Whether you’re new or old in the healthcare industry, medical professional home loans can help you own your home with exclusive benefits, such as lower rates and deposits and waived lenders’ mortgage insurance (LMI).
Becoming a part of the Australian medical field already takes a long time, hard work, commitment and financial obligations. To give you a stress-free, easy and affordable home loan, we reveal what medical professional home loans are, which professions qualify and the benefits you may get.
What are medical professional home loans?
Home loans for medical professionals (also called medico loans) are designed to help members of the healthcare industry with their mortgages. These are home loans for doctors, nurses and other allied health practitioners considered by banks and lenders.
Some financial institutions will allow you to borrow up to 90% of the property’s price (sometimes, even more) without making you pay LMI. Generally speaking, if your loan-to-value ratio (LVR) is 80% or more, lenders require you to pay LMI because of its risky nature.
LVR is the amount of your loan expressed as a percentage of the property value. Let’s say that the property is worth $800,000, and you deposit $160,000. This means you borrow $640,000, which is 80% LVR.
But since allied health workers are low-risk borrowers, you can opt for a low deposit without shedding money on LMI.
This loan package is available whether you are purchasing or refinancing your home loan, and it’s open to first home buyers or looking to purchase their next home. With a medical professional home loan, you can purchase an owner-occupied home or even an investment property.
Why do lenders favour medical professionals?
Home loans are expensive debts, so each lender follows strict policies and considers your financial situation and credit to ensure that you can make your repayments and avoid defaulting on your loan.
In some cases, financial institutions consider some borrowers low-risk, so they get special offers. This doesn’t come out as a surprise as some jobs tend to have higher incomes that increase with time and experience, so they are unlikely to default on their loans.
Since healthcare workers earn higher incomes and have a stable source of income, banks and lenders tend to favour them. This puts these professionals in a unique position where they can access exclusive loan packages not available to other borrowers.
Which medical professionals qualify for waived LMI?
While the term medical professional goes beyond doctors and nurses, each lender has a set of different criteria for its specialist home loans. It’s best to talk with your mortgage broker about which banks can service you best to make sure you find the loan that fits your circumstances.
Here are some of the common professions that qualify for medico loans:
- Cardiothoracic surgeons
- Cosmetic surgeons
- Emergency surgeons
- General practitioners
- General surgeons
- Heart surgeons
- Medical practitioners
- Occupational therapists
- Orthopedic surgeons
- Pediatric surgeons
- Plastic surgeons
- Respiratory surgeons
- Speech pathologists
Benefits of home loans for medical professionals
Since banks have the impression that you can meet your loan repayments, you can enjoy exclusive benefits:
1. Lower deposits
But with home loans geared towards medical professions, lenders let you off the hook. They view your job as high paying and steady, so you can deposit as low as 10% (sometimes lower).
2. Waived LMI
Lenders require LMI to protect themselves from losses they might incur with the possibility of mortgage defaults. Since financial institutions have a sense of security that you are unlikely to default on your loan, banks consider waiving their LMI premiums even if you borrow more. This means you get to save thousands on your loan if you qualify for a medical professional home loan.
To help you understand how much you can save by having your LMI waived, consider this scenario:
Let’s say you want to purchase a home valued at $600,000 and deposit $60,000 (90% LVR). Under normal circumstances, you may need to pay over $8,600 to $14,000 in LMI. However, with a medico loan, your lender can waive this fee.
So, you get to save thousands on the upfront costs of buying your home. Of course, conditions apply to different lenders, and this depends on your eligibility.
3. Discounted interest rates
As a medical professional, you may also have access to more competitive interest rates that aren’t offered to other low-deposit loans. This makes your home loan repayments lower and your budget more flexible.
For example, if you take out a 25-year loan of $750,000 under a standard home loan with a 5.45% interest rate, your monthly repayments reach $4,584.
However, if your broker finds you a bank that is willing to give you a 4.85% interest rate because you are an allied health professional, your monthly repayments go down to $4,320. This means you get to save $264 a month.
Aside from good rates, you also have access to a range of home loan products and features, including offset accounts and redraw facilities, that can help you save more over the life of your loan.
You can use our loan repayment calculator to help you estimate your repayments at different rates.
4. Waived fees
Along with lower interest rates, some lenders can also offer discounts on some fees associated with your application process. They may also choose to waive them altogether depending on your case and the lender.
Eligibility criteria for medical professional home loans
Each lender has certain criteria that you should meet to qualify for the loan package. The qualifications are determined by the lender and are on a case-to-case basis. However, these are some of the common things you may need to meet:
- Be an Australian citizen or permanent resident
- Be an allied health professional
- Be a member of a registered medical association (depending on the lender)
- Satisfy the minimum income requirement (depending on the lender)
- Have the deposit requirements
- Meet the lender’s credit policy
- Proof of genuine savings (depending on the lender)
Who is eligible for an LMI waiver?
Each bank varies, so waiving LMI depends on the lender’s discretion. For example, some lenders may require a minimum or maximum loan amount before they waive your LMI premium. Along with loan requirements, some lenders also have limited professions they choose to waive fees on.
Since different lenders require different things, consulting with your broker can help you find the right lender that matches your situation and needs.
It’s Simple Finance’s founder and managing director, Joseph Daoud, shares how St. George expands its medico loans. You can watch the full video below to find out the eligibility criteria and benefits of medico loans.
How to apply for medico loans?
The steps for a home loan application are the same as applying for a medical professional home loan:
1. Scan the market to find the right loan product
Not all lenders offer special schemes for medical professionals, so it may take time to explore your choices.
Since loan packages vary greatly from lender to lender, understanding your situation and comparing your options can help you find the best deal that suits your circumstance.
It is in your best interest to speak with a broker as they have an in-depth understanding of the market and multiple connections that allow them to find, negotiate and tailor-fit the best loan product for you.
2. Get pre-approval
Pre-approval or conditional approval is when a bank or lender assesses your ability to repay your loan and gives you conditional approval to borrow up to a certain amount for a home loan. This is not yet formal or unconditional approval, but it gives you a clearer idea of your maximum borrowing power.
This way, you can manage your expectations, narrow down your property search and confidently make an offer on your chosen property.
To apply for pre-approval, your broker can help you navigate and submit the required documents to increase your chances of getting approved.
3. Apply for unconditional approval
After choosing a property and reaching an agreement with the seller, your mortgage broker will handle your unconditional approval. Getting unconditional approval means your lender formally approves your home loan.
4. Review and sign contracts
Once you receive your contracts, carefully review the documents to make sure you understand and agree with the terms and conditions. After signing, your solicitor or conveyancer will arrange the settlement date. This final stage means you officially own the property. Usually, this is the part where you settle other upfront costs, including stamp duty and other fees.
Ready to get your medical professional home loan?
Getting into the healthcare field is already hard enough, so you deserve a home loan that recognises and considers your hard work. With medical professional home loans, owning your home becomes easier and more rewarding with the exclusive discounts and special rates you can get.
Whether you are looking to purchase a home or refinance your existing mortgage, it is always a smart idea to shop around and compare deals and offers from multiple lenders to find the best home loan for medical professionals.
To save time and effort, unlock your options with It’s Simple Finance’s brokers. Access the top 40+ banks and lenders in Australia that match your profession and goals, and get simpler and faster home loan approval. Book your FREE expert consultation at your most convenient time to secure the right loan tailored just for you.
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