When you’re dealing with shift patterns, a low starting salary and having to rely on overtime to boost your income, the thought of securing a mortgage when you work in the police force can be disheartening. Lenders, however, look favourably on police officers and staff so you can benefit from more flexibility with their lending criteria.
What is a police mortgage?
So what exactly is a police mortgage and how does it differ from a standard one? The mortgage loans offered to those serving in the police force are, in fact, the same as those offered to everyone else. The difference is that working in the police force is considered to be a respected career that most people enter into for the long term. In that respect, lenders deem you to be less of a risk and offer more flexible lending criteria to help boost your chances of securing a mortgage.
How much can you borrow for a police mortgage?
Every lender has its own criteria when assessing your affordability for a mortgage loan. Generally, lenders use an income multiplier of 4.5 for your annual salary to calculate how much you can borrow. Your profession, however, can put you in a better position with lenders as it’s a trusted one and has excellent promotion prospects. This means many lenders are prepared to offer higher income multipliers of five or even six times your annual salary.
The downside to beginning your career in the police force is that the starting salary tends to be lower than the national average. This immediately puts you at a disadvantage when trying to determine how much you can borrow. If a lender agrees to use a higher income multiplier, however, this can make a considerable difference to the amount. For example, if you earn a starting salary of £20,000 and a lender uses an income multiplier of 4.5, you can anticipate borrowing £90,000 for your new home in Bexleyheath. If a lender recognises that your stable career choice and prospects for promotion make you a low-risk borrower, you can hope for a loan of £120,000 if they use an income multiplier of six.
As a police officer in Scotland, you can benefit from a slightly higher starting salary. As an example, if you have an annual income of £26,000, you can expect to borrow £117,000 with a multiplier of 4.5. If a lender uses a higher income multiplier of six, you can look forward to receiving a loan of £156,000.
Is your overtime taken into account?
Whilst some lenders won’t include your overtime, bonuses, shift allowances or a second income when calculating how much you can borrow, many lenders will. Lenders who frequently arrange mortgages for police officers and staff are more likely to do this so it’s a good idea to speak with your mortgage broker in Kent, London or Edinburgh to approach the right lenders on your behalf.
The additional pay you receive needs to be consistent and you need to provide proof of this to the lender. It’s preferable to show that you’ve received it for 6 months or more. Concerning your overtime, it’s helpful if you can show that it will still be available to you on a regular, ongoing basis. Other recurring amounts that you receive can also be included, such as maintenance payments and benefits. Should you receive an additional income from self-employment, you need to provide the lender with at least a year’s accounts but be aware that some lenders may only consider 3 years’ accounts.
Lenders typically ask for a deposit of 15% or 20% of a property’s value. Trying to save this amount is one of the hardest obstacles to overcome when applying for a mortgage and can put the property you want to buy far out of your reach. As a police officer or police staff, however, some lenders will agree to a lower deposit of 5%.
This amount can still be hard to save but there are various ways to help you reach your deposit goal:
- If you buy with another person via a joint mortgage, you can both pool your savings. This significantly reduces the amount you need to save on your own and lets you reach your deposit goal sooner.
- You can benefit from a 25% bonus from the government each year if you save with a Lifetime ISA to buy your first home.
- You may be lucky enough to receive a gifted deposit from a family member or close friend. As its name suggests, the money is given to you as a gift rather than a loan and the person giving it to you will need to confirm this to the lender.
If you’re really struggling to save a deposit, you may be able to secure a guarantor mortgage. This is when a family member or close friend agrees to make your mortgage repayments if you’re unable to.
Even though many lenders will accept a 5% deposit from you because of your profession, the more deposit you can save, the better. This is because more deals will become available to you and you’ll be offered more competitive rates.
Get help from a government-backed scheme
There are some government-backed schemes that you can take advantage of to get onto the property ladder. When speaking to your mortgage broker about Welling or Pimlico mortgages, ask them for more information about the Help to Buy shared ownership or equity loan schemes, the Right to Buy or Right to Acquire schemes, the First Homes scheme or the 95% mortgage guarantee scheme.
Can you get a mortgage if you’re new to the police force?
Lenders usually prefer that you’ve been in your current role for as long as possible because this shows stability. As you work in the police force, however, you’re perceived to be less of a risk. This even applies when you’re in your probationary period. This is because there is plenty of scope for promotion in your profession and lenders take on board that your salary will likely increase as a consequence of this.
Securing a mortgage can be more challenging at this stage but a specialist lender can help you. You will need to provide them with the necessary documentation, which will include your employment contract.
What if you have bad credit?
Lenders will check your credit score as part of their affordability checks and a good score will give them more confidence to offer you a loan. This doesn’t mean that you can’t secure a mortgage with a bad credit rating, though. Lenders assess various types of credit issues differently and take into account how recent the issues were. Some lenders specialise in bad credit mortgages and they will factor in the stability of your job as well as your earnings, the size of your deposit and the affordability of the mortgage loan.
There are numerous ways to try and improve your credit score before you apply for a mortgage so speak to a mortgage broker first for advice on this. Your mortgage broker can also help to prepare your application and approach a specialist lender to increase your chances of a successful mortgage application.