Young Professional Mortgage in Scotland

This is really the biggest advantage of a professional mortgage and lenders are prepared to give you more because they can consider your likely future earnings in a clearly-structured career.

Standard mortgages will usually allow you to borrow around 4 -4.5 times your salary. Professional mortgages offer 5.5 – 6 times your income. This can make a substantial difference.

This is potentially important as you start your career on a lower salary but remember that you can take your time to progress up the property ladder, it doesn’t have to be a rush. Just because the lender is prepared to give you more doesn’t mean you need to take it.

Completing a thorough budget plan & ensuring you can afford all your life goals and not just a house is very important and an independent mortgage adviser will explore this with you.

As your salary & career progress you could consider using a professional mortgage again if you need a higher income multiple for your forever home. Lenders are willing to write bigger mortgages for professionals with higher incomes – usually above £50K.

The most significant discretion is used for professional borrowers earning more than £100K a year.

Some of the new lending products for professionals offer 95% mortgages, which can be extremely useful to first time buyers with only a small amount of money saved.

Most professional mortgage lenders also allow gifted deposits from family.

Another product useful for First Time Buyers is a mortgage product called Joint Borrower Sole Proprietor where your borrowing power can be boosted if parents have “unspent borrowing capacity”. The parents don’t need to provide any capital gift, just agree to underpin the mortgage until your income reaches a level you can take over. It doesn’t attract additional property tax for the parent because they are not on the property title but it can restrict their own borrowing power and advice should be taken from a professional mortgage adviser re the suitability of this product.

This is an important issue for self-employed professionals, such as GPs & architects in partnerships, solicitors & barristers or professionals working as independent contractors. In addition, those whose annual incomes are heavily bonus-related.

Professionals with a proven track record & whose income is made up of irregular lump sums or bonuses, may be considered for an interest only mortgage. Generally, this would require a sufficient level of equity to have built up in the home, so not for first time buyers. The interest only mortgage would reduce the monthly mortgage repayment covered by the lower salary coupled with a facility to make penalty-free lump-sum repayments against their capital borrowing each year.

An offset mortgage may be appropriate in these situations for more established professionals where you can relinquish your right to credit interest on savings and use the savings instead to offset your mortgage. So, for example, if the mortgage is £300k and you have savings of £100k, in an offset situation you only pay interest on £200k. You can use your offset benefit to reduce your monthly repayment or pay off your mortgage early. Additionally, if you are a higher rate or additional rate tax payer then the offset benefit is received tax free.

A standard capital repayment mortgage offers, an Overpayment Facilityof 10% or even 20% annual or regular lump-sum capital repayments. Some mortgage products have the option of unlimited overpayments and overpayments are a great way to save interest.

Just as professionals can have lump-sum payments that make it easy to overpay, they’re more likely to want to make investments or more significant expenditures when opportunities arise.

The offset mortgage facilitates access to your savings with immediate access & other mortgages, once you have made substantial overpayments can allow you to take these back out.

If you want to step off the career ladder for a time – to do postgraduate study, manage family responsibilities or backpack around the world – you might want to take a break from your mortgage repayments.

Once you’ve established a repayment track record, many professional mortgages allow you to take a repayment holiday as long as this is agreed in advance.

Many professionals considering going into consultancy will need to think through the impact this will have on their property plans. Usually lenders need to see 12-24mths track record in the change of status before considering that income.

However for professionals with a track record of solid experience, some lenders will make a mortgage offer on just one year’s accounts, sometimes even if you have some adverse credit. The interest rate offered however will reflect the perceived risk.