7 Things You Need to Know About Getting a Key Worker Mortgage in 2024
Getting a mortgage in 2024 can be anything but simple. Our guide gives you the 7 things you need to look out for whilst preparing to apply for, and applying for a key worker mortgage.
by Mark Robinson, Director – Albion Forest
1. What is a Key Worker Mortgage?
A key worker mortgage is a type of mortgage specifically designed for individuals employed in essential public services, such as healthcare, education, emergency services, and social care. These mortgages often offer preferential rates and terms to recognize the valuable contributions made by key workers to society.
2. Eligibility Criteria for Key Worker Mortgages
To qualify for a mortgage for Key Workers, you’ll typically need to:
- Work in an eligible profession: This includes roles in the NHS, education, police, fire service, ambulance service, social care, and other essential public services.
- Have a stable income: Lenders will assess your income to determine your affordability.
- Meet the lender’s credit criteria: A good credit history is generally required.
- Provide proof of employment: You may need to provide evidence of your employment status and length of service.
3. Benefits of Key Worker Mortgages
- Preferential Interest Rates: Key worker mortgages often offer lower interest rates compared to standard mortgages.
- Reduced Deposits: Some lenders may require smaller deposits from key workers.
- Flexible Terms: You may be able to find more flexible terms, such as longer mortgage terms or interest-only periods.
- Additional Perks: Some lenders may offer additional benefits, such as cashback or free valuations.
4. Key Worker Mortgage Schemes
Several UK lenders offer mortgages for Key Workers schemes. It’s worth shopping around to compare different offers and find the best deal for your circumstances. Some popular lenders that offer key worker mortgages include:
- Foundation Home Loans
- Lend Invest
- Teachers Building Society
- Kensington Mortgages
5. Government Support for Key Workers
In addition to key worker mortgages, the UK government offers various support schemes to help key workers get on the property ladder. These may include:
- Help to Buy: This government scheme allows eligible first-time buyers to purchase a new-build home with a deposit as low as 5%. (Only currently available in Wales)
- Shared Ownership: This scheme allows you to buy a share of a property and rent the remaining share from a housing association.
- Stamp Duty Relief: Key workers may be eligible for stamp duty relief in certain circumstances.
6. Tips for Applying for a Key Worker Mortgage
- Start Early: Begin your application process well in advance to give yourself plenty of time to gather the necessary documents and shop around for the best deal.
- Improve Your Credit Score: A good credit score can improve your chances of approval and potentially secure a better interest rate.
- Get Pre-Approved: A pre-approval can give you an idea of how much you can borrow and help you narrow down your search.
- Consider a Joint Mortgage: If you have a partner, a joint mortgage can increase your borrowing power.
7. Additional Resources
Understanding the Different Types of Key Worker Mortgages
There are several types of key worker mortgages available, each with its own unique features:
- Fixed-Rate Mortgages: These mortgages offer a fixed interest rate for a set period, providing stability and predictability.
- Variable-Rate Mortgages: The interest rate on a variable-rate mortgage can fluctuate over time, which can lead to both savings and potential increases.
- Tracker Mortgages: These mortgages track a specific base rate, such as the Bank of England base rate.
Key Worker Mortgage Eligibility Requirements
The specific eligibility criteria for key worker mortgages can vary between lenders. However, common requirements include:
- Employment: You must be employed in an eligible profession and have a stable income.
- Credit History: A good credit history is generally required.
- Deposit: Some lenders may require a smaller deposit from key workers, but this can vary.
- Property Type: Some lenders may have restrictions on the type of property you can purchase.
The Benefits of Government Support for Key Workers
In addition to key worker mortgages, the UK government offers various support schemes to help key workers get on the property ladder. These schemes can provide financial assistance and make homeownership more affordable.
Maximising Your Chances of Approval
To increase your chances of approval for a key worker mortgage, consider the following tips:
- Save for a Deposit: While some mortgages for key workers may require smaller deposits, saving as much as possible can still improve your chances.
