By Ryan Johnson
A specialist mortgage broker has explained the overlooked opportunities for doctors and healthcare professionals when buying property and urged lenders to explore more options in the sector.
Michael Hughes (pictured above) from Sydney-based brokerage AHK Finance, said many doctors found that their borrowing capacity was limited by the current interest rates despite earning a decent wage.
“Doctors spend many years on an average income through training and once fellowship is achieved, this can increase substantially very quickly,” said Hughes who specialises in loans for doctors, dentists, and allied health professionals.
“By aligning their income trajectory with property goals, generational wealth is easily achievable for any doctor in Australia with the right strategy.”
The Australian health sector has grown significantly in recent years, with more than 104,000 medical doctors and specialists currently operating across the country.
But despite the profession being particularly lucrative, with the average general practitioner earning over $218,000 per year, many are unaware of the unique incentives available to help them enter the property market and grow their wealth, according to Hughes.
These home loan products allow medical professionals to purchase property at lower immediate costs than regular borrowers.
For example, Hughes, who was an Australian Mortgage Awards 2023 excellence awardee in the Pepper Money Broker of the Year - Specialist Lending category, said NAB, ANZ, Westpac and CBA allow doctors to purchase with as little as a 5% deposit without LMI. St George bank has recently joined this list as well.
“You have the big four banks and Bank of Queensland (BOQ) Specialist that have specific policies for doctors, as well as about 10 or so other smaller banks that have a policy or two designed for doctors,” Hughes said.
“While most will be aware of a smaller deposit and no LMI, that’s just the beginning of what’s available through a few specific bank health divisions.”
Most of these options are designed to improve borrowing power such as purchasing within a corporate trust structure, considering the future income for doctors, and the option to have a 35-year loan term.
“Two banks allow the 5% deposit purchases to be made in a Trust (Corporate Trustee) structure,” said Hughes.
“There are a further 11 banks that allow doctors to purchase investment properties using a 10% deposit and pay no LMI with varying interest rates and roughly half of them allow the purchase to be made in a trust structure.”
“The one bank that allows doctors a 35-year loan term also only for 10-year interest only period on investment purchases – so there’s some decent products out there.”
Doctors can also save money on their home loans with discounts on interest rates and fees.
For example, a doctor with a $750,000 loan at 95% LVR over 30 years could save up to $30,000 by getting a 0.25% discount on their interest rate and having their annual fees waived, according to Savvy.
Based on the above, a doctor’s home loan could save $60,013 over a 30-year loan term.
While the options above were a good start, Hughes said there weren’t that many options from banks for doctors when you considered the range of lending providers in the market.
Considering there are 96 banks and countless more non-bank options in Australia, Hughes said the decision for lenders to carve out more niche lending options would only benefit doctors, brokers, and themselves.
In any case, Hughes said there was plenty of opportunity for brokers to provide value within this niche sector.
“Without finance strategy, current bank policies make it very difficult to achieve through property investing,” said Hughes.
“Any doctor on the average medical income can achieve financial independence and generational wealth through property investing in Australia with the right finance and property strategy.”
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