Tips and what to think about
If you are a successful and accomplished barrister, you are probably among the 50% plus of Barristers operating in the UK that command an annual salary of consistently more than £100k a year. You are probably also someone who is regarded, via a credit score, as highly credit worthy, and thus are in principle the sort of individual that any mortgage lender will easily accommodate.
If you are someone who has been operating in a self-employed capacity with other barristers through Chambers, your profile should be something that any good, experienced broker will have no problem handling with a range of traditional lenders, but what about if you have chosen to be a self-employed sole practitioner.
One might think that sitting outside of the umbrella of Chambers, where there are shared costs, may mean little but the reality is that, as an individual presenting themselves as a sole practitioner, one suddenly may move from appearing as a standard borrower to a non-standard.
As a non-standard borrower, there are a couple of considerations that, as a barrister you will need to consider
1) You may well be penalized on affordability criteria if you have a highly irregular earning stream. It is OK to have small gaps related to your sources of income but if these gaps start to extend beyond 90 days, they start to raise “flags” with many conventional lenders.
2) You may well be expected to provide a combination of historical earnings going back 2-3yrs alongside your tax filings (SA 302) in order to prove that despite irregularities your average income is in line with that of the last 12mths (at least)
3) If you are using a corporate vehicle such as a limited company to pay yourself, as well as manage your expenses, you might find that the profitability of your practice has greater weight with some underwriters than you are actual income that generates the turnover for the practice.
4) If you had invested previously to build your brand, but no longer will need to do so, you need to make sure you can communicate this properly, even being able to evidence in within your spending patterns. Underwriters can easily misinterpret past regular spending patterns that have been tailing off or stopped altogether.
The challenges presented above might make you think it is far better to operate from Chambers, and while that might be a sensible conclusion in its own right, our guidance would be as follows
1) Interact with other barristers operating in a similar way to you to access their broker if they have had a successful outcome
2) Seek out help from the broader legal associations that support your profession for advice and perhaps brokers with existing relationships
3) Identify Mortgage brokers who not only identify barrister mortgages on their website but speak the language of your industry, and the standards of practice for your profession.
Beyond working on getting the right broker, it is important to understand that as a Barrister, the best mortgage offer found for yourself may not be from one of the top 10 lenders that dominate the standard mortgage market. For non-standard, it is often the case that specialist lenders will
1) Offer better Loan to income outcomes and thus give you the opportunity to borrow a larger amount
2) Better understand the relationship between income and expenditure in your practice and thus will see greater capacity in your ability to service your mortgage payments than a standard lender.
It is important to recognize that being non-standard does not necessarily mean increased risk of an application failure, but it does absolutely mean that you should keep in mind that
1) Traditional affordability models that you might use on aggregators or even large lender website might not apply to you, and should be treated with caution
2) It is probably better to find the right broker and do a discovery meeting even before you go and look for a property, and thus get a better sense of both affordability and process
3) You should prepare your finances and the evidence around your income and expenditures with an eye toward the mortgage process in the future.
Our objective as mortgage readiness here at Porthos is to assist you in doing all of the above as well as, when ready, matching you up with broker who will do right by you. Open an account with us and let us help you get mortgage ready.