- Improve Your Credit Score: A good credit score can make a significant difference in your application.
- Shop Around: Compare offers from different lenders to find the best deal for your circumstances.
- Get Pre-Approved: A pre-approval can give you an idea of how much you can borrow and help you streamline the application process.
By understanding the different types of key worker mortgages, the eligibility criteria, and the government support available, you can increase your chances of securing a mortgage and achieving your homeownership goals.
Conclusion
Mortgages for Key workers offer a range of benefits for individuals working in essential public services. By understanding the eligibility criteria, benefits, and available schemes, you can increase your chances of securing a mortgage and achieving your homeownership goals.
For more information about mortgages for key workers, check out our main key worker mortgage article.
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Key Worker Mortgage
The Definitive guide to getting a Key Worker Mortgage in the UK. Get Key Worker Mortgage solutions from Albion Forest Mortgages today.
Can I get a Key Worker Mortgage?
Whilst there are few mortgages specifically for Key Workers, it is mostly about setting everything up properly with the lender for a Key Worker mortgage. When you apply it’s important that your application is packaged correctly to allow you to have both a quick application process and the right decision!
Key worker mortgage scheme: What are my options as a first time buyer?
As a Key worker and a first time buyer you have a number of options. Unfortunately the old scheme called the Key Worker Living Programme, ended in 2019 but you still have a few options for getting on the property ladder.
In early 2020 the government announced the new First Homes scheme for First time buyers and also Key Workers. Under this new scheme you would purchase a new build property and get a 30% discount on the purchase price. This scheme has not started yet, but there are a few other options available now including help to buy and shared ownership.
Who is classed as a key worker?
You may be wondering if you count as a Key Worker, our understanding of a Key Worker currently is that if you fall into the below professions, you should be considered a Key Worker, there are also other professions, but the main ones are:
- Polices officers and PCSO’s
- Armed Forces
- Some Government Employee’s
- Teachers (We have a whole article on Teachers here)
- NHS Staff
- Defence Staff (MOD)
Do Key Workers Get Better Mortgage Rates?
It’s possible that Key workers may get better mortgage rates as there are sometimes specialist products either for professionals (Who are often Key Workers) or specifically Key workers. Often Key Worker mortgages are specifically giving higher income multiples rather than better interest rates, meaning that Key Workers can borrow more. Alternatively Key Worker mortgage products may offer specialist criteria that is beneficial for Key workers.
Certain products may also target specific key worker jobs such as:
- Teachers
- Doctors
- Nurses
- Dentists
- more…
Key Worker Mortgage Scheme Options
Currently you have the Key Worker Mortgage scheme options of Help to buy, Shared Ownership as well as Right to Buy. The first two options are available on certain New Build properties and you can view these at https://www.helptobuy.gov.uk/. The last option, Right to buy is for Council Tenants wanting to purchase their property at a discounted price.
Shared ownership
- Purchase a percentage of a property, and rent the rest. You can then usually buy more of the property later on when you can afford it.
- Purchase between 25-75% of the property, depending on how much you can afford
- Only available on new build properties
Help to Buy
- This is an Equity loan from the government for 20% of the property price (15% in Scotland or 40% in London)
- The main benefit is only needing a 5% deposit
- Again, only on New build properties
- Potentially get a better rate as you only need a 75% mortgage.
- Unfortunately the scheme has ended in England, however it is still available in Wales.
Right to Buy
- Allows you to purchase your Council property from the local authority at a discounted price
- Available on your local authority property
- Only available to qualifying council tenants, contact your Local authority for more info.
First homes
- The First Homes scheme allows Key Workers and First time buyers to purchase a new build property for 70% of its value.
- The discount is a minimum of 30% so may be more depending on developer and location.
- When you sell the property, you will sell it at 70% of its value, so it will always have the same discount.
- Not available for second homes or buy to let properties.
Do key workers get help with mortgages?
