Medico home loans, also known as medico loans, are special home loans reserved for medical professionals.
That includes doctors, surgeons, nurses, dentists, vets, psychiatrists, physiotherapists, chiropractors, optometrists, ophthalmologists, pharmacists, radiographers, midwives and others.
What makes medico loans special is they tend to have more generous borrowing conditions (which vary from lender to lender) compared to regular home loans. Depending on the lender, medicos may be able to:
Qualify for lower interest rates and fees. Lenders tend to charge lower interest rates (sometimes as much as 1 percentage point lower) and fees for medico home loans than regular home loans.
Take out larger loans. A medical professional applying for a medico loan would probably be approved for a larger loan amount than a regular borrower with an otherwise identical financial profile applying for a regular home loan with the same lender.
Have smaller deposits. For regular customers, it can be tricky to qualify for a loan with less than a 20% deposit. But medical professionals are given more leeway, and may be approved for a medico loan with a 5% or even 0% deposit.
Gain access to LMI waivers. With regular home loans, borrowers generally have to pay lender’s mortgage insurance (LMI) if they put down less than a 20% deposit. But with medico loans, medical professionals are generally exempt from LMI if they provide a 10% or 5% deposit – or even, in some cases, a 0% deposit.
Receive special loan features. Some medico loans include offset accounts and redraw facilities for fixed-rate loans, which are not available with regular home loans.
Get faster loan assessments. Lenders will often process medico loan applications faster than regular home loan applications.
Secure more flexible repayment terms. With some medico loans, you may be able to temporarily switch from principal-and-interest repayments to interest-only.
Why do medical professionals get special treatment?
Lenders prefer borrowers who have higher incomes (because they’re likely to take out more loans, and larger loans, during their life) and lower risk profiles (because they’re more likely to repay their loans).
Medical professionals tick both boxes.
Compared to an average worker, medicos:
Given that lenders regard medical professionals as high-quality customers, they’re eager to attract their business. They also know that because the mortgage market is so common, if they don’t offer medical professionals special medico loans, those customers will take their business elsewhere.
Do all medical professionals qualify for medico loans?
Unfortunately, some medical professionals don’t qualify for medico home loans. Depending on the lender, that may include naturopaths, dental hygienists and alternative medicine professionals.
That’s because, in the eyes of the lender, people in those professions don’t have more secure jobs, earn higher incomes and have more reliable income streams. As a result, they’re seen as regular borrowers and are eligible only for regular home loans, rather than medico loans.
Why it’s vital to shop around with medico loans
One thing that medico home loans and regular home loans have in common is that borrowing conditions can vary widely from lender to lender.
For example, a medical professional with your specific scenario might be able to borrow hundreds of thousands of dollars more at Bank A compared to Bank B. Some lenders may also offer you:
That’s why, if you’re thinking about taking out a medico loan, it’s important to speak to an experienced mortgage broker, like Shore Financial.
Shore Financial will take the time to understand your scenario, explain the pros and cons of different medico loan options, present you with a shortlist of recommendations and then manage your application from start to finish.
Shore Financial has helped many medical professionals secure medico home loans and can help you too. To discuss your options, call us on 1300 416 700, email us on info@shorefinancial.com.au or fill in this online form.
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