A physician loan (also known as a doctor loan) is a type of loan specifically given to medical professionals who’re interested in buying houses for themselves. These loans do not usually require a deposit which makes them very attractive for individuals who’re on restricted incomes but have promising futures and want to buy their first homes.
If you are such an individual and are having trouble raising the money to pay for a deposit on a traditional mortgage, this post will tell you what to know before applying.
Determining Eligibility
The very first thing that you need to do if you are planning on applying for a physician loan is to figure out whether or not you are even going to be able to. Not everybody is eligible for physician’s loans even if they are medical professionals. Of course, they are mortgage loans for physicians (the keyword in the previous sentence is physicians). If you are not a physician but work in another area of medicine you likely won’t qualify. However, that’s not to say that there won’t still be a loan you can get. Healthcare professionals are given access to loans ordinary people are not. If you are planning on applying for a physician loan and are eligible then you need to make sure that you are getting a good deal and most importantly of all, can afford to repay your loan on time and in full.
Interest Rates
Once you have determined eligibility you then need to spend some time thinking about interest rates. While these loans allow individuals like yourself to get mortgages you wouldn’t otherwise be able to afford (because of large deposit requirements) they sometimes have high interest rates. Even those that do not have high-interest rates can still be expensive because as no deposit is paid, the total amount due is higher, and therefore monthly repayments are more than they would be if you put a deposit down of 10% or more.
Repayment Plan
If you are sure that you want a physician loan then after researching interest rates you need to give some thought to your chosen lender’s preferred payment arrangement. Once you have figured out how much the house you want to buy is going to cost and have made an offer you can go ahead and apply for your mortgage. Upon application, you will be given a provisional repayment plan and schedule. If it is too much for you then under no circumstances should you go ahead with the loan. If you do go ahead with it and are unable to pay you could lose your house.
Other Options
You do have other options. Even though physician loans are great because they sometimes have fantastic interest rates and deposits are not required, you should explore your options before committing to a mortgage. If you are unsure what to do and you think you need a little more advice then speak to a mortgage broker. A mortgage broker can use their expertise and knowledge of the property market to get you a mortgage that’s right for you. You can find specialist brokers who work with companies offering physician loans to help medical professionals like you find loans right for them.
Consider Cost
Think about the cost. Can you afford the house that you are making an offer on? Many people who’re accessing and using physician loans get excited because they can borrow more than they would normally be able to and do not have to pay deposits. This excitement usually leads people to make purchases of properties that are outside of their normal budgets. Speak to your partner (or if you are single think carefully) and figure out whether or not the house that you want to buy is within budget. If it does not then do not hesitate to pull out and find another.
Understanding Risk
Understand the risk that is inherent in physician mortgages. While you can buy a house that is more expensive than other lenders might permit you to, you will also lose it if you do not keep up with repayments. Mortgage lenders are mortgage lenders; they are unforgiving. It doesn’t matter if you are a physician or a brain surgeon, you need to make sure your repayments are made on time. If you do experience financial difficulty then reach out to your lender and explain this to them, and they might be able to sort something out for you.
Physician loans are great for medical professionals wanting to buy their first houses. Before taking out any kind of loan first spend time doing your research and make sure that it is right for you. Mortgages are the largest financial commitments people tend to enter into which means they need to be carefully thought through.
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