Do Teachers get special mortgages?
Teachers can lead very busy lifestyles and can constantly be on the go. Being a Teacher is a very well-rounded and well known profession so you may be wondering if there are such things as Teacher mortgages and how you might get your hands on it.
Unfortunately there is no such thing as a ‘Teacher mortgage’ but there are specialist lenders who cater towards teaching professionals. They understand how Teacher’s incomes work from being a new Teacher to being freelance and can be worth hunting around for.
It does not matter whether you are part of a team of newly qualified Teachers, a supply Teacher or have been teaching for years, it is important to find the right mortgage to fit your situation.
How much can I borrow as a Teacher?
You can access up to five times your annual salary if you have a good credit score. This amount can vary between lenders so it is important to read into the criteria you need to fit to access the right rates for you.
Some lenders will take into account any bonuses or overtime that you may receive as well as a secondary income. Other lenders will just look into your teaching salary and will completely ignore everything else. It is important to find a mortgage lender who is going to allow you to make the most out of your income; find a lender who factors in all revenue you want them to.
What help can I get as a Teacher?
Mortgage lenders do prefer when they see a profession such as a Teacher or a doctor as they are more likely to have stable and reliable incomes. You can also increase your chances of being accepted onto a mortgage through approaching a lender with a bigger deposit.
There used to be a ‘key worker mortgage scheme’ to help encourage key workers into buying or renting accommodation. This scheme ended in 2019 but there are still plenty of mortgage products out there to help you onto the property ladder.
Help to Buy Equity Loan
You can get a five year interest free equity loan giving you up to 20% – 40% of the property value depending where you live. You will pay interest at 1.75% after the fifth year and then 1% RPI every following year.
If you cannot afford to buy the whole of the property initially then you can buy between 25% and 90% of the property and buy back the rest at a later date. There are regional differences. This is often described or referred to as a staircasing where you buy back as little as 5% at a time until you own the whole property.
This gives a £1000 Government bonus if you save the maximum of £4000 a year. There are conditions to using these as a savings vehicle and you should seek advice from a qualified financial advisor before joining these schemes.
Help to Buy ISA
The help to buy ISA is no longer available as applications for these saving vehicles which helped First Time Buyers stopped on the 30/11/2019. If you had this scheme opened before the closing date the funds within them can still be used for a deposit on your first home.
Right to Buy
This scheme allows you to buy your home at a discounted price, also known as the preserved right, to buy. You will acquire a discount on buying a property after being a tenant for at least three years.
You need to make sure that you can afford the mortgage that you are paying for, if you miss repayments on your mortgage your home may be repossessed. You should speak to a mortgage advisor to ensure you know what commitments you are getting yourself into.
What if I am a Self-Employed or a Freelance Teacher?
If you are Self-Employed or a freelance tutor you will still have access to the same products as a PAYE employed borrower. You will need to provide proof of your income through any contracts or bank statements.
Lenders will usually ask for three years’ worth of accounts to be able to prove your income but there are specialist lenders out there if you are newly Self-Employed. You need to make sure that you are filing for your taxes through SA302 forms as you will be asked to provide them.
How can a Mortgage Broker help?
A Mortgage Broker has access to the mortgage market and offers that may not be available directly to you. As such they can help to find the most suitable mortgage product for you from a larger range of lenders. There are a lot of different options out there no matter what your situation and a broker has the knowledge and experience to point you to the right lender for you.
There are mortgage products that are not authorised and regulated by the Financial Conduct Authority. Mortgage Brokers are regulated to ensure that everything is legitimate and to make sure customers are treated fairly.
There are a lot of lenders out there who will tailor towards Teachers but they can be harder to find. Brokers will help you with gathering all the documentation you might need for your mortgage application and will ensure you are applying for a mortgage you can afford.
It doesn’t matter if you are on temporary contracts and looking for a Buy to Let mortgage or a PAYE Teacher looking for their first purchase, the right Mortgage Broker will advise on the right mortgage deal for you and your circumstances.