Doctors and medical professionals are often seen as respected members of the community, and for good reason.
They’ve worked hard to achieve their qualifications and provide a valuable service to their patients, as well as having a strong code of ethics that is the envy of many professions.
But it’s not just in everyday life that doctors are valued – they are also seen as great potential customers for Australian banking institutions.
With over A$87bn in home loan commitments in the last quarter alone, the housing market is a major earner for Australian banks.
And while they are understandably cautious about who they lend to, medical professionals are often seen by lenders as a good investment – mainly due to their high earning potential and stable job prospects.
As a result, doctors in Australia can receive some great deals from financial institutions when approaching the property market. Here are just a few examples.
Unique Advantages
There are several unique advantages for doctors looking for a home loan in Australia, and one of the biggest is the ability to have your Lenders Mortgage Insurance (LMI) completely waived when buying a property.
Many people who take out a mortgage in Australia are obliged to pay LMI, which is effectively an insurance policy for the lender if you were to default on the loan.
Unless you are putting down a 20% deposit – not easy these days – LMI is added to the value of your loan and can run into thousands.
But the good news for doctors and certain other medical professionals is that, because of their desirability as home loan customers, many Australian banks and non-bank lenders will consider waiving their LMI charges to secure your business.
A second benefit for doctors looking to secure a new home or invest in property is the potentially reduced deposit they may be asked to pay to take out a loan.
Most banks will typically look for a Loan to Value Ratio (LVR) of 80% when lending on property in Australia. This effectively means you will have to put down a deposit equivalent to 20% of the property value to secure the loan for the remaining 80%.
However, many lenders are willing to increase this LVR to 90% for doctors (and even higher for some specialist medical professionals).
Effectively, this means many medical professionals can secure a property loan with a lower deposit, sometimes as little as 10% or less of the property value.
That extra borrowing capacity, especially when added to savings on LMI, can mean big advantages for medical professionals in the home loan market. Check out the example below for exactly how much this can mean.
A property purchase with a 10% deposit would usually incur the additional cost of LMI. The table below shows you the LMI premiums from a big 4 bank at different property values. The premiums are substantially higher with a deposit of less than 10%, and savings on having a 10% deposit rather than 20% deposit on a property in Victoria are also shown. The advantages of LMI waivers and reduction in savings required are evident.
| Property Value | LMI premium Saved | Savings needed 10% deposit (Vic) | Savings needed 20% deposit (Vic) |
| $1,000,000 | $16,552 | $158,000 | $258,000 |
| $1,500,000 | $28,040 | $237,000 | $387,000 |
| $2,000,000 | $40,223 | $314,000 | $514,000 |
| $2,500,000 | $50,278 | $397,000 | $647,000 |
| $3,000,000 | $60,403 | $479,000 | $779,000 |
Commercial Benefits
It’s not just in home loan lending where doctors can reap significant benefits from their preferred status with lenders either.
When borrowing for commercial purposes – such as acquiring new premises for your medical practice or purchases new fittings and equipment for such a practice – medical professional are often able to secure preferential lending terms.
Commercial loans tend to be more complex than a standard residential home loan, but many lenders will offer additional benefits to the medical profession for commercial lending, primarily because they are seen as low risk.
For example, a retail franchise business can normally borrow up to 70% of an asset (such as their commercial property) to fund expansion plans.
Yet for a medical practice, this loan to asset ratio can often be significantly higher, with some specialist practices managing to secure commercial loans up to 100% of their asset value in recent times.
It’s worth pointing out that commercial lending requires your business to provide collateral for the loan – usually a property or equipment – to secure the funds, but if you’re just starting out it is also possible to use your home as the asset to borrow against.
All the more reason for doctors to take advantage of what is available to them from banks and non-bank lenders in the current market.
But how should they best negotiate the market for these services?
How an experienced broker can help
With all the potential discounts and preferential terms available for doctors and other medical professionals in the property lending market, it’s a good idea to get some help in navigating the market to secure the best deals available.
Although many mortgage brokers will offer this service, it is only the really experienced ones that truly know this section of the industry.
Finding a broker who has specialist knowledge in securing home and commercial property lending for doctors can reap significant benefits, as many specialised loan packages live deep within bank policy documents and require insider knowledge to unlock.
Working alongside such a broker will help you to identify exactly which lender offers specific deals for medical professionals, allowing you to secure lower interest rates and flexible features.
Just as importantly, they will know how to present your application in a way that ticks every box the lender is looking for.
This expertise can assist in:
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- Fast-tracking approvals by matching you with the right lender from the start
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- Maximising benefits so you don’t miss out on waived fees or better rates
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- Avoid common pitfalls—such as lenders misunderstanding variable income from private practice or locum work
The advantages of being a doctor or specialist medical professional are there to be discovered if you know where to look.
Securing a specialist mortgage broker will be your eyes and ears on this market, and will be well worth your time investment in their services.
After all, you wouldn’t go to a GP for brain surgery, would you? The same applies with property lending, and the financial benefits of doing so can be significant.
Loanscope specialises in home loans and commercial loans for medical professionals.
Contact us today for expert advice.
