How to get a mortgage as a new law partner

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How to get a mortgage as a new law partner

Chirag Patel is here to explain the mortgage process for new law partners. 

Can I get a mortgage as a newly qualified partner?

Yes, you can get a mortgage as if you’ve just been made a partner. However, lenders may consider your income slightly more cautiously.

If you’re new to the role, you may be required to show your employment contract, proof of stable income and potentially bonuses. But it’s possible to secure a mortgage, especially if your salary is high and your credit is strong.

How long do I need to be a partner before I can use my new income for a mortgage?

Lenders typically want to see a minimum of six to 12 months of stable income as a partner before considering it for a mortgage application.

Some lenders may require a longer period, especially if you’re an equity partner, as your income can be more variable. However, certain lenders are more flexible if your previous salary as an associate was high and stable.

Can I factor in annual bonuses and dividends for a mortgage?

Yes, you can factor in annual bonuses and dividends when applying for a mortgage, but it depends on the lender. Some lenders may take a portion of your bonus or dividend income into account if it’s a regular and consistent part of your overall earnings.

However, they may only consider a percentage, typically 50% to 75% of your bonus or dividends when calculating affordability.

How much can I borrow for a mortgage as a law partner?

For a law partner, most lenders will go up to five and a half times your annual income. If you’re an equity partner, some lenders may be willing to lend at the higher end of this range.

Sometimes with high net worth partners, it’s very common for it to go above five and a half times, because they have the ability to show stability of income. They would also need good credit history, combined with disposable income as partners.

So I would say you can get up to five and a half times with most mainstream lenders, but for high net worth individuals, even higher.

What deposit do I need for a mortgage as a law partner?

The deposit needed will depend on the lender, the choice of products and whether these are specific for legal professionals or not. If not, then depending on the lender, it’s normally 5% to 10% as a deposit.

If you’re applying for a higher value mortgage, or a property in a competitive market, you might need a larger deposit. The amount will also depend on whether you’re a salaried or an equity partner.

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We support clients through a daunting process, looking at your circumstances and taking time to understand your priorities. We then research the market for the most appropriate options based on those needs.

Why are interest only mortgages popular for law and equity partners?

Interest only mortgages tend to be popular with law and equity partners, because they allow for lower monthly payments. This can be advantageous for individuals with higher earnings and variable income.

Law partners often experience fluctuations in income due to bonuses and dividends, so paying only interest can provide more financial flexibility. These mortgages also suit professionals with a plan to pay off the overall loan amount later – either through asset sales or a lump sum from a future payout.

Lawyers often like to combine their mortgage with an offset facility, where they can store what they would have paid on a repayment mortgage in an offset savings account. This gives them access to those funds, but reduces their monthly mortgage payments.

In summary, interest only mortgages are popular because they allow lawyers to manage the variation in their earnings.

How do I get a better mortgage as an equity partner?

One option is working with private banks such as Coutts, C.Hoare and Co, Investec or Abuthnot Latham. For an equity partner, if you can demonstrate stability and potential growth in your income, they can look at your profit shares, bonuses and dividends to give you the most suitable mortgage.

Often that means they can provide a specialist bespoke mortgage product with potentially higher income multiples, lower Loan to Value, and additional options such as offset. They’re likely to understand the complexities of life as an equity partner and offer more favourable terms.

How can a mortgage broker help here? Have you got anything else you’d like to add?

A mortgage broker can be invaluable in helping to navigate the mortgage process for a law partner. We understand the specific requirements of lenders because we work with them day in, day out.

When it comes to complex income structures like those of law partners, we can help you access specialist mortgage products. A broker can also help negotiate better rates and terms with private institutions, saving a professional lawyer time and potentially money in the long run.

It’s also important to note that law partners might have access to exclusive mortgage deals, through the specialist lenders that recognise the stability and high earning potential of their legal profession.

Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £499.

Chirag Patel trading as CKN Mortgages is an Appointed Representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.