Some lenders offer exclusive products and schemes for a Key Worker mortgage. This can mean either a more preferential rate, or they may lend you more.
In terms of actual help, at Albion forest we offer Key Workers help with mortgages. This can be selecting the correct mortgage or offering support for your complex income that you may receive. We also offer a discount off our fees for most Key Workers.
Do I have to be a first time buyer to be eligible for these schemes?
These schemes are available to you if you are either a first time buyer or a home mover. Other than the First Homes scheme, which is for First Time Buyers and Key Workers. When you are considering which scheme is best for you it’s important to look at all the options. You may also benefit from speaking to a specialist mortgage advisor that may be able to help.
Can a mortgage broker help me find a key worker mortgage scheme?
Currently there are no Key Worker schemes specifically. However with the First homes scheme announced for Key Workers in the near future, you should consider this.
A specialist mortgage broker can help with all of these schemes. Ensuring you fit both the scheme you are considering, and with a mortgage lender. You should definitely consider whether speaking to an advisor would help you.
Do NHS staff get key worker mortgage discounts?
There are not currently any mortgage discount schemes for NHS staff. We can even get mortgages for NHS Students! The new Government scheme – First Homes offers discounted properties for Key Workers. Almost all NHS staff would count as Key Workers so should be eligible under this new scheme.
Mortgages for NHS Professionals
At Albion Forest we support the 1.4 million staff at the NHS, we specialise in mortgages for NHS staff. This ensures you get all the right advice, with a lot less cost. There may be specific products or rates available for NHS professionals, however these change regularly and you would need to get in touch to see whether any are available and what they might be at the time.
What is an NHS mortgage?
You may here the term Key Worker mortgage, or NHS mortgage thrown around. Unfortunately there isn’t actually any lender or product specifically for NHS mortgages.
There is however lenders that will more easily understand your income. The most important thing is finding a broker that will package your mortgage in the best way possible, so the lender understands it. Like us!
How does a key worker mortgage work?
A Key Worker Mortgage will likely work the same as any mortgage. The main difference being you may be able to secure a better rate of interest, or even be able to borrow more than on a non Key Worker mortgage.
Commonly with a key worker mortgage you can borrow a higher amount. This is usually because lenders are aware that key workers usually get regular pay rises over time.
Key Worker Mortgage Scheme For Nurses
Whilst there isn’t a specific Key Worker Mortgage scheme for Nurses. Nurses do have products and lenders that are a good fit for them. The First Homes scheme when it is released should be perfect for you if you are a Nurse. We have a whole article on Key Worker Mortgage Scheme for Nurses here.
Nhs Key Worker Help To Buy
Both NHS and Key Workers can use the Help to Buy scheme. However from next year it might not fit. It’s best to speak to a specialist. You have Help to Buy, shared ownership and the new First homes schemes to consider.
The help to buy scheme offers a 20% equity loan (40% in London). This allows you to put down a 5% deposit, and get a 75% mortgage which often means you can get better rates.
What Is The 30% Discount for Key Workers?
The 30% discount for Key Workers refers to the First Homes scheme which offers First Time Buyers and key workers a minimum 30% discount on the purchase price of eligible new build homes. However, this discount then has to be offered to the next person buying the home as well. This therefore means when you sell the home you will receive less money for the property.
Whilst the First homes scheme is available in the UK, there are few examples of properties available on the scheme, and it is nowhere near as popular as the former Help to buy scheme, which is no longer available.
How much can you borrow on NHS mortgages?
This will vary lender to lender, and will depend on many factors. Essentially you are just applying for a normal mortgage, but packaged correctly for an NHS mortgage. Our Key Worker Mortgage Calculator can give you an approximate maximum loan figure, and for more information speak to one of our expert advisors.
Key Worker Mortgage with bad credit
Having bad credit can affect your ability to get a mortgage. We’ve got a whole article on Bad credit mortgages here.
When you have bad credit it’s important to check your credit file, for this we recommend Checkmyfile.
