Medicine is one of the noble professions across the world. While it sounds good and reputed it is equally challenging at the same time. As the saying goes “with great ability – comes great responsibility”. To help physicians achieve their professional and personal goals, lenders are bringing innovative and customized lending solutions.
One such lending solution is the physician mortgage loan, which is now gaining its popularity and has proved to be beneficial. Read on to know more about physician loans, their eligibility criteria, features, benefits, and more.
What is physician mortgage loans?
A physician mortgage is a type of mortgage designed to cater to the specific needs of physicians. Contrary to a popular belief that physician mortgage can only be applied by a doctor, in today’s world those who’re practicing other branches of medicine, like dentists, orthodontists, veterinarians, and whatsoever can also apply for the same.
Why are mortgage loans a good fit for physicians?
Given the demand for physicians, it is common that they are more likely to earn a higher income. This strong job outlook gives lenders the assurance of good repayment capacity and increases the chances of securing a loan.
Lower Rate of Default:
Compared to the overall rate of consumer default, physicians are less likely to default on their loans. Thus pictures more security of the lending amount.
What are the benefits of a physician mortgage loan?
Zero Down payment:
One of the top benefits of the physician mortgage loan is the zero down payment feature. While traditional loan products have a minimum down payment requirement of approximately 3.5%, physician mortgage loans have none. This feature allows physicians to purchase their dream home without having to first invest lakhs of rupees as a down payment. However, if physicians find themselves financially capable of making a down payment, it is encouraged to do so.
No Cap on Loan Amounts:
With a physician loan, there is no monetary cap on the amount that a physician can borrow. However, one should draw the line at borrowing only as much as they can pay back with ease.
What are the eligibility requirements for a physician mortgage loan?
In order to qualify for a physician mortgage loan, one must keep the following factors in mind:
Good Credit Score:
Your credit score reflects your creditworthiness, i.e. your ability to repay your mortgage in an orderly and timely manner. It is calculated on the basis of your repayment history, your credit utilization, and your credit mix, among other factors. For physicians, a good credit score is considered to be 700 or above. It is essential that you maintain such a score in order to increase your chances of having a mortgage sanctioned at attractive interest rates.
Debt to Income Ratio:
Most of the doctors complete their degree by taking a massive education loan. Lenders, being acutely aware of that completely understand the impact these loans (and other debt) will have on their current finances. A DTI ratio gives lenders an accurate picture of the portion of the physician’s income being utilized to pay off existing debt. This, in turn, helps them assess if the physician would be able to bear the load of another mortgage and repay it in a timely manner.
Thus, having a low debt-to-income ratio gives you an edge when applying for a mortgage. To calculate for your debt-to-income ratio here’s an easy formula: (Total Monthly Debt Payments/Total Monthly Income).
Self-employed loan applicants will undergo a more stringent application and vetting process as compared to salaried physicians. They would generally need to demonstrate steady income for the past two years indicating a stable and profitable practice. Self-employed physicians may also require a better credit score than most and a low DTI ratio.
Factors to Look For While Selecting your Lender
While narrowing down your options, physicians must look for lenders who offer the following features:
Interest Rate and Additional Fees:
Compared to a traditional loan product, lenders issuing physician loans may charge higher interest rates. It is prudent to be aware of the exact interest rate applicable to your mortgage. Additionally, you should enquire if a fixed or variable interest rate is also applied (generally, variable rates are applicable to physician mortgages). In addition to the interest rate, various fees and charges may be levied too. These may include processing fees, convenience fees and more. Ensure your lender doesn’t levy a hefty number of additional fees and charges.
Many a time, physicians find themselves financially not capable of paying off their loan. Thus, you should always enquire whether your lender would levy a penalty, should you pay off your mortgage early. If they do levy a penalty, make sure you understand the exact charges you would incur.
Opt for a lender with proven expertise in providing physician loans in particular. If necessary, ask around professional spheres for a suitable lender.
These days lenders are offering personalized loans to meet the needs of end-users. Bajaj Finserv Professional Loan for Doctors, available on Finserv MARKETS offers custom made benefits, competitive interest rates, high loan amounts of up to Rs. 25 lakhs, zero collateral requirements, flexible repayment tenures, and value-added services like financial fitness reports. Thus, be it a physician mortgage loan or a professional loan for doctors, a range of customized, affordable and innovative loan products are available for physicians in the market today.
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