Home loan benefits for medical professionals

Practising medicine is considered to be a stable, high-income career. As a result, several Australian lenders offer exclusive home loan benefits to medical professionals.

If you’re a doctor or another type of medical professional, your hard work and dedication towards the welfare of others may be rewarded through specialist home loans that make it easier to become a property owner.

Unique lending opportunities for low-risk professionals

Lenders consider medical professionals to be low-risk applicants with higher income, which is not only stable but increases over the years. Financial institutions preference medical professionals as clients because they may invest in other products, such as business loans.

The income structure for medical professionals is often different from the calculations used for regular PAYG or other self-employed professionals. For example, you may work as a general practitioner in someone else’s practice and raise an invoice based on the number of patients you see. 

You may want to consult an experienced professional who is familiar with how income for medical professionals is calculated before you apply for medical loans as your pay arrangement may affect your borrowing power.

Eligibility

Your income structure may be unusual, which could affect your eligibility for home loans with some lenders. Receiving medicare income guarantees, contractual employment, partner-style businesses, and self-employment, may all also affect your application.

Some lenders may require buyers seeking a medical professionals home loan to provide documented proof that they’re a member of a relevant industry association, such as the Australian Medical Association (AMA), Australian Association of Practice Managers, Medical Practitioners Board of Australia, or Australian Medical Council (AMC).

Lenders Mortgage Insurance (LMI) waiver

Lenders normally require homebuyers to purchase Lender’s Mortgage Insurance (LMI) when borrowing more than 80% of a property’s value, as protection against financial loss due to default or non-payment of the home loan. Most lenders pass the cost of LMI on to the borrower, which can be expensive. 

However, LMI waivers are available to healthcare professionals taking out home loans, allowing them to avoid incurring this cost and potentially save a significant amount of money. Some lenders may also waive off LMI even if you borrow 100% of the property value, although many impose a maximum loan-to-value ratio (LVR) below the full property value. 

This waiver is typically available to general practitioners, pathologists, nephrologists, urologists, neurologists, haematologists, and several other medical professionals. A few lenders may also offer this benefit to interns and residents.

If you’re considering obtaining an LMI waiver, you’ll need to apply with a lender that offers this benefit.

Big four banks ANZ and Westpac extend LMI waivers to eligible borrowers. In late 2022, Westpac expanded its program to allow eligible registered nurses and midwives with a 10% deposit to qualify if they earnt over $90,000 per annum.

The amount you might save by qualifying for an LMI waiver will depend on the property’s value and the deposit you have saved. RateCity has crunched the numbers on how much you could save if you only had a 10% deposit and qualified for LMI waivers for a variety of residential property values. See the table below for the calculations:

How much you could save with an LMI waiver

Source: RateCity LMI Calculator. Results are estimations for demonstrative purposes. Actual LMI figures may vary.

It may be worthwhile speaking to a mortgage broker for more information on which lenders may offer LMI waivers. A broker can also provide you with more specialised information on loans that best suit your needs and goals.

Other benefits for medical professional homebuyers

In addition to the LMI waiver, you may be entitled to several other benefits as a low-risk applicant. These include:

Discounts on interest rates and fees

Medical professionals may receive lower or discounted interest rates and fees, or other waived home loan charges. Generally, lenders offer these benefits if you borrow less than 80% of the property value, and have a strong employment history, as well as significant savings. 

However, eligible medical professionals are highly-sought after mortgage customers and some lenders will offer generous discounts in order to secure these types of dependable borrowers.

Higher loan-to-value ratio (LVR)

Lenders may allow medical professional home loan applicants to borrow at a higher LVR than regular borrowers, without the consequences of LMI. Some financial institutions may allow a LVR of up to 90-95% of the property value, while others may allow you to borrow 100% of the property’s value, negating the need to save for a deposit.

Negotiate all these options with lenders or a mortgage broker as part of your market comparison.

Can you buy an investment property?

You can use a specialist medical home loan for buying your first home, an owner-occupied property, or an investment property, with a few additional terms and conditions. 

Most lenders have stricter eligibility requirements for investment loans for medical professionals compared to owner-occupied home loans. Other eligibility requirements may differ from bank to bank but mostly include a consistent full-time work record, minimal liabilities (or additional loans) and a clean credit history with no defaults.

How to apply for a medical professionals home loan

The benefits available to medical professionals may allow you to grow your property portfolio faster.

Keep in mind that there is more to a home loan than interest rates and LMI waivers. You’ll still want to compare your options carefully, including checking interest rates, fees, features and the lenders’ customer service. 

Once you select your ideal home loan, reach out to the lender to confirm they offer loans for medical professionals, discuss and negotiate the terms of the mortgage until you’re satisfied, or seek the assistance of a mortgage broker to help with your search efforts and the application process.

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