If you’ve arrived at Uni and are already eyeing up where your going to live in your second year but wondering how to manage a mortgage as a medical student, then here’s why it could be time to start thinking about buying your own place.
In today’s world, you’d be forgiven for thinking that buying a house as a medical student with no income outside of your student loan, was just a dream. But if you are one of the new generation of medical students that wants to get on the property ladder for both personal and/or money-making reasons, then you’ll be pleased to know that there is a mortgage lender out there who will be prepared to help you do just that!
Traditionally, student debt has been the main reason holding medical students back from being able to borrow. If you have arrived at Uni, set yourself up with a student loan but want to own a home – whether in the next month, next year or next decade – you need to manage how your student loans affect your income / outgoing ratio and overall credit score to ensure you’ll be approved for a mortgage when the time comes.
Your Income / Outgoing Ratio
By analysing your monthly income and outgoings, a lender will measure your ability to manage and meet your monthly mortgage repayments. If you’re applying for a mortgage as a medical student, a lender will calculate your income / outgoing ratio by adding up all your monthly outgoings, including your expected mortgage repayments, and dividing them by your gross monthly income. If you have a part-time job as a medical student, then this will go some way in making your bank balance look a bit healthier.
Qualify with profit, not debt!
There’s no denying that finding house deposit in your late-teens is hard work. If your parents are prepared to co-invest or lend you a deposit, then there are up to 95% mortgages available at great rates given the current base rate. Today’s best first-time buyer rates typically require a deposit of between 60-80%.
An application can be made in your name, or jointly between you and your parents. It is often the case that a sole applicant will require a parental guarantee.
By renting your remaining rooms to fellow students, there is huge potential for you to take an income and make a profit from your newly purchased property. If house prices rise over time, you could also be in for a long-term financial gain. A typical three-bedroomed house would bring in more than £1000 in monthly rental income, and means that you are not forking out on paying rent yourself.
Optimising Your Credit Score
Student loans will naturally affect your mortgage approval in that they are an important factor in your credit score. However, repaying your student loans on time each month when the time comes is an excellent way to build a good credit score.
A mortgage lender will use your credit score to not only evaluate whether your mortgage should be approved, but also to determine your mortgage’s interest rate. Borrowers with higher credit scores are eligible for lower interest rates and better mortgage rates, while those will lower scores face higher interest rates, and are less eligible for different types of mortgages and possibly even a rejection of their mortgage request.
If you are planning to increase your student loan amount and you want to buy a home soon after you leave Uni, stick to the standard student loans and avoid borrowing from a bank if possible. For easy tips on how to increase your credit score read our blog article.
Doctors Mortgages Online helps prospective and current medical students, as well as newly qualified doctors make sense of their mortgage loan options, factoring in their student debts and loan repayments. If you want to review your eligibility for a mortgage as a medical student or newly qualified doctor, then get in touch with one of our specialist medical mortgage advisers today. Call us on 01656 749902.