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Financing your first home for doctors

Buying a first home is a key milestone in life – and while medical, dental and veterinary professionals can enjoy advantages when it comes to securing a home loan, there are pitfalls to be aware of.

Tuesday, 11 June 2024

Young couple sitting on floor surrounded by moving boxes.

Your first home is far more than a roof over your head. The property is also a valuable asset, one that should appreciate in value over time.  

Indeed, many doctors choose to hold onto their first home and use it as an investment property when they are ready to upgrade to their next home. This is why it sometimes pays to have an investor mindset – even when you are buying a home to live in. 

However, long before you begin attending ‘open home’ inspections, it’s worth taking three early steps to make your home buying journey as seamless as possible. 

 Here’s what’s involved. 

1. Surround yourself with experts 

Buying a first home can involve a steep learning curve – and you want to be sure you get it right. 

 Gathering a team of experts not only streamlines the buying process, it also gives you the benefit of professional expertise to avoid costly mistakes.  

Your team of experts should ideally include a mortgage broker that specialises in your profession such as Avant Finance. This is because a specialist finance provider will have comprehensive knowledge of doctors’, dentists’ and vets’ unique income streams, career journeys and credit profiles, all of which is important when it comes to securing a home loan. 

A trusted solicitor or conveyancer should also form part of your team such as Avant Law. Their role is to review a property’s sale contract, and identify any clauses that could work against you, as well as ensuring a hassle-free transfer of the property into your name. 

For doctors, dentists and vets who are time-poor or buying in an unfamiliar area, a professional buyer’s agent can be a valuable addition to your team. 

2. Know the support available to first home buyers 

As a first home buyer you may be entitled to a financial helping hand through various initiatives. It’s worth knowing what’s up for grabs. 

For example, The First Home Owner Grant, differs across Australian states and territories, and can be worth anywhere between $10,000 and up to $15,0001.  

Stamp duty concessions and exemptions may also be available, offering substantial savings on the upfront cost of your home. 

Other options include the First Home Guarantee2 that allows first home buyers to get into the market with as little as 5% deposit. However, doctors, dentists and vets receive preferential treatment from lenders and are offered low deposit home loan options too. 

Conditions and eligibility requirements often apply to these schemes. Your Avant Finance lending specialist can explain any initiatives you may be eligible for. 

3. Get your finances in great shape 

When you apply for a home loan, lenders will want to see a strong track record of saving, though some banks will also consider regular rent payments as ‘savings history’.  

What’s less obvious is that a bank will look at the overall credit limit on your credit card rather than the outstanding balance. This being the case, it can be worthwhile contacting your card issuer to request a reduction in your credit limit before applying for a loan. 

While these sorts of issues are common to all first home buyers, medical, dental and veterinary professionals can face additional considerations.   

In particular, it is common for medical professionals to carry a large HECS debt. Doctors may be encouraged by well-meaning friends or family to pay down as much of their HECS balance as possible prior to applying for a loan. 

However, this could work against you. The amount owed in HECS is often of less interest to a lender than the fact you have a HECS debt.  

So, there may be no need to aggressively pay down your HECS balance before applying for a mortgage. Instead, the money can be used to fast-track a deposit. 

The good news for doctors buying a first home 

As we mentioned earlier, medical, dental and veterinary professionals can enjoy valuable advantages when it comes to home loan funding. That’s because banks love doctors, dentists and vets.  The earnings – and earnings potential – of medical, dental and veterinary professionals mean they are seen as low risk borrowers. 

This can filter through to valuable perks. For instance, banks often waive lenders mortgage insurance (LMI) for medical, dental and veterinary professionals. LMI is a type of insurance that protects the lender (not the borrower), and it usually applies if a borrower has a deposit below 20%.  The catch is that the one-off premium can run into thousands of dollars. Being able to bypass LMI is a significant saving.  

On the flipside, lenders aren’t always familiar with the ways doctors are remunerated, and each bank has its own nuances when it comes to assessing income.  

From locum roles to loading and allowances, and future projected income, the role of a good broker is to understand how you are paid, and translate this into language the bank can understand. This is the first step in understanding your borrowing power, and from there, building a buying budget.  

Call Avant for focused expertise 

Buying your first home is exciting – and more than a little nerve-wracking. It is, after all, a major financial commitment. As Avant Finance focuses on medical, dental and veterinary professionals, we are well-placed to guide you through the journey. 

For more suggestions on preparing to buy a first home, call Avant on 1300 99 22 08, or request a free consultation with one of Avant’s medical finance specialists. 

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