Homeownership is a challenging dream that many long for, so the benefits of home loans for healthcare workers in Australia are undeniable.
Imagine finally achieving your dream home – a place where you can create memories, feel secure and build the future you’ve always wanted. For health workers in Australia, this can feel like an uphill battle because of the high cost of living, the unpredictable nature of their work and the property market.
In this article, we explore the benefits of home loans for medical professionals and provide expert tips on the requirements and process to secure the right mortgage that recognises your hard work and value.
Benefits of Home Loans for Healthcare Workers
Banks and lenders view healthcare workers as low-risk borrowers since they are unlikely to default on their mortgages. Because of this, you may enjoy some home loan perks exclusive to your profession:
Low deposit requirements
If you don’t qualify for low-deposit loans or first-home buyer grants and schemes, you need to deposit at least 20% of the property’s purchase price. However, since lenders consider the healthcare industry high paying and steady, you have a higher borrowing capacity.
In turn, you may deposit 10% without paying Lender’s Mortgage Insurance (LMI). In some cases, you can deposit as low as 5% if you meet strict lending criteria.
Case study: Nurse Katherine
Situation
Katherine is a registered nurse looking to buy a home worth $800,000 in NSW. However, she only has enough savings to cover 10% ($80,000) of the deposit, stamp duty and other fees. When she browses through different lenders, she finds out she needs to pay around $17,000 in LMI.
Solution
It’s Simple finds a lender that offers special home loans for nurses, and they secure Katherine a 90% home loan without LMI. This means that she can deposit as low as $80,000 without paying LMI or using a guarantor.
LMI waiver
While you pay the premium, LMI protects lenders in case of mortgage defaults. LMI is typically required if your loan-to-value ratio (LVR) is higher than 80%.
LVR is the amount of your loan as a percentage of the property value. For example, if your property is worth $700,000, and you deposit $140,000, your LVR is 80%.
Since healthcare workers are deemed low risk, financial institutions may waive LMI fees even if your deposit is less than 20%.
Case study: Doctor Paul
Problem
Dr. Paul is a surgeon in NSW who wants to buy a property. He finds his dream property and sees that it’s valued at $700,000. However, he realizes he only has enough savings to cover a deposit of $105,000 (85% LVR) and pay for other fees.
Solution
Under normal circumstances, he needs to pay over $5,900 in LMI. Since his budget is limited, he consults a broker. They find a lender that offers home loans for allied health professionals.
In the end, Paul’s lender waives his LMI premium, so he gets to save thousands on the upfront costs of buying a house.
Lower interest rates
As a healthcare worker, you may be eligible for discounted home loan interest rates that can lower your repayments. For example, a 25-year loan of $800,000 with a standard variable rate of 5.45% brings your monthly repayments to $4,889.
If your lender gives you a 4.85% interest rate because you’re a healthcare worker, your monthly repayments go down to $4,608.
To estimate how different rates affect your repayments, you can easily use our loan repayment calculator.
Exclusive offers
Aside from competitive interest rates, you can also access a range of features, including offset accounts and redraw facilities, that can help you save more over the life of your loan.
Eligibility Criteria for Home Loans for Healthcare Workers
Different lenders require different criteria based on your situation. Typically, you should:
- Be an Australian citizen or permanent resident working in Australia
- Be a health worker
- Be a member of a registered medical association (based on the lender)
- Meet the income requirement ($90,000 or depending on the lender)
- Have the deposit requirements
- Satisfy the lender’s credit policy
- Proof of genuine savings (depending on the lender): To increase your savings, try to track your income and expenses to have an idea of where you can cut costs. For example, you can cook your meals, look for subscription services you can cancel, consider cheaper alternatives or set separate accounts for your daily expenses and savings.
- A good credit history: There are certain things you can do to improve your credit score before applying for a home loan. These include paying your bills on time, checking your credit report for errors and lowering your credit limit.
How to Apply for a Home Loan for Healthcare Workers in Australia
Step 1: Compare different home loan products and lenders
Before looking for a home loan, make sure you understand your situation and goals. Not all lenders offer loan packages exclusive to healthcare workers, so you need time and patience to research.
When comparing lenders and offers, check the interest rates, comparison rates, loan features, loan terms, repayments and other fees to find the one that matches your needs.
To make your research and application easier and faster, talk to a home loan specialist. They have multiple industry connections and an extensive understanding of the market inside out.
If you’re unsure, book a FREE consultation with our expert brokers. They will help you compare and choose the loan that works for you and negotiate a better deal on your behalf.
Step 2: Get pre-approval
Once you find the ideal lender and product, consider getting pre-approved. Pre-approval or conditional approval is not yet final, but it gives you a clearer idea of how much a lender may let you borrow. They will assess your documents, such as payslips, credit history, etc.
Getting pre-approval is not a hard requirement, but it comes with benefits. It helps you know how much you can afford, so you can narrow down your property search.
Step 3: Search for your dream home
Once you’re confident of your borrowing power, you can browse through the properties that fit your budget. Then, attend inspections before making your offer to assess the property’s condition.
This part can be overwhelming, so having a conveyancer or solicitor can help you with reviewing contracts, negotiating terms and conditions and ordering building and pest inspections.
Step 4: Apply for unconditional approval
After making an offer and reaching an agreement with a seller, your It’s Simple broker will help you secure unconditional approval or formal approval. This means the lender formally approves your mortgage.
Step 5: Review and sign contracts
Once your loan documents arrive, make sure you carefully review them to ensure you understand and agree with the terms and conditions. Then, you can sign them if you’re satisfied with the offer.
Tip: Having an expert by your side can help you assess the contract better before signing it.
Step 6: Settlement
After signing, your solicitor or conveyancer will arrange the settlement date. This final stage involves transferring the property to your name. Usually, this is when you pay other upfront costs, such as stamp duty.
Congratulations – you’re now a homeowner!
Looking for a medical professional home loan?
As the backbone of our society, you deserve to reward yourself with a place you can comfortably go home to and relax in after your tiring shift. Medico loans are a great way to achieve long-term security. The benefits of home loans for healthcare workers help you own your house with a lower deposit, waived LMI and discounted interest rates.
Get in touch with our mortgage brokers to get expert help from the start and beyond. It’s Simple will help you break down your options, enjoy tailored choices from the top 40+ banks and lenders in Australia and help you choose and apply for the right loan solutions that satisfy your goals and needs.
You can email us today at info@itssimple.com.au or book a free expert consultation at your preferred schedule.
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