The Barrister’s Guide to a Mortgage

Highly qualified, exceptional earning potential, and a stable career path, anyone would think that it must be incredibly easy for barristers to secure a mortgage – right?

In reality, however, the occupation of a barrister comes with its own unique challenges. With the self-employed nature and unpredictable and fluctuating incomes, there are often challenges to the conventional methods of mortgage assessments.

In this article, we explore the different types of mortgages for barristers, how lenders will calculate income, the advantages of specialist mortgage lenders, and exactly how you can boost your borrowing potential. Let’s get started.

How Do Lenders Calculate Barrister Incomes for Mortgages?

When asking “how will a lender look at my income?”, it is first important to note that affordability calculations differ from lender to lender. Each lender will have their own mortgage lending criteria, and by extension, their own unique affordability calculation.

With that being said, let’s take a look at what an affordability assessment will evaluate, and how this information can be used to the advantage of barristers.

Typically, an affordability assessment by a lender will take a holistic look at your financial profile. Their aim is establish, through an evaluation, whether or not you will be able to reliably repay any potential loan over the proposed mortgage term.

A lender’s affordability assessment will usually look at the following:

• Credit history
• Regular expenses
• Total income
• Income frequency
• Initial deposit

Fortunately, one of the primary benefits of securing a mortgage as a barrister is the associated higher-than-average earning potential. As such, many lenders will look favourably on barristers and could provide access to larger loan amounts at strongly competitive rates.

Importantly, however, if you are self-employed – including barristers – then most lenders will require you to demonstrate a history of a strong financial standing. This is usually evidence of two or three years, and can be calculated from your tax returns and business accounts.

How Can A Specialist Mortgage Help Barristers?

Living in the world of the legal sector, the income structure of a barrister can be quite difficult for lenders to assess. This is because barristers will usually receive remuneration on a case-by-case basis, making their income and pricing dependent on the type of cases they work.

For example, some barristers operate their services on a conditional fee basis, meaning that they are paid after, and only if, they win the law case. Other barristers will charge a fixed hourly rate with an upfront cost – particularly in public access cases – due to the risk that their client may not be able to pay should the case fail or be ruled against.

For popular high-street lenders, the nature of irregular payments, potential risk of not being paid, and even delayed payments, can all too often position barristers as high-risk borrowers. As such, finding a specialist mortgage lender who understands barrister mortgages and the complexities of self-employed income streams, could massively boost your borrowing power and allow access to competitive mortgage rates.

Generally, banks and high-street lenders will cater to the majority of their client base, resulting in a much stricter mortgage lending criteria that may not allow for the flexibility of self-employed income streams. Specialist lenders, however, can often offer mortgage products that are tailored to those who are the exception.

Working with a trusted whole-of-market broker – like Boon Brokers – is the best way to find a specialist lender that understands your specific financial circumstances. With true whole-of-market access, our expert advisers can compare the entire market to find the best mortgage deal for you.

What Are the Mortgage Options Available for Self-Employed Barristers?

Generally speaking, barristers will have the same ‘mortgage doors’ open to them as other high-earning professions.

Each mortgage type is slightly different, each with its own benefits. What is important when considering your available mortgage products is what best suits your financial circumstances. Taking out a mortgage can be a huge commitment, and so it’s vital that you understand the pros and cons of each mortgage available to you.

Here are some mortgage options that are available to barristers:

– Fixed-rate mortgages: Fixed rate mortgages can provide a clear insight into the immediate future by locking in an interest rate. This can be particularly beneficial if you’re concerned with fluctuating incomes.

– Tracker mortgages: A tracker mortgage is a type of variable-rate mortgage that can offer lower rates, but will stay in line with the Bank of England (BOE) base rate.

– Offset mortgages: An offset mortgage enables you to reduce the interest costs of your mortgage by linking your savings to your mortgage balance.

– Interest-only mortgages: The interest-only mortgage option allows you to borrow the full capital and interest required for your property purchase, only paying the interest on the loan. However, the overall capital will remain throughout the mortgage.

As we’ve previously touched upon, barristers will generally work as self-employed practitioners. Because of this, they will often be subject to provide additional documentation that can prove their affordability.

Working with a trusted whole-of-market broker, specifically experienced in securing mortgages for barristers, can greatly help you navigate these mortgage options. At Boon Broker, our expert advisers will provide you with a complete comparison of the mortgage market, helping you navigate the necessary mortgage lending criteria, to find the mortgage that is best for you.

Buy to Let Mortgages for Barristers

Due to the high-income potential of a barrister, buy-to-let mortgages can often provide another way to diversify income and build wealth.

