Financial Priorities for a Newly Graduated Doctor
As a newly graduated doctor, your income has typically increased, making it an ideal time to consider purchasing your first home. Many new doctors prioritise entering the property market early. With a higher income, saving for a deposit becomes more feasible. However, understanding the right amount to save and the best loan options is crucial. Typically, new doctors are eager to establish themselves financially, and owning a home is a significant step in that direction. The stability and investment potential of property can make it an attractive option. Additionally, the sense of accomplishment and security that comes with homeownership can be particularly appealing after years of rigorous medical training.
Challenges with Housing Affordability in South Australia
Housing affordability remains a challenge in South Australia like most Australian capital cities. Rising property prices and limited housing supply have made it difficult for many to enter the market. The median house prices in Adelaide have increased, making it essential for buyers to have a strategic approach when planning their home purchase. For medical professionals, who often have substantial student debt, this can be an added challenge. However, the higher earning potential and unique lending policies for doctors can offset some of these difficulties.
How Much Deposit is Needed?
Typically, a 20% deposit is required to avoid paying Lenders Mortgage Insurance (LMI) – an insurance designed to protect the bank – not you! However, doctors have unique opportunities to borrow up to 95% of the property value without incurring LMI, thanks to specialised loan products tailored for medical professionals. This allows doctors to enter the property market sooner with a lower initial deposit.
These specialised loans recognise the stable and high earning potential of medical professionals, offering them more favourable terms. This can be particularly beneficial for those who are early in their careers and may not have had the time to save a large deposit. Understanding these options and working with a knowledgeable broker can make a significant difference in the home buying process.
Why Should a Doctor Care About a Lender’s ‘Future Income Policy’
Doctors often have a predictable and increasing income trajectory. Lenders’ future income policies take this into account, allowing for higher borrowing capacities based on expected future earnings. This can be particularly beneficial for doctors early in their careers, enabling them to secure better loan terms and purchase their desired property sooner. These policies recognise the long-term earning potential of medical professionals, which can significantly enhance their borrowing power. This can be a crucial factor in a competitive housing market, where having a higher borrowing capacity can make the difference between securing a property and missing out. Understanding and leveraging these policies can provide doctors with a significant advantage in the home buying process.
Why use Bartons instead of Going Direct to Your Bank?
Bartons offers an integrated solution that combines tax, financial planning, and lending services. This holistic approach ensures that your loan is structured optimally, considering future investment potential and maximising tax deductibility. Unlike banks, which may only focus on immediate financials, Bartons looks at your long-term financial health and goals. This integrated approach is particularly beneficial for doctors, who often have complex financial situations.
By coordinating tax planning, financial advice, and lending, Bartons can help you make the most of your income and investments. This can include strategies like using offset accounts to reduce interest payments and structuring loans to maximise tax benefits particularly as our experience shows that Doctors will typically seek to upgrade the family home as their career grows often renting out their first home. The goal is to provide a comprehensive plan that supports your current needs and future goals.
Next Steps and Tools to Help
If you’re a doctor looking to enter the property market, start by chatting with Bartons. We can provide an approval in principle, giving you a clear understanding of your borrowing capacity. Utilise our research tools, such as RP Data, to make informed decisions about property purchases. Our integrated approach ensures that your financial planning, tax considerations, and lending are all aligned for the best possible outcomes. This comprehensive support can help you navigate the complexities of the property market and make informed decisions that align with your financial goals.
Additionally, having a clear understanding of your borrowing capacity and the current market conditions can give you a competitive edge when negotiating property purchases. Bartons’ expertise and resources can provide the guidance and support you need to make confident and informed decisions.
This general advice has been prepared without taking account of your objectives, financial situation or needs. You should consider the appropriateness of this advice before acting on it. If this general advice relates to acquiring a financial product, you should obtain a Product disclosure Statement before deciding to acquire the product.