You may benefit from special housing deals if you are an eligible key worker. However, the requirements can vary by the mortgage lender or housing association. In this article, we have set out the three main points to consider when looking to apply for a key worker mortgage.
Are you an eligible key worker?
Typically, key worker mortgage applicants would have to meet the following criteria if they are to be considered:
- Able to prove that they are unable to buy a home that meets their needs within a practical commuting distance to their work without financial help.
- Be British or EU/EEA citizens or have indefinite leave to remain in the UK.
- Able to show that they have savings or have access to a specified minimum amount to cover the property purchasing related costs.
- Must be employed on a permanent employment contract. However, exceptions may be considered based on individual circumstances and bank nursing, supply teaching may also be accepted.
- Not own a property at the time of the application or if they do, they must sell this by the time the subject purchase completes.
- Have a good credit history.
Typically, applicants must be permanent employees of an NHS Trusts or organisation. However, this excludes doctors, dentists and administrative, domestic or portering staff.
This category includes:
- Qualified nursery nurses working in grant-maintained nursery schools
- Teachers working in Local Education Authority (LEA) schools and sixth form colleges
- Lecturers in Further Education (FE) colleges
- Child social workers employed by the LEA.
In addition, all teachers applying using their key worker status must normally have Qualified Teacher Status (QTS).
This group includes:
- Police officers
- Community support officers
- Civil Nuclear Constabulary (CNC) and the British Transport Police in most areas of the country.
Also, some civilian police officers may qualify as key workers.
Prison staff and probation service
Prison service employees include:
- Prison officers and related grades
- Operational support grades
- Industrial officers
- Instructional officers
- Nursing staff
Those working as Probation Officer (Trainee, Senior or Probation Service Officer) could also potentially qualify.
Local authority applicants could also include social workers, but not certain other occupations, like speech and language therapists or occupational therapists.
Environmental health officers
This category was for the now-closed HomeBuy scheme, so eligibility will have to be checked for each individual current or future scheme.
Applicants could include Qualified Environmental Health Officers and Practitioners who work in a government agency, local authority, NHS or other public sector agencies. Applicants also had to hold either an EHRB Certificate of Registration or an EHRB Diploma in Environmental Health.
Applicants would have to be in one of the following roles within the Highways Agency Traffic Officer Service:
- Supervisor (on or off road)
- Traffic Officer
- RCC Operator
There are some specific requirements to bear in mind:
- Be a uniformed member of staff;
- Have successfully completed the initial training and
- Potentially completed a 10-week training course in order to qualify as a Control Officer
Ministry of Defence (MoD)
Qualifying applicants have to be members of one of the following department/organisation:
- Ministry of Defence Police Officers;
- Uniformed staff in the Defence Fire Service;
- Regular service personnel, including Military Provost Guard service in the Navy, Air Force and Army or
- Clinical Staff (not including doctors or dentists)
The truth about key worker mortgages
At the time of writing (May 2018), specific key worker mortgage deals are rare.
As an exception, there is a lender with a special deal (maximum 95% LTV, 5-year fixed rate deal at 4.99%) exclusively for teachers. This lender understands teachers’ pay structure and can lend to teachers even before they take up their first teaching post, so it’s worth considering them.
There is another deal for newly qualified associate dentists, who normally are not eligible for key worker status. In the case of this mortgage deal, however, they are considered and could get maximum 90% LTV, 5-year discounted rate deal starting at 3.24%.
It is also worth mentioning that there is a lender, who offers lower mortgage rates and/or lower fee options to certain professions that include teachers, dentists, medical doctors, optometrists, pharmacists and vets. It’s enough if only one of the applicants works in one of these jobs in order to qualify for the favourable deals.
As an update, a major high street lender has just announced (July 2018) the introduction of a range of mortgages for newly qualified professionals, including medical doctors and dentists. These exclusive deals allow eligible applicants to borrow 5.5 times their income up to 95% loan to value with no arrangement fee, free valuation and a maximum loan amount of £600,000. The mortgages are available for first-time buyers and home movers.
Separately, they also introduced a range of deals available for other key workers as well, including nurses, police officers and teachers.
Key workers with unconventional income type
On a positive note, there are quite a few lenders, who can accept income from bank nursing and supply teaching.
Terms and conditions apply, but some lenders recognise that while this type of income may not be fixed, there is a constant need for key workers to work this way.
Doctors and other healthcare professionals also often have both employed and self-employed income due to working privately in addition to being employed.
Lenders are happy to accept income from both sources and recognise that frequent changes to the place of work are also part of how the system works.
Similarly, army personnel’s income and residency history may not fit regular mortgage lending criteria, but this type of key worker is also acceptable for many lenders.
Your mortgage options in a nutshell
In short, if you are a key worker, you can be considered for a mortgage like anyone else, even if your income is out of the ordinary. You may be able to benefit from a key worker mortgage deal, but you may find that the best mortgage deal for you is not specific to key workers. In all cases, your mortgage affordability will depend on each lender’s requirements and affordability assessment rules.
Key worker schemes
You may have heard about the Starter Homes Initiative (SHI, Sep01-Mar04) or the Key Working Living programme (KWL, Apr04-Mar08) that followed. The latter included a number of schemes:
- Key Worker HomeBuy
- London Challenge Key Teacher HomeBuy
- Key Worker Shared Ownership
- Key Worker Intermediate Rent
Another scheme aimed at key workers was the London Wide Initiative, which was a shared ownership scheme.
Those who still (part) own their home under any of these schemes can find help via the www.myfirsthome.org.uk website.
There was also The Armed Forces Home Owners Scheme (AFHOS) between 2010 and 2014, which was then replaced by the Forces Help to Buy scheme (FHTB) and is available until the end of 2018.
The Forces Help to Buy scheme allows regular armed forces servicemen and servicewomen to borrow up to 50% of their annual salary, maximum £25,000 interest-free.
This amount can be used when buying your first home or moving home and selling the current one. The amount may be used as a deposit or to pay for costs, including solicitor fees and stamp duty.
You can find further information on the following government website: https://www.ownyourhome.gov.uk/scheme/forces-help-to-buy/
Key workers may benefit from a local developer or housing association schemes.
The discounted/intermediate rent is lower than the market rent, which allows you to save money towards the deposit by paying less rent than you normally would.
The key worker rent to buy options work on the same principle, i.e. paying less than the market rent, but in this case, you have the option to buy the rented property after an agreed period of time.
Key worker shared ownership is different, as it means buying a share in a property and paying a proportionate rent on the remaining share. This can work well if you expect an increase in your salary and could potentially buy more shares or even 100% in the future.
Check out the government official website for the help to buy schemes: https://www.helptobuy.gov.uk/
Availability of key worker schemes
Developers and housing associations may make certain properties only available to key workers or just prioritise key worker applicants if there are multiple applications for the same property.
For information about locally available housing options, you should contact local developments and housing associations. Alternatively, the housing department of the local council may also be able to assist.