Newly Qualified Teacher Mortgages
Teacher Mortgages and Newly Qualified Teacher Mortgages are slightly different. Most teachers are treated as normal borrowers once you have a permanent position. Some lenders will treat you as permanent as soon as you have an offer of a permanent job. If you’re an NQT wanting a mortgage, you will be treated slightly differently. Also see Graduate Mortgages.
Are Newly Qualified Teacher Mortgages available?
Yes. NQT mortgages are available.
Not many lenders will consider you during your NQT year. This is because you are still technically on probation on a temporary contract. However, if you approach the correct lender when applying for a mortgage as a newly qualified teacher you may be able to buy your first home.
What deposit do newly qualified teacher mortgages require?
There are options from as little as 5%. This 5% deposit could even come as a gift from a family member if you haven’t had much time to save up yourself yet.
Five percent assumes you are buying a house that is at least 2 years old. The NQT friendly mortgage lenders ask for larger deposits on flats and new build houses. Typically 15% as they are seen as riskier mortgages by most lenders.
How much can NQTs borrow?
You might be able to borrow up to 4.5 times your salary. If you are buying with somebody else and your joint income is over £50,000, and you have a 15% deposit then some mortgages for newly qualified teachers allow you to borrow up to 5 times your joint income.
Before confirming what an NQT friendly lender will lend you, they will want to assess your affordability by looking at your commitments such as credit card balances, car finance, and any personal loans.
Do student loans affect getting a mortgage?
They can do, if you have a lot of other credit commitments too. If you aren’t earning enough to start paying your student loan back though, it shouldn’t affect you at all.
Can I apply for a mortgage before starting my NQT year?
Yes. The very best NQT mortgage lenders allow you to apply a few months before your contract’s start date. It’ll take a few months to complete if you are purchasing a house anyway.
You’ll stand a better chance of getting approved before your contract has started if there is another person with an income applying with you. If not, you may just have to prove that you have the funds to survive a couple of months before the contract starts.
What about trainee teachers?
If you are still in your training year then you can still be considered for a mortgage. Your affordability will be based on your bursary, plus the income of anyone else you are applying with.
You may find that you’ll be able to borrow more once you have your NQT contract lined up. However, while receiving your bursary you may be able to borrow 4.5 times that amount, or 4 to 5 times your combined total income if you are applying with somebody else.
Is getting a mortgage while an NQT a good idea?
As there are only a few lenders that will consider NQT mortgages you might get a better mortgage deal by waiting until you have a permanent job, or even just an offer of one. There are still competitive deals available to NQTs and slightly higher interest rates might not make a huge difference to your payment anyway. Besides, once you get a permanent role you might be able to remortgage to an even better deal anyway.
If suitable properties don’t come on the market very often you may regret not making an offer on one when it was available.
You need to be confident that you can commit to the area you are currently working in. Are you confident you’ll get a position at the same school, or one nearby?
Are Teachers Building Society the only mortgage lender for NQTs?
No. In fact, I’m yet to use them for an NQT as other lenders have actually always offered better rates and products to NQTs.
Although Teachers Building Society can be great for quirky cases, if a better, and by better I usually mean lower cost, mortgage is available from other lenders then it makes sense to take advantage of that.
Lenders for Newly Qualified Teacher Mortgages
Mortgages for NQTs are considered by a few of the lesser know regional building societies. You should get advice as to which one might be best for you and to check who else is available. Especially as professional advice is probably cheaper than you think.
Why do most banks decline NQTs for mortgages?
Most mortgage lenders like certainty. They want to be confident that your income is sustainable for a long time.
As NQT contracts are typically only for a year this puts a lot of lenders off. Even lenders that allow fixed term contracts of a year exclude NQTs due to the dropout rate.
However, the most NQT friendly lenders understand that you’ve committed to this profession and you won’t punish you for the route into teaching that you have to take.
Do teachers get better mortgage rates?
When it comes to teachers and mortgages, most lenders will treat you like any other employee. There are a few lenders, like Swansea, who offer a discounted rate for people in some jobs, including teachers. Although they offer this discount, this doesn’t necessarily mean they are the best rate available. Other lenders may have lower interest rates even without this special discount for teachers.
How much does NQT mortgage advice cost?
Typically I charge a £245 fee for NQT mortgages. This is paid after our initial meeting over Zoom if I’m confident you can get a mortgage and you want to proceed. If your case is otherwise straight forward, ie you have good credit and are buying a standard property there won’t be any further charges.
You can read all about my fees here, and how I usually manage to charge first time buyers nothing at all.
If your case has added complexity, such as bad credit or non-standard property, this fee could be more. I’d confirm this before we moved ahead though.