Home Loans for Doctors and Medical Professionals - No COVID-19 Changes?
BANK FEE REBATE OFFER - We want to say thank you to our medical professionals!
At Reservoir Finance, we are thankful for all medical professionals working in the frontlines, not only for treating and preventing COVID-19, but also for other medical treatments and just being there for us. To say thank you, we want to offer you five years of fee free home loans!*
ALL MEDICAL PRACTITIONERS, INCLUDING NURSES AND MIDWIVES ARE ELIGIBLE FOR THIS OFFER*
This means we will rebate all yearly bank and package fees incurred for the first five years of your home loan if you work with Reservoir Finance for your next home loan (including new purchases and refinancing!). This amounts to over $2000 worth of savings!*
*Terms and Conditions apply
While professionals in Australia are in general highly admired socially and financially, medical professionals are certainly at the top of the spectrum. As The Australian Financial Review reported in June 2020, among the occupations for top income earners, there are Anaesthetist at the top with a median taxable income of $366,387 in the financial year of 2018, Surgeon at the 2nd, Internal Medicine Specialist at the 3rd, psychiatrist at the 4th, and other medical practitioners at the 6th.
When medical professionals seek for home loans, they are warmly welcomed by nearly all banks and lenders. Special treatments come in different ways. The list is as follows:
1. LMI Waiver up to 90% LVR
As briefly explained in our LMI waiver for professionals article, medical professionals are the most welcomed group amongst all professionals. For eligible medical professionals, borrowing 90% of the value of the house (loan to value ratio) will not incur any lenders mortgage insurance (LMI) payment, as long as the security itself does not trigger other LMI requirements.
Eligibility for medical professionals varies among lenders. Each lender has its own list of acceptable medical professionals who are eligible for LMI waiver. Among these are (not exhaustive):
- General Practitioner
- Internal Medicine Specialist
Veterinarians, Optometrists, Pharmacists, Chiropractors, and Physiotherapists are not recognised as eligible by all lenders. Psychologist, Medical Research Scientist, and Chinese Medicine Practitioner are not recognised as eligible by nearly all lenders. For all individual professionals, relevant qualification needs to be verified via Australian Health Practitioner Regulation Agency (AHPRA) website.
2. Lower Interest Rate
Generally, if you apply directly to a lender, they might not automatically offer you a lower interest rate even though you are meidcal professional. Lenders will offer an interest rate discount if a request is properly made. Another benefit that medical professionals have is that when they borrow 90% or even 100% of the loan (LVR), some lenders will not apply a higher interest rate (whilst the general public will normally be hit with higher interest rates).
3. Higher Borrowing Capacity
All things being equal, medical professionals will be able to borrow more than their same level income earners in most other professions. There are a few reasons to this, but it ultimately ties down to the amount borrowed, the type of income and lower interest rate which improves serviceability. We have covered at great depth the factors of borrowing capacity and how one can improve it.
Savings with LMI Waivers
Normally, if someone borrows (for example) at 90% LVR, lenders will charge an LMI fee which is then baked into the loan (increasing the loan amount). This means that borrower is effectively borrowing at around 88% LVR. However for medical professionals, because they have the LMI fee waived, it means they are effectively still borrowing at 90% LVR.
Treatment of non-base income is different
For most borrowers, if you are earning a non-base income (e.g. overtime, allowances), the non-bases income will be reduced by 20% in income assessments. For example, if you are earning $1000/month in overtime, the bank will only treat that income as $800/month. However, for medical professionals, non-base income is treated at 100%, which may substantially increase the borrowing capacity.
Lower Interest Rates offered
As covered above, medical professionals enjoy lower interest rates compared to the average Australian. As a result, due to how banks assess serviceability (how you can repay the loan), this provides a boost in borrowing capacity given the debt is less as a result of lower interest rates.
Though it sounds like COVID-19 has brought no employment risks for medical professionals, some lenders still cautiously changed their LMI waiver policies as a part of the responses to the once-in-a-century pandemic. One major lender deceased LMI waiver from 90% LVR to 85% for medical professionals, while one other major limited the LMI waiver only applying to owner-occupied home loans.
On the other side, out of the high appreciation of those frontline workers, one second-tier lender is offering $1,000 extra cash rebate for all eligible refinance, apart from its $3,000 existing cash rebate.
Let us save you time and let us research and negotiate with the lenders to get the best home loan deals for your personal circumstances. Partner with a mortgage broker like Reservoir Finance, an independent mortgage broker based in Sydney (but we service all Australians) who puts your interests first. We encourage a unique philosophy of responsible borrowing which means we will never push you to take loans that stretch you financially and we will be honest, transparent and upfront with you about our opinion.
At Reservoir Finance, we are thankful for all medical professionals working in the frontline, whether treating COVID-19, or helping Australians with other medical treatments. We are offering ALL medical practitioners, including nurses and midwives, five-year FEE FREE home loans. This means we will rebate all bank fees occurring related to the home loan for the first five years, which is worth over $2,000.*