Essentially, a buy-to-let mortgage provides the new landlord (when the property is purchased) to rent the property out to a tenant(s). There are some key differences that you will find with buy-to-let mortgages, including:

• Higher deposits required: Buy-to-let mortgages often require a higher deposit. This is because the additional responsibilities of being a landlord are seen to add another layer of risk to lenders.
• Interest rates are higher: Interest-only mortgages are extremely common with buy-to-rent mortgages. As such, the interest rates are usually higher.
• Higher fees: Buy-to-let mortgages will generally cost more for setting up the mortgage, with many lenders applying charges of £1,500 to £2,000.

A typical example of a lender’s criteria for a buy-to-let mortgage would see a minimum deposit of around 25% is required, and rental income to cover between 125% and 145% of the mortgage repayments.

If you’re a barrister looking into a buy-to-let mortgage, it’s important to note that lenders will not only assess your own personal income, but the potential income of future rent from the property.

Before you finalise your choice, it’s important to have a clear picture of how much you can borrow based on your earnings and financial history.

How Much Can a Barrister Borrow?

One of the most common – and important – questions a barrister can ask when thinking about securing a mortgage is “How much can a barrister borrow?”

The short answer: the exact amount you will be able to borrow will be predicated upon many factors, including your income, financial history, deposit size, and your chosen lender’s specific criteria.

With most lenders, barristers will be able to borrow between 4.5 to 6 times their annual income. This amount is subject to change depending on the results of a lender’s affordability assessment.

Fortunately, with an above average earning potential, barristers will typically have access to larger borrowing amounts and increased competitive rates. Below, we have provided an insight into what a barrister might expect to borrow, depending on the stage of their career:

Early Career:

In the first year following qualification, earnings can range from approximately £12,000 to £90,000.

This would calculate your borrowing range would be between:

• £54,000 and £405,000 (4.5x)
• £72,000 and £540,000 (6x)

Mid-Career:

Within five years of practice, barristers earning potential increases to between £50,000 and £200,000.

This would calculate your borrowing range would be between:

• £225,000 and £900,000 (4.5x)
• £300,000 and £1,200,000 (6x)

Senior/Established:

With 10+ years of experience, barristers can earn from £200,000 upwards.

This would calculate your borrowing range between:

• £900,000 (4x)
• £1,200,000+ (6x)

Please note, these figures provide an insight into how income will be used by lenders to calculate your borrowing capacity. The exact amount a barrister can borrow for their mortgage will directly relate to their individual earnings and financial profile.

How Can I Maximise My Borrowing Potential?

Whether you’re looking to secure a mortgage as a barrister, NHS worker, or even work in investment banking, maximising how much you can borrow can open up opportunities for a bigger property purchase and might be the difference between a great house and your dream house.

Fortunately, the strategies surrounding maximising your borrowing potential are open to every walk of life and often relate to strengthening your overall financial profile. For example:

– Organise Your Financial Records: By making sure that all your income documentation, tax returns, and bank statements are up to date, lenders will be able to easily identify you as a reliable borrower.

– Reduce Outstanding Debts: Lowering the balance of your credit card and settling other debts will greatly improve your debt-to-income ratio that lenders will evaluate.

– Boost Your Credit Score: Increasing your credit score by making timely payments on all financial obligations will greatly help your appeal to lenders.

– Increase Your Deposit: A larger deposit will reduce the risk for lenders, and will most likely lead to better interest rates and mortgage terms.

Taking these steps will provide a clear signal to potential lenders that you are a reliable borrower. Essentially, no matter the lender, they will be looking for a security measure that assures them that you will be able to repay whatever loan over the duration of your agreed term.

Boosting your financial standing in any way will always be a step in the right direction of increasing your borrowing power.

How Our Specialist Mortgage Brokers Can Help

It’s true – finding the perfect mortgage deal can be incredibly difficult. With the mortgage market becoming flooded with varying rate changes, different mortgage products, and specialist lenders, navigating your way to a mortgage that matches your needs can be laborious.

Fortunately, finding the best mortgage for a barrister doesn’t need to be so stressful.

Here at Boon Brokers, we have a wealth of experience in assisting barristers find the mortgage that is right for them. As a true and trusted whole-of-market mortgage broker, we work with high-street and specialist lenders alike. With access to all the mortgage products on the market today, we can compare between lenders to match you with the mortgage that is tailored to your needs – completely free.

Contact Boon Brokers today – our expert mortgage advisors are waiting to help guide you to the mortgage deal that is best for you.