How to Get an NHS Mortgage in 2024 | Key Workers Guide

It is difficult for staff in the National Health Service to purchase property in the United Kingdom. This is due to a couple of factors. Firstly, mortgage calculation issues around raising a high enough loan sum. Secondly, the challenge of raising a suitable deposit for an onward property purchase. 

For this reason, NHS staff need to understand their mortgage options and the government schemes available to them. After reading this guide, you will have a better understanding of how you can purchase a property as an NHS worker. 

Are you short for time? Watch this Summary Video from our Managing Director on the topic:

What is an NHS mortgage?

There are many mortgage options available to NHS employees and other Key Workers. While it is true that an NHS mortgage scheme used to exist, there are no specific NHS mortgage products available now.

Many people mistakenly believe that NHS staff have special mortgage products not available to the public. This misconception may be because there are a number of loans for NHS staff. However, these loans are personal rather than secured to properties.

The Government introduced the First Homes Scheme. This program offers discounts of 30% to 50% off a property’s market value for first-time buyers. At their discretion, councils can favour employees classed as Key Workers.

The definition of a Key Worker differs from council to council. However, all councils class NHS employees as Key Workers. The First Homes Scheme is not a mortgage product. However, it helps NHS workers who want to buy a home.

What is the First Homes Scheme?

The First Homes Scheme is designed exclusively for first time buyers. It is often referred to as a Key Worker Housing Scheme or NHS Housing Scheme. 

As mentioned previously, it offers discounts of between 30% and 50% of a property’s market value. You can only use the First Homes Scheme for your primary residence purchase. This means that it cannot be used for a buy to let or commercial purpose.

As many first-time buyers need help purchasing a home, the First Homes Scheme has been well received in the housing market. 

Here is a summary of the scheme’s criteria. You must:

• Be a First-Time Buyer
• Be able to get a 50% Loan-to-Value Mortgage
• Earn Less than £80,000 per annum before tax (or less than £90,000 if the property is located in London)
• Be 18 years old or older

If buying with other parties, you must:

• All be First Time Buyers
• Apply Together
• Not Exceed a Combined Gross Income of £80,000 per annum (or £90,000 if the property is in London)

Local councils decide how this first-time buyer scheme is implemented and the criteria for selection. The definition of a Key Worker is determined by each council. NHS employees, firefighters, police officers, and other essential public service workers should meet every council’s Key Worker definition.

What Does First Homes Mean?

For a property to qualify for the First Homes scheme, it must either be a:

1. New Build Built by a Developer or a
2.  Property Purchased from an Estate Agent but Bought Before with the Scheme

The property must also:

1. Be Based in England
2.  Not Cost More than £250,000 (or more than £420,000 in London) After the Discount has been Applied

The First Homes Scheme was introduced by the British Government in June 2021 to help first time buyers purchase new build properties. They realised that many new builds were not affordable. To address this, the Government developed the First Homes Scheme. They mandated developers to offer ‘affordable housing’ for at least 25% of any development plot.

There is little help for first-time home buyers. This is especially true since the NHS Help to Buy scheme ended on March 31, 2023.

Are there Restrictions in Place?

As an NHS Worker, you will face a number of restrictions when obtaining a first homes scheme mortgage.

To qualify for a mortgage, you must have:

1. Suitable Income for the Lender’s Borrowing Criteria
2. Suitable Credit File for the Lender’s Credit Scoring Criteria

There are also some specific restrictions relating to the first homes scheme.

There are some technical restrictions in place too, such as:

1. Your Deposit Must Be 50% of the Discounted Property Value
2.  You Must Have Never Owned a Property Before (in any country)

You will be pleased to know that there are no restrictions with how the property can be decorated. The First Home Scheme rules only apply if you wish to let or sell the property.

When a property from the scheme is sold, the discount applies to future sales. If the property cannot be sold on the scheme, it can be sold at market value following approval from the council. However, be aware that the property’s local authority will retrieve the discounted amount from the sale. This will be at least 30% of the sale price.

In some cases, the council may offer to purchase the property themselves.

Who is Eligible for the First Homes Scheme?

Local councils are in control of the qualifiers for the First Homes Scheme. They tend to choose applications from people who: 

1. Are Key Workers in the Public Sector
2. Live in the Local Area
3. Are on Low Incomes

Although, councils can make exceptions to this list for certain Key Workers. For example, for armed forces personnel, income and residency restrictions may be waived.

