Mortgages for Teachers

Mortgages for Teachers

There are lenders available who specialise in mortgages for teachers and look favourably on those of you in the teaching profession. They see you as extremely employable and also have an understanding that there is a lot of opportunity for career progression and pay increases. This means that certain lenders may be a little more flexible when it comes to how much they will allow you to borrow.

However, getting a mortgage as a teacher can be challenging if you are a trainee, newly qualified, on a fixed-term contract, or are a supply teacher and have a fluctuating salary.

Generally speaking, you will need to be in receipt of one of the following to qualify for a professional mortgage product:

• A permanent teaching contract

• A fixed-term contract

• A temporary contract

• A supply contract

• An agency contract

• A trainee teacher bursary or grant

Do teachers have access to special mortgage rates?

Although you may be able to access mortgage products specifically designed for teachers, it doesn’t necessarily mean that you’ll have access to better rates. It’s likely that you’ll have access to the same rates as those in any other profession but with some lenders, they may allow you to borrow more. If you do opt to borrow a higher income multiple, you may be looking at slightly higher rates for the privilege.

There are a few lenders who offer discounted rates for teachers but this doesn’t mean that they’re the best rates available. Other lenders may offer lower rates even without their special discount.

Early Careers Teacher (ECT)

As a newly qualified teacher, you may struggle to get a mortgage due to your lack of employment history or being in a short-term contract before transitioning to a permanent teaching role. Many lenders look less favourable on those on temporary contracts as they see the employment as less stable and therefore higher risk to them. This can make mortgage applications more challenging. However, fortunately there are lenders who are happy to consider an ECT on a fixed term contract. They understand that starting on a fixed term contract is common for teachers and know that your income will increase steadily over time.

How much can I borrow as an ECT?

As a teacher, you can usually borrow up to five times your income, although this does depend on factors such as your age and credit profile. However, as an ECT it is more likely that your borrowing will be capped at around 4.5x your income.

Trainee Teachers

It is possible to get a mortgage as a trainee teacher although your choice of lenders may be limited. Approaching the right lender is key to success as you need to ensure that they will accept your bursary or grant income plus any part-time income you may have for affordability purposes.

If you are a trainee teacher and have been offered a contract for your first teaching role, you may be able to use the income from your contract to get a mortgage, a few months before your job starts.

Supply Teachers

Securing a mortgage offer can be more challenging for supply teachers, but there are lenders who may still consider your application. Typically, lenders may require at least twelve months of continuous supply work to consider your application, although some will accept 6 months of continuous supply work providing you have at least two years’ worth of previous teaching experience. Additionally, any written assurance of contract continuation could enhance your overall eligibility.

Retired Teachers

As a retired teachers receiving a pension, you can use your teacher’s pension as income for affordability for mortgage. Most lenders will accept pension income so depending on your age, you may be able to get a loan through a mainstream lender. If you a little older, you may still have options available by considering a lender who specialises in later life mortgage products.

Can I get a mortgage on a temporary teaching contract?

Securing a mortgage whilst on a temporary contract can be very challenging. However, if you can evidence that your contract will be extended (e.g. a letter from your Head Teacher) or have a long-standing history in the profession, some lenders may still consider your application.

Can I get a teacher mortgage deal with bad credit?

No matter your profession, having bad credit can be an additional hurdle to overcome when applying for a mortgage. There are some lenders who specialise in bad credit mortgages and the rates you have access to can be influenced by the following:

• What is the extent of your bad credit? Was it simply a missed payment or do you have CCJs, defaults and debt management plans in your credit history?

• Is the bad credit linked to a single account or over many?

• How much was it for?

• Is the debt now paid off?

Find more about bad credit mortgage here.

Do teachers have access to specific mortgage schemes?

Although there are no specific home buying schemes tailored for teachers, there are several schemes that exist to help any first-time buyer onto the housing market. These schemes include:

1. Shared ownership

This scheme enables buyers to purchase a share in a new-build property from a housing association if they can’t afford the full deposit or mortgage. Rent is paid on the portion of the property not owned by the buyer. Over time, buyers can increase the share of property that they own through a process called ‘staircasing’ until they own the property outright.

2. The First Homes Scheme (England)

This initiative offers eligible first-time buyers the chance to purchase certain new-build homes with a minimum discount of 30% across most of England, with potential increases up to 40% or 50% in some areas at the discretion of local authorities. To qualify for this scheme, buyers must have a household income below £80,000 (£90,000 in London) and utilize a mortgage to cover at least half of the property price.

3. 5% Mortgage Guarantee Scheme

Under this government backed scheme, lenders are encouraged to offer loans at 95% loan to value through the promise that they would compensated by the government for any potential losses. This scheme is set to run until mid 2025.

4. Right to Buy and Right to Acquire Schemes

Through these schemes, tenants renting from their local authority or housing association can purchase the home they are renting at a discount. You can find out if you are eligible and how much discount you’d be entitled to by contacting them directly.

5. New-Build Discounts

Some developers may offer discounts on new builds to key-workers, including teachers.

How do I apply for a teacher mortgage?

You have the option to apply for a mortgage directly through a high street lender. However, if you are concerned about affordability or are not yet in a permanent teaching role, approaching the right lender is key to success.

A mortgage broker can search thousands of mortgage products from both specialist and high street lenders to ensure you access the best possible deals for your circumstances. They will also have a sound understanding of lender criteria and the underwriting process to ensure that your mortgage application is successful.