRC SA302 ’ S ? Regular mortgage underwriting will likely take issue if your accounts and SA302 ’ s do not match . This may be due to taking advantage of tax breaks set by the Chancellor – for example 100 % deductions for capital allowances . However , lending can be agreed on the pre-deduction figures with suitable explanations .
I ’ M TRADING AS A LIMITED COMPANY – WILL THIS AFFECT MY LEVEL OF BORROWING ? The majority of lenders will lend against an average of your latest two year ’ s salary and dividends . However , in some
cases it may be more beneficial to lend against your latest years if this is higher . Alternatively , if your salary and dividends do not present very favourably , then you may still be able to achieve increased borrowing by lending against your most recent year ’ s Share of Net Profit , after corporation tax and adding in your salary .
HOW MANY TIMES MY INCOME CAN I BORROW ? You may well have heard that 4x is the general multiplier the majority of lenders go by . In actual fact , nowadays the majority of lenders will use affordability calculations to work out levels of borrowing . These take into account a detailed breakdown of your cost of living and existing commitments . So , depending on your status and credit score , lender ’ s affordability calculations could equate to between 4 to 5.5x income , although your individual circumstances could mean it ’ s actually less .
WILL I GET A MORTGAGE IF I ’ M JOINING A PRACTICE AS A PARTNER BUT HAVEN ’ T STARTED YET ? Of course . Mortgage lending can be agreed with the support of a reference from the practice partner , even if you ’ ve not actually been employed yet at the practice .
IS IT A GOOD TIME TO REVIEW A BUY-TO-LET PORTFOLIO ? If you have buy to lets already , then yes now is a good time to review the structure of your portfolio . It ’ s always advisable to seek the professional advice of your tax specialist / accountant and a mortgage advisor , particularly with regard to the tax changes coming in to place from April 2017 .
One thing that we have seen an increased demand for recently is the transfer of private ownership of a buy to let into a limited company . This aims to make the portfolio more tax efficient over the long term , but again , always seek expert advice before making any decisions .
CAN I REMORTGAGE MY CURRENT HOME AND USE THE FUNDS TO BUY ANOTHER PROPERTY ? If you currently own a home and you would like to keep it and rent it out , it may be possible to remortgage this property on a buy to let mortgage arrangement . This will potentially give you the ability to release equity from the property and use these funds to cover the cost of a deposit and any associated costs for another residential purchase . Please bear in mind though that as you would not be selling a residential property you would incur an additional 3 % stamp duty on any new residential purchase and this cost will need to be factored in to the long-term plans for your property portfolio .
All in all , getting a mortgage is a big decision and our advice is simple .... be prepared and always seek the advice of an expert .
FTA FINANCE If you would like advice on securing a new mortgage or reviewing an existing mortgage arrangement , please contact us on 0330 088 11 57 or email info @ ftafinance . co . uk Web : www . ftafinance . co . uk / mortgages
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