Does the NHS have Mortgage Lenders?

The NHS does not have its own mortgage lenders. However, NHS staff on permanent contracts may have a greater chance of obtaining a mortgage. This is because mortgage lenders view full-time NHS employees as having a low risk of redundancy.

Mortgage lenders understand that the NHS is significantly under-staffed compared to demand for its service. This means that they may be more accepting of their contracts.

Mortgage underwriters know NHS payslips well. The National Health Service is one of the biggest employers in the UK. They are likely to process NHS documentation far quicker than they would from mortgage applicants employed by unknown companies. Therefore, mortgage lenders may have quicker turnaround times for producing formal offer letters for NHS staff.

What Type of Mortgages are Available to NHS staff?

There are many Key Worker mortgages to choose from. These mortgage products can work in tandem with the First Homes Scheme. But the question is, what are the best mortgages for NHS staff?

The best mortgage for key workers, such as NHS employees, will vary for each person. This depends on the applicant’s individual situation. However, the primary three mortgage rate types available to NHS staff are Fixed, Tracker and Variable Products.

How Much Can NHS Workers Borrow?

Depending on their income, NHS workers may be able to borrow a mortgage up to 95% of the property’s value. As NHS staff advance through different payment bands, they should find that they can borrow larger mortgage sums. This is assuming that their expenditure remains the same.

Many mortgage lenders can accept variable income for NHS staff. This includes overtime, shift allowance, night work, and weekend work. For a lender to accept this income, it must show on at least 2 of the last 3 monthly NHS payslips.

The lender will average that type of income over the last three months. They will use this average in their maximum loan amount calculation.

It is important for NHS staff to know this. Many key workers depend on extra income to reach their desired mortgage amount.

Typically, lenders will allow you to borrow 4.5 times your annual salary. Although, some lenders offer more generous loan sums. To make sure that you are approaching a lender that will accept your income against the property, you should use a mortgage broker.

Boon Brokers is a broker in the U.K. that deals with mortgages, insurance, and equity release. We can help you find lenders. These lenders may allow you to borrow up to 5 or 6 times your annual salary. If you are struggling with raising enough of a mortgage, it is worth discussing your income with us and we will try to help.

You can also use our mortgage calculator to get a rough idea of how much you can borrow.

If you are considering applying to the First Homes Scheme with a mortgage, remember the following:

Can I get a Mortgage if I have just started working for the NHS?

Yes, you can obtain a mortgage if you have just started a new job at the NHS.

Certain lenders can accept just a signed permanent job contract as proof of income to consider you for a mortgage. They may even accept the contract as income proof prior to your start date.

This is because NHS contracts are well understood by mortgage underwriters. As underwriters frequently process NHS income, they can quickly identify a genuine contract. They also know that the borrower is likely to stay at the NHS for a long time. This means they can keep making their monthly mortgage payments.

That being said, most mortgage lenders will insist on at least one month of payslips before accepting it as proof of income. Some even require a minimum of 3 months before accepting it.

Above all else, the type of contract will determine whether you can access a mortgage if you have just started working for the NHS. As discussed, with permanent contracts, the contract itself may be sufficient without any payslips. If the contract is fixed-term, part-time, or zero-hour, you will likely need to provide 3 to 12 months of payslips.

For compliance purposes, lenders and brokers will request copies of your corresponding bank statements. This is to show your salary and to review your spending as part of their rules.

Each case is different. Talk to a fee-free mortgage advisor at Boon Brokers about your situation. They can give you accurate advice for your needs.

Conclusion

There are many mortgages available for NHS staff. From doctors to nurses, surgeons, administrative staff, etc, there should be mortgages available for all key workers. The type of contract, required scheme, mortgage product, and the client’s situation can affect the mortgage offered.

The First Homes Scheme has been designed to assist key workers, like NHS employees, with getting onto the housing ladder. By using it, NHS workers can receive a significant discount on their first purchase and escape the UK’s rental market.

You should discuss your goals and financial circumstances with a qualified mortgage broker before deciding your course of action.

Boon Brokers process mortgage cases for NHS staff on a daily basis. Our brokers are well skilled with all contracts offered by the NHS and they can source the most suitable mortgage for your requirements.

Boon Brokers does not charge any mortgage broker fees. We give whole-of-market advice to clients across the U.K. Submit an enquiry to discuss your mortgage requirements further.