Finance matters for female doctors

Doctors are in a fortunate position. They are typically regarded as attractive borrowers by banks, owing to their relatively consistent income and their ability to dial up and dial down their income as required.

This provides real advantages. When it comes to residential borrowing to buy a home or investment property, lenders may waive lender mortgage insurance, paving the way for doctors to borrow as much as 90-95% of a property’s value for investment purposes or an owner-occupied home*.

This means doctors purchasing property may only need a smaller deposit compared to the usual 20%, plus savings to pay for stamp duty. In certain states/territories, some first-home buyers may be eligible for a full exemption or reduced rate of stamp duty depending on the cost of the property they have purchased (though conditions can apply).

This is all favourable for female doctors, particularly as residential property can form the foundation of personal wealth. However, there are various life events that can have a significant impact on a woman’s financial situation – far more than for men. At these times, good planning ahead of time and expert support is essential.

Having a baby, taking maternity leave, and returning to work

Pregnancy, maternity leave, and the subsequent return to work are all extremely exciting milestones for female doctors. Depending on your needs during this period, it is important to be transparent with your lender when applying for finance.

Doctors in PAYG roles will generally have a ‘return to work’ letter that sets out their returning salary. Banks will often use this to determine the doctor’s borrowing capacity.

For doctors who are self-employed, lenders may want to see your prior year’s tax return for evidence of income.

Undertaking speciality training or making the transition to self-employment

Female doctors who commence specialty training may see their income dip for the duration of their training. Additionally, living costs may rise if training requires a move interstate. Here too, it is important to be upfront about your situation with a lender.

The transition to self-employment doesn’t prevent a female doctor from taking out a residential loan, but there may be more hoops to jump through. Fortunately, lenders can recognise the earning potential of female doctors, and for many 3-6 months of earnings history is all they will need in order to qualify for a loan. On the plus side, this is far less than the requirement for borrowers outside the medical profession, who will normally be asked to provide one – two years of tax returns as proof of income.

Relationship breakdown

Unfortunately, relationship breakdown is a fact of our modern society. It’s not something we can generally prepare for, but when you have combined finances, a lot can come into play. We generally suggest female doctors come to us with what a ‘worst case’ settlement might look like so that we can put a plan in place to achieve this and negotiate with your lender from there.

The value of a personal circle

Having a trusted team who you know are working in your best interests is critical for female doctors. It allows you to progress with your professional and personal life, while experts are supporting your wealth.

Your accountant, financial adviser and finance specialist form the core of your team, and they are who you should aim to touch base with regularly. Connecting with experts who have experience working with doctors is an essential step as they will have a clearer idea of the nuances of the profession.

Your solicitor and potentially a buyer’s agent or property advisor can also form part of your expert line-up.

With your network of experts sorted, you can be confident that each of these individuals will collaborate to help you find the solutions to reach your goals.

Over time, you will grow your assets, and your wealth. Seeking expert support from an early stage on how you own and structure these assets can protect your wealth from relationship breakdown while also ensuring your children and loved ones continue to benefit from your assets.

Avant is here to help

It can all sound complicated, but it shouldn’t be. Avant Finance is here to help.

With our focus on doctors, and our own suite of Avant loans plus brokered loans with other lenders, we are dedicated to helping female doctors achieve personal financial security from buying a home to buying or expanding into a practice of their own.

To find out how we can help, request a free consultation with one of Avant’s medical finance specialists. Otherwise, if you are interested watch our webinar for female doctors, Finance Matters.