Strive is a specialist mortgage brokerage that specialises in mortgages for equity partners in law and accountancy firms. Certain mortgage lenders are more equipped to deal with the unique employment structure of equity partners.
Challenges when securing a mortgage as an equity partner
While there is no doubt that being an equity partner in a law or accountancy firm is a respectable and potentially lucrative career, it can present challenges when securing a mortgage, especially if you have recently been promoted to partner.
Most lenders treat equity partners as self-employed and require 2 or 3 years of income documentation. Obtaining a mortgage can take a while, especially if you have recently been promoted to partner and your current earnings do not reflect future potential earnings. Equity partners often have complex income structures and may only hold a small percentage of ownership in the company. Their income may not primarily come from a salary but from other sources like dividends or bonuses, for which most lenders want a 2-year track record.
Providing company accounts to evidence income can be challenging, especially if you do not have a large share in the company. Most lenders are not equipped to handle these types of applications, and specialist lenders who understand the nuances of this employment structure are often required.
How much can I borrow as a Limited Liability Partner?
The amount you can borrow will vary significantly depending on the lender. For example, some lenders base their decisions on the most recent 2 or 3 years of profit share, while others consider only the latest year. This can make a significant difference if your income has increased recently or if you are in the early years of your business. Some lenders offer loans at 4.5 to 5 times your income, while others may consider up to 5.5 times your income. Higher income multiples are usually reserved for those with incomes above £100,000. Choosing the right lender can result in tens of thousands of pounds in additional borrowing. Larger deposits and higher incomes can unlock higher income multiples.
How Quickly After Making Partner Can I Use My New Income for a Mortgage?
Most lenders will require 2 years of income after becoming an equity partner. However, some will consider just one year, and at Strive, we have access to lenders who will lend even before you have completed your first year as a partner. These lenders may consider your previous earnings prior to becoming a partner, along with future projections.
Large mortgages for equity firm partners
It’s not uncommon for equity partners to benefit from significant earnings packages and understandably want to leverage their earnings to generate large borrowing amounts. Strive has access to lenders that can leverage up to 5.5 times income and consider share of profit and other earnings. Most high street lenders will consider mortgages up to £3 to £5 million, while others may consider larger amounts. Typically, mortgages over £1 million will require deposits of at least 15%; however, it is still possible to secure such loans with smaller deposits, though this will be with a smaller pool of lenders.
Evidencing income for Mortgages for Law Firm Partners
Evidencing income for mortgages for law firm partners will depend on the lender, your scenario, and the length of time you have been a partner. Many lenders will ask for 2 years of SA302s, overviews, and company accounts. Others may consider just 1 year. Some lenders understand that accessing company accounts can be tricky for some equity partners, especially those with smaller shares, and may accept a confirmation of earnings letter from the financial directors in lieu of the company accounts.
How Much Deposit Do I Need?
Speak to an Equity partner Mortgage Expert
It’s possible to get a mortgage with as little as 5%, but the required deposit will vary depending on your circumstances. You may have more options and better rates with larger deposits. Additionally, larger mortgages, such as those above £500,000, may require larger deposits.
How to get a better mortgage as an equity partner
Ultimately, finding the right lender to suit your circumstances is crucial. Using a specialist equity partner mortgage broker will give you the best chance of success, especially one with access to and close links with equity partner-friendly lenders. In addition to choosing the right broker, being well-prepared with your documentation is essential. This includes having a confirmation of earnings letter from your financial director, SA302s, and other relevant financial documents ready. Furthermore, having a larger deposit and a good credit score will always improve your chances of securing a better mortgage.
Speak with an Expert in Equity Partner Mortgages
Strive is a specialist mortgage broker for equity partners in law and accountancy firms. We have over 20 years of experience in arranging mortgages for equity partners and have forged close relationships with lenders that are geared towards lending to clients in this profession.
FAQ’S
I’ve only just become an Equity Partner, can I get a mortgage? Yes, it’s possible to get a mortgage for recently promoted partners. Certain lenders understand the nuances of this employment structure and will consider applications based on previous earnings and future projections.
Contact us today, and we’ll work hard on your behalf to find you a competitive mortgage.
For more information on mortgages for contractors, please contact a member of the Strive team, by emailing [email protected] or call us on 01273 002697.
