Paul Crisp talks all about the mortgage process for teachers.
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Are there specific mortgages tailored to teachers?
In short, teachers don’t necessarily get better mortgages. Lenders may have in the past made some exceptions for teachers and other key workers. Some have offered discounts or reduced fees, but it’s not very common now.
There are so many different types of employment structure in the UK, lenders find it very difficult to deliver specific mortgages for every industry out there.
Can teachers get a mortgage on a fixed term contract?
Working in this way is quite common for teachers. It’s appropriate where there’s a job to do, but only for a set amount of time, so it’s done on a fixed term contract.
Lenders have modernised their approach to this, but each bank or building society is very different in what they accept. That’s the advantage of using a mortgage broker rather than going direct to your bank – we can explore the options more widely.
Some lenders might ask that you have 12 months’ history on your contract or 12 months remaining on it. Or, they might expect you not to have had a break of more than 12 weeks between contracts. But some lenders will just treat it as a standard income – and others might not accept it at all.
When it comes down to the income evidence you need, in general employment you usually need three months’ payslips. For a teacher on a contract, a lender might be more stringent and want 12 months’ payslips to show that you’ve been doing this for a long period of time.
A mortgage advisor can do all that legwork and find the lender that fits your situation.
Can I get a mortgage if I’m a supply teacher or newly qualified?
For supply teachers, the answer here is very similar to the fixed term contractors. All lenders will approach this differently. In general, though, it’s more down to your career history and your ability to continue working in this way. Much like self-employed applicants, we might need to see at least a 12 month history. If you’ve just started supply teaching work and you’ve got no real history, the lender might question that.
For newly qualified teachers, you might have a contract that hasn’t even started yet. That’s quite common, especially in the summer where teachers have just qualified, but they don’t start until September. That can be accepted as long as the start date is within three months. Once you’ve started in your role, it’s usually treated as just a standard income.
Lenders might want to see the contract to make sure it’s a permanent contract. But yes, you can get a mortgage in either of those situations.
How do mortgages work for a trainee or retired teacher?
I’ve got a client at the moment who is a trainee teacher and her income is bursary-based, which is often the case. It could be quite hard if that’s your only source of income as a bursary or trainee salary is often quite low.
There’s also no real way to prove to the lender that you will continue on into a teaching job. Lenders are quite risk averse when it comes to bursary based income – but that’s not to say they don’t accept it. It’s just very limited. If you’re applying with someone else as a joint mortgage then it can usually be considered as a secondary income.
A retired teacher would be treated in the same way as any retired applicant. We’d want to know what their pension income is and if they have any part-time jobs. Retirement mortgages are becoming a lot more common. Lenders are happy to use pension income because it’s actually more reliable than an employed income – it’s always going to come in.
Retirement income mortgages have almost no age limit, while on a normal income your mortgage may be limited to retirement age, or 70 or age 75.
How do mortgages work then if I’m a First Time Buyer teacher?
The process of buying a home is the same regardless of what you do for a living. For a First Time Buyer your advisor will want to understand your contract situation and income. Teachers generally have defined salary increases – certainly within the first couple of years as they go through probation.
It’s common within teaching not to stay within the same school for many years until you’ve progressed through your career. So we would make sure that the mortgage fits you – it’s flexible enough that you can overpay, and if you need to move location you can port that mortgage onto a new property.
How does remortgaging work for teachers?
There is no real difference to the process here if the applicants are not making any changes. If you want to borrow some more money, then we need to apply everything that we’ve just spoken about to find the right lender. But generally there are no real differences on a remortgage.
Is it easy for a teacher to get a Buy to Let mortgage?
As long as a teacher is already a homeowner then there’s no reason why they can’t purchase an investment property. The main criteria here for Buy to Let is that you have a good deposit of at least 25%.
What mortgage protection products are available for teachers?
Teachers can get some great employment benefits, particularly if they’re off work for anything short term. Your employment contract will often give you six to 12 months’ full sick pay – often dependent on how long you’ve been in that role. A newly qualified teacher might only get six weeks’ full pay and six weeks’ half pay.
We would look at your contract so that we can personalise mortgage protection to fit that. If you’re on six months’ full pay then you don’t need any income protection for the first six months, then if you’re on half pay for the next six months we’ll set you up with half the benefit. We can design any income protection policy to suit the person’s role.
With life insurance and critical illness cover there is little difference for teachers, but we do sometimes find that it can cost a bit more for protection than a standard office worker. Claims from teachers can be particularly high for time off for stress or mental health. I don’t think that’s surprising. Teachers work very hard.
How much can teachers borrow on a mortgage?
With all clients, my job is to do a full affordability check – looking at your income and expenditure both now and in the future. We’ve got to make sure that a mortgage is always affordable.
The borrowing calculations are different depending on which lender you go to. Your bank might offer you much less than you might get via a broker – we can look at a whole range of different lenders to maximise your borrowing, while keeping things affordable.
What help is available for teachers to buy a home?
There’s nothing specifically for teachers – lenders maybe can’t be seen to be biased towards particular fields or industries. That being said, you might see some lenders putting out special deals. A common one is professional mortgages – does a teacher fit a professional mortgage or is it restricted to doctors and surgeons and lawyers?
As a broker I compare professional mortgages to a normal mortgage and often they are identical deals. They’re just labelled to look more attractive. It’s all about speaking to the broker to find the overall most appropriate deal for you.
How can a mortgage broker like Fiducia Mortgage Solutions help?
A teacher, like many people, might just go to their bank for a mortgage. The bank might say no. Don’t stop there. Speak to an advisor because often there is a solution that will work for you. There are many more lenders out there beyond your bank. Don’t get disheartened – we’ll be able to help in some way.
Your property may be repossessed if you do not keep up with your mortgage repayments. The Financial Conduct Authority does not regulate some Buy to Let Mortgages.