"I AM A LOCUM DOCTOR EARNING HIGHER RATES OF PAY UNDER PAYE - HOW CAN THIS COMPLICATE MY MORTGAGE OBJECTIVES?" BY DANIEL MCLARDY (EDINBURGH, 04/03/2026)
PAYE locum doctors are commonly employed as either (1) NHS staff bank workers providing services directly to the NHS OR (2) Workers indirectly providing services to the NHS via an agency, which employs the doctor on a zero-hours basis. While in both cases the doctor can be appointed to a role for an "indicated" length of time, the employment is usually casual - there is no obligation for the doctor to provide services, and no obligation for the NHS (or locum agency) to provide work. Thus, while the flexibility and higher rates of pay can appeal to doctors, it should be recognised that mortgage lenders are sensitive to the risks associated to what can be deemed "ad-hoc work". Furthermore, lenders do not assume that locum doctors do not face the risk of work shortages or other headwinds, simply because of reported staff shortages within the NHS. They are aware of the complicated relationship that exists between the NHS and locum doctor labour market.
IT APPEARS THE POWERS THAT BE UNDERSTAND NHS OPERATIONS REQUIRE A DEGREE OF LABOUR FLEXIBILITY, YET COST PRESSURES AND LACK OF CLARITY ON THE UTLISATION OF LOCUMS CREATES RISKS
PAY RATE RISK
Pay rate uncertainty has been a genuine risk faced by locum doctors in recent years, with the NHS seemingly using their monopoly power in an attempt to suppress market rates. Initiatives such as the "pan London rate cap", and Scotland's "agency rate control" initiatives are indicators of the headwinds faced by locum doctors, with it often being the case that capped rates are below the recommendations made by the British Medical Association. Lenders are aware of the pay rate risks within the locum doctor market, and they treat it accordingly.
POLICY RISK
The NHS appears to be in a relentless internal struggle with their position on locum doctors. There are contentious theories the locum doctor industry does not reconcile with continuity-of-care objectives, and as such some NHS trusts view the employment of locums as sub-optimal. Conversely, the GMC's 2021 (November) research paper on LAL's (locum agency locums) suggests that the NHS could be doing more to address the issues faced by locums, who reported challenges with induction, integration into teams, and receiving consistent support. With these conflicts in sight, NHS policy on the utilisation of locum doctors appears uncertain between both separate trusts and the institution as a whole, and again lenders are not oblivious to the risks this poses to locum doctor mortgage borrowers.
GEOGRAPHICAL RISK
Related to policy risk is location risk, associated to different NHS trusts and their own workforce management policies/practices which can change with little or no indication to the locum market. This can mean a shortage of locum work can occur very suddenly in particular geographical regions, potentially forcing doctors to travel long distances for work and in turn creating income sustainability pressures.
HOW DO LENDERS TREAT PERCEIVED LOCUM DOCTOR INCOME RISK?
REFUSAL
A contingent of lenders simply don't lend to PAYE locum doctors where locuming is their primary income source. I have spoken to a proportion of these lenders, and a recurring view was they have seen evidence for fluctuant availability of locum work across most geographical regions, and as such they don't have the risk appetite for the employment type.
TREATMENT AS A ZERO-HOURS CONTRACTOR
Given that locum doctor contracts are commonly structured as "no mutuality of obligation" agreements (particularly through agencies), most locums are captured by zero-hours contractor lending policies. Such policies usually require at least 12 months of income history to evidence the doctor has successfully established a consistent income from locum work. There can be a high bar for income evidence, too, with a proportion of lenders requiring 12 months of pay slips alongside the latest p60. If you are a locum doctor with mortgage aspirations, I strongly recommend you keep all your pay slips and p60s to hand, as the income evidence requirements can be extensive.
RECENT INCOME
In certain nuanced situations it is possible a locum may be eligible to be assessed as a lower-risk fixed term contractor, particularly where the current work placement is structured as a fixed term work position on set monthly pay. This is commonly where a specific vacancy is being filled. This can be advantageous for mortgage eligibility purposes, potentially allowing the locum's annual income to based on the most recent or latest three months of pay. There are caveats surrounding the length of industry experience the locum has in these instances, but it is an available method of representing a client's income where the lender's criteria can be fully satisfied.
WE CAN HELP YOU
If you are a locum doctor contemplating a mortgage, I implore you not to go it alone! These are the situations where a broker's lender knowledge will give you the advantage, saving time (you probably don't have) and possibly a lot of heartache, too. We will assess your combination of wider circumstances alongside your locum contract experience to target the right lenders for a successful outcome. If your mortgage eligibility is constrained, we will candidly advise why, so you have an understanding of a how you can progress your situation towards a more favourable position.
GET IN TOUCH WITH DAN
Please feel free to get in touch with me. I'm happy to have a zero-obligation chat to give you an idea of the possibilities.
FAQ's
> As a locum doctor, will I have to pay a higher interest rate?Not directly - lenders don't target locum doctors with different mortgages at higher rates of interest. However, if your circumstances restrict your lender access, it may mean you won't have access to lenders offering the best deals at a particular moment in time. This is not to say you won't be able to to get a very competitive deal, and we always advise our clients of how much more they will pay versus the best deal in the whole-of-market. Our process is transparent.
> Will my mortgage application take longer?
Some lenders will divert your mortgage application to "senior" or "manual" underwriting, which may add some processing time, but not to the extent that it will disadvantage you. Our role is to package your mortgage application in the most efficient, effective way to ensure the underwriting process runs as smoothly as possible. Further, we are always on hand to respond to underwriting requests quickly, to keep your application moving along. We do a lot of work in the background!
> What income documents do I need?
This depends on your particular set of circumstances, and we can advise you of the income evidence requirements relatively early in the process. However, if you want to take a proactive, "belt-and-braces" approach, I advise you collect together all of your pay slips, contracts and P60's for up to the past two years. Preparation is key, and more income evidence is better than less.
> Can you help if I am locuming through a tax avoidance scheme?
No. If you participate in a tax avoidance scheme we cannot assist you. These schemes, including pay-via-loans and minimum wage with equity bonus have been condemned as illegal. We cannot assist you with these schemes, or any like it.
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