Mortgages For New Law Firm Partners
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Are there mortgages for new law firm partners?
Yes!
Partners are typically viewed as self-employed by mortgage lenders, irrespective of shareholding in the partnership. This can cause problems for new partners, as lenders often want at least two years’ tax calculations to verify self-employed income.
However, being a partner in a professional LLP means there are ways to get around this.
How quickly after making partner can I apply for a mortgage?
As long as the firm you are a partner at has been trading for at least two years, and your shareholding is relatively small, we work with lenders who can consider you from day one! You therefore don’t need to wait to meet lenders’ typical self-employed criteria.
How do lenders assess income for new law firm partners?
Partnership income is usually verified through tax calculations and corresponding tax year overviews, which are generated after you submit your annual tax return. Lenders tend to take an average of the last two years’ figures, or the most recent year in isolation if there has been a drop in income.
However, new partners won’t have two years’ worth of partnership income for lenders to look at.
If you haven’t yet submitted a tax return, or if you only have one completed tax return, then some lenders can accept a letter from your firm’s finance director or accountant confirming your earnings. Others will ask for a copy of the partnership agreement or contract alongside personal bank statements.
Can I use performance-related bonuses or future profit shares to borrow more?
Lenders will generally only accept variable or non-guaranteed income once there is a proven track record of you receiving it. You usually need a two year history.
As a new partner, you’re unlikely to have this. Lenders will therefore work off fixed or guaranteed earnings only for the time being.
Will my student loans affect what I can borrow on a mortgage?
If they are loans through the Student Loans Company, then the monthly repayments will be factored in as committed expenditure, but the total loan balance won’t have any impact.
This is unlike personal loans, where the balance is a factor, too.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Case Study
With a letter from his practice manager confirming his earnings, alongside the usual documents, we secured him a remortgage with additional funds for home improvements.
I took out a loan to buy into the firm – will this impact my mortgage application?
Any sort of ongoing financial commitment will affect what you can borrow. Both the monthly payments and overall balance could play a part in restricting your overall borrowing capacity.
How much can I borrow?
The amount you can borrow depends on your personal circumstances. Some lenders can offer up to 5.5 times your income.
In addition to looking at your income, lenders will also look at your expenditure. This includes credit cards and loans as well as things like childcare and maintenance.
Every lender uses a different calculator, so speak to an experienced mortgage adviser, like us, who will be best-placed to help you.
What deposit do I need?
The smallest deposit most lenders will accept is 5%. You may need a bigger deposit, for example if you have bad credit.
Putting down a bigger deposit than the minimum is usually an advantage, and can result in lower interest rates being available to you.
Do you have a question?
Are there interest-only mortgages for new law firm partners?
Possibly, yes.
Lenders usually have minimum income requirements for interest-only mortgages. A lot of the high street lenders set theirs at £75,000 for a single applicant or £100,000 for joint applicants.
The required deposit will be higher than 5%.
Lenders also need an acceptable repayment vehicle so they can see how you’re going to repay the mortgage at the end of the term. If you are planning to sell the house and downsize, there are often minimum equity requirements, too.
How can The Mortgage Store Chorley help with mortgages for new law firm partners?
At The Mortgage Store Chorley, we deal with a number of mortgage providers that specialise in helping new law firm partners find a mortgage. Plus, our specialist adviser has a law degree, so she understands the industry and how it operates.
We work with lenders who understand partnership earnings, including profit shares and variable income. With access to a wide range of mortgage options, we can find competitive deals tailored to newly appointed partners, even those with limited trading history.
Although we’re based in Lancashire, we can help wherever you are in the UK, with video and phone appointments available seven days a week.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
