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    Issue 16

  • A doctor’s life

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    Looking for a loan?

     
    James Ostroburski

    James Ostroburski

    Chief Executive Officer

    Kooyong Group

     
     
    looking for a loan main image

    When it comes to home loans, doctors need the right guidance to ensure being time-poor and under pressure doesn’t prove costly.

    Whether you are looking for your first home or third investment, there are property market trends and borrowing insights to consider at every step on the property ladder.

    The Kooyong Group, which is part of the Avant Group, specialises in lending to doctors. With access to a range of banks, including those who offer preferential service, the Kooyong Group secures finance for doctors by understanding and explaining their unique circumstances to a prospective lender. This can often save time and money.

    Housing market booms

    Australia’s housing market has rebounded; property values have regained COVID-19 losses, interest rates are at record lows and buyers are back in droves.

    The Reserve Bank of Australia has indicated interest rates may remain low for the next three years. However, a major bank recently raised its four-year fixed interest home loan rate, serving as a timely reminder that rates could rise in the near future.

    Borrowing that factors in earning potential

    Doctors’ earning potential, deposit requirements and need for loans with higher loan-to-value ratios (LVR), vary throughout their careers. For example, a younger doctor looking for their first home with no deposit may require a 100% LVR loan, where a specialist, with access to accumulated equity may need substantially less.

    Banks consider loans above 80% LVR to be a higher risk, so they usually attract lender’s mortgage insurance (LMI). This covers the bank if the customer defaults on the loan. However, various loan structures that consider a doctor’s current income and future potential are available. These often involve a lower deposit with a higher LVR and costly LMI payments waived.

    Income sources impact lending considerations

    Doctors who have started their own practice and are newly self-employed can find providing proof of income for a loan challenging. Doctors who work in both private and public practice may struggle to explain the variety and reliability of their different income streams. Although banks usually require a significant income history to approve a loan, some can provide finance with as little as three months of income data.

    By understanding what different banks require, doctors’ unique income streams can be factored in to ensure access to the best possible solution, even with a recent transition to self-employment, or a career stage where income in the last year does not predict future income.

    Overtime and on-call time payments that count

    Most banks ‘shade’ overtime and on-call time, which simply means they discount the amount of this type of income when calculating the ability to service a loan. Given these extra hours can make up a good portion of some doctors’ overall income, shading can be a big issue. It can often limit a doctor’s borrowing potential and the value of the assets they can secure funding for.

    Doctors can maximise their borrowing capacity by using banks who will consider 100% of their income.

    Finding the right option

    In the current market, there are great opportunities to make your move onto or up, the property ladder. When looking for a lending adviser, having a comprehensive understanding of credit and the requirements of each lender, is fundamental. However, doctors’ needs can be complex, and the needs and income profiles vary for each person. Therefore, it’s important to find someone who is an expert in you. A lending adviser who can find the right solution for you and be your personal champion.

    Kooyong adv

    © 2020 KA JV Pty Ltd. Kooyong Group is a trade mark of KA JV Pty Ltd (ACN 637769361) exclusively licensed to KA JV 2 Pty Ltd (ABN 75640406784), Credit Representative Number 523242 is an authorised credit representative for Australian Finance Group Ltd (ABN 11066385822), Australian Credit Licence Number 389087. Credit services or assistance to which the National Credit Code applies are provided by KA JV 2 Pty Ltd (a wholly owned subsidiary of KA JV Pty Ltd). Eligibility criteria, terms and conditions, fees and charges apply.

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