HIGHER-RATE taxpaying professionals have always been in the good books with the nation’s mortgage lenders because their relatively high and secure incomes make them a pretty safe bet. But as more lenders hunt for profits by cornering specialist sectors of the market, professionals are being targeted with deals designed to make them feel special.

Mortgage schemes for professionals aim to offer a number of benefits over and above what borrowers could expect to receive from a normal mortgage deal, such as higher income multiples or lower deposits.

A number of lenders, such as Scottish Widows, offer specific schemes for professionals. The bank offers 110 per cent of the purchase price or valuation, whichever is the lower, with income multiples of four times the main applicant’s salary, plus one second income, or three times joint basic salary. This would enable a doctor on £60,000 a year and his wife on £30,000 to borrow £270,000 using either option.

A five-year fixed rate of 5.49 per cent would be available for borrowing more than 90 per cent loan to value (LTV) and 4.99 per cent for less than 90 per cent LTV.

Another deal from Cheltenham & Gloucester will advance four and a half times the joint income. This would give the doctor and his wife borrowing potential of £405,000 at 5.29 per cent until February 2011, but the deal does require a 5 per cent deposit.

Other lenders, such as the Teachers Building Society, trade off their experience with a certain type of professional, rather than offer specific product features. Mike Hislop, marketing manager of Teachers Building Society, says: “We are familiar with the needs of teachers, so the mortgages we offer are designed to accommodate them at every stage of their professional lives, including those on short-term contracts or supply teachers.”

But a new Clydesdale Bank mortgage, available through My Mortgage Direct, a broker, is aiming to raise the bar on lending to all kinds of professionals. The Professional Offset base rate tracker, pegged at 0.4 percentage points above the Bank of England base rate, offers features such as no early repayment charges and no penalties for overpayments, making it well suited to higher earners. The offset facility is of particular benefit to higher-rate taxpayers with savings because it could reduce substantially the interest they have to pay and therefore the mortgage term.

Paul Hearnden, of My Mortgage Direct, says: “Professional higher-rate taxpayers are in a position to take maximum advantage of certain types of mortgage products over those paying basic or lower-rate tax. Lenders such as Clydesdale Bank have recognised this and have created products that offer a wealth of features for borrowers with steady, high-level incomes.”

However, some brokers urge borrowers to look beyond the spin. Jonathan Burridge, of Quantum Mortgages, the broker, says: “Professional schemes can offer great value. But just because a scheme is badged ‘professional’, it does not follow that the scheme will always be the most appropriate for everyone in the target group.”

Others give warning that the label is simply a way for lenders to add a premium to the cost of the deal. Nick Gardner, director of Chase De Vere Mortgage Management, the broker, says that borrowers can usually find better rates elsewhere. “The rates are rarely, if ever, market leaders, so no one should look for a ‘professional’ mortgage if they want to save money,” he says.

Instead, Mr Gardner recommends researching the market to find the best deal available to all borrowers and then find out if the lender is prepared to negotiate. He says: “You are better off looking at the whole market for the best rate, then seeing if that lender will offer you better terms because you are a professional.”

The prevailing trend among lenders such as Bank of Scotland, Accord, Standard Life Bank and the Co-operative Bank is not to market specific products at professionals, but to consider these customers in a preferential light.

This means that they will take a more positive view about the borrower’s potential earnings and job security, so will offer more generous terms, such as a higher LTV or bigger income multiples than they would offer to non-professional borrowers.

As the market shifts towards lending according to how much a borrower can afford, rather than using more traditional income multiples as a guide, some brokers think that schemes aimed at specific groups such as professionals have become a bit of a red herring. Mark Chilton, of Purely Mortgages, says: “As more and more lenders, such as Abbey and Alliance & Leicester, are basing their deals on how much individual borrowers can afford, professional schemes no longer have much of an advantage over regular deals.”

• For more on the housing market visit www.timesonline.co.uk/mortgage

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