With a range of benefits and discounts on offer, enjoy the significant savings that can be achieved with home loans for dentists
As a dentist, you are recognised as having a high earning potential which means that lenders classify you as a low-risk borrower.
This means you can take advantage of the specialist home loan products available from some lenders. Home loans for dentists offer a wide range of benefits including discounted rates and the ability to avoid lenders’ mortgage insurance (LMI) when you satisfy certain criteria.
Read on to find out more about the features offered by home loans for dentists.
How do home loans for dentists work?
Home loans for dentists offer the same features as any regular home loan and can be used to buy your first home or next home, buy an investment property, refinance an existing loan, or finance construction or renovations.
Usually, lenders have a separate department dedicated to home loans for what they term 'professionals'. This includes other medical professionals as well, including doctors, optometrists, cardiologists and many more.
Because lenders see the dental industry as very stable, they'll offer loans to dentists which have some extra benefits for borrowers. In many cases, lenders will offer a discount off the standard variable interest rate, allowing dentists to enjoy significant savings on interest repayments across the life of their loan. Another common benefit is that lenders will waive the need for applicants to pay LMI premiums up to a certain Loan to Value Ratio (LVR), allowing them to enjoy more without incurring the extra cost of insurance, which can cost thousands. Look at the case study below to see just how much this type of loan can save you.
Just how much can you save with one of these home loans?
Meet Donna. Donna works as a dentist and earns $100,000 per year. Although she only has $100,000 in her savings account, Donna has decided she’d like to buy her first house for $1 million. Her bank is happy to offer her a loan at the standard variable rate, but they insist on charging her for the cost of LMI.
Having heard from a work colleague that there are specialist home loans for dentists available, Donna approaches a mortgage broker who tracks down the perfect loan for her. Donna will pay off her mortgage over a 30 year period. Although Donna needs to borrow 90% LVR, the new lender does not require her to pay LMI. This will save Donna a total of $20 070, or $154 per month if the premium is capitalised into the loan.
In addition, the lender also offers Donna a 0.25% p.a. discount of the standard variable rate, which in turn equates to high interest savings over the 20-year term of her loan.
Find out how to compare home loans for dentists
Take the following features into account when comparing home loans for dentists:
- Interest rate. Interest rates are an important factor to consider when comparing loans, as the interest charged on the amount you borrow can hugely affect how much you will have to spend to pay out your loan. Note that these loans generally come with interest rate discounts.
- Fees. Keep an eye out for any hidden fees or charges that apply to your loan. While they may seem small at first, they can quickly add up to a sizeable amount if you’re not careful.
- Repayment options. Can you make extra repayments on your loan without penalty? Can you pay the loan out ahead of time without incurring a fee? Can you choose a repayment schedule (weekly, fortnightly or monthly) to suit your budget? Ask yourself all these questions to determine which loan is right for you.
- Discounts and benefits. Look at the different benefits you can take advantage of, such as discounted rates and waived LMI, and make sure you’re aware of any specific criteria you may need to satisfy to receive these benefits.
- Other features. Compare any additional features each loan may offer to provide added flexibility, such as a redraw facility, an offset account and other package discounts. These can help you save money on your home loan in the long term too.
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Weigh up the pros and cons of home loans for dentists
- Discounted interest rates. A reduction in the interest rate on your loan can save you a large amount of money over the life of your loan.
- Waived LMI. LMI is quite costly and is an expense many borrowers often forget to take into account, so the ability to avoid paying for this type of cover is a huge benefit for dentists.
- Higher LVR. Many providers of home loans for dentists will offer a higher maximum LVR to dentists than they do to ordinary borrowers. This means that dentists have greater borrowing capacity.
- Lack of awareness. While many people know that there are discounted home loans for doctors, the existence of home loans for dentists hasn’t been as widely publicised.
The most important questions about home loans for dentists
How much of an interest rate discount will I receive?
The discount available varies between lenders and may be influenced by whether you are a member of the Australian Dental Association (ADA), your salary and the amount you are borrowing.
What conditions will I have to meet to qualify for a loan?
You will need to be employed as a dentist and the lender will often require you to be registered by the Australian Health Practitioner Regulation Agency (AHPRA). Other lending criteria will be determined based on your income, how much to wish to borrow and other factors.
Where can I find home loans for dentists?
There are several lenders and mortgage brokers that specialise in matching dentists up with the best available home loans. You’ll be able to find information about a wide range of brokers and lenders at finder.com.au.
Am I eligible for these types of loans with a 457 Visa?
Several brokers and lenders can help you secure a loan even if you're in Australia on a temporary 457 visa. Note that in some cases the maximum LVR you'd be able to apply with might be limited, and there might be more stringent conditions that you'll have to fulfil when it comes to income.