Why Barristers Should Consider Protection and Mortgage Advice Together
When arranging a mortgage, the conversation naturally focuses on the borrowing.
How much is appropriate? How should the mortgage be structured? What will the monthly commitment look like?
For barristers, I believe another question deserves to sit alongside those discussions:
What Happens To That Commitment If Your Ability To Practise Is Interrupted?
For an employed professional, there may be sick pay and other benefits provided through their employer. A self-employed barrister can have a very different financial safety net.
Their ability to generate income is closely connected to their ability to continue practising. If illness or injury prevents them from working, the impact can extend well beyond their career. The same income may be supporting a mortgage, household expenditure, family commitments and wider financial plans.
Henry Dannell’s existing guidance for barristers recognises this particular challenge of self-employment and the importance of considering income protection throughout a barrister’s career.
For me, that is why the mortgage and the protection supporting it should not be viewed as entirely separate conversations.
A Mortgage Is Based On Today. Protection Considers What Happens Tomorrow.
A mortgage can represent one of the largest and longest financial commitments a barrister will make.
When arranging that borrowing, considerable attention is rightly given to affordability. We look at the barrister’s income, expenditure and wider circumstances to establish what borrowing may be appropriate today.
Protection asks a different question.
What Happens If The Income Supporting That Commitment Changes Unexpectedly?
A barrister may have a successful practice and a strong financial position, but self-employment means some of the protections associated with conventional employment may not be available.
That becomes particularly relevant when taking on a significant mortgage commitment.
The objective is not to assume something will go wrong. It is to understand what the financial consequences would be if it did, and whether those consequences should be protected against.
For Many Barristers, Their Ability To Earn Is A Significant Financial Asset
Property and investments are obvious assets because they can be valued relatively easily.
Future earning capacity is less visible, but for a barrister with many years of practice ahead of them, it can be extremely important to their wider financial position.
That earning capacity relies on being able to continue working.
Henry Dannell’s Journey of the Bar guide identifies illness or injury as a particular consideration for self-employed barristers because an inability to practise can directly affect income. It also highlights income protection as an important consideration throughout a barrister’s practice.
Income protection is designed to provide an income where illness or injury prevents an insured individual from working and the circumstances meet the relevant policy definitions, subject to its terms, exclusions and limits.
For a barrister, the conversation should go beyond simply asking whether the monthly mortgage payment could be covered.
The wider question is what level of income the individual and their household rely upon, and what would happen if that income were interrupted for a prolonged period.
Life Insurance Protects Against A Different Financial Consequence
Income protection and life insurance may both sit within a wider protection strategy, but they address different risks.
Income protection is concerned with the financial impact of being unable to work because of illness or injury, subject to the terms of the policy.
Life insurance considers a different circumstance: the financial impact of death.
For a barrister with a mortgage, partner, children or others who depend on them financially, that can raise important questions.
Would the mortgage need to be repaid?
Could a partner maintain the property and household commitments without the barrister’s income?
What financial support would dependants require?
What existing assets, insurance or other arrangements are already in place?
There is no single answer that applies to every barrister. The appropriate level and type of protection will depend on their individual circumstances, existing provision and wider financial responsibilities.
The important point is that those questions are considered rather than overlooked.
Why Have The Protection Conversation Alongside The Mortgage?
The mortgage process creates a natural opportunity to look at these risks.
At that point, we are already building a detailed understanding of the client’s finances. We know the borrowing being considered, the likely mortgage commitment, how income is generated and what other expenditure or financial responsibilities exist.
It therefore makes sense to ask what happens if the income supporting that structure is interrupted.
That does not mean every mortgage should automatically be accompanied by every available form of protection.
It means the client should understand the risks associated with the financial commitment they are taking on and have the opportunity to decide, with appropriate advice, whether protection has a role.
For barristers, there is another reason why bringing these conversations together can be valuable.
We already understand how the income works.
Protection Advice Should Reflect How A Barrister Actually Earns
A barrister’s financial position can look very different from that of someone receiving the same salary every month.
Pupillage, the transition into tenancy and the development of a self-employed practice can all change the income profile considerably. Earnings can also fluctuate because of the timing of work and receipts, career breaks and the natural ebbs and flows of practice. Henry Dannell’s existing barrister guidance explores these characteristics throughout the different stages of a career at the Bar.
That context matters when discussing protection.
A second six pupil beginning to generate their own income may have different needs from a barrister several years into tenancy with a substantial mortgage and young family.
An established practitioner who has accumulated assets and reduced their borrowing may have different priorities again.
The conversation should therefore reflect the individual rather than treating a barrister’s income as though it were a conventional monthly salary.
As the career changes, the financial commitments around it can change too.
The Mortgage Should Not Be The End Of The Conversation
Securing a mortgage can understandably feel like the objective.
In reality, completion marks the beginning of what could be a commitment lasting many years.
A barrister may spend considerable time ensuring the borrowing is structured appropriately, particularly where their income requires more specialist interpretation. Yet the same attention is not always given to what would happen if the income supporting that borrowing suddenly stopped.
For me, good advice should consider both sides of that position.
How should the borrowing be structured today?
And:
What financial resilience is in place if something unexpected happens tomorrow?
These are different questions, but they are closely connected.
Henry Dannell’s wider approach to debt advice is based on looking beyond an isolated transaction and considering borrowing within the client’s broader financial circumstances and longer-term objectives.
Protection can form part of that wider conversation.
Protection Should Evolve With The Career It Supports
A barrister’s financial circumstances can change considerably throughout their career.
Pupillage becomes tenancy. A developing practice can become an established one. Earnings may increase substantially. Property commitments can become larger. Partners, children and other dependants may enter the picture.
The protection considered at one stage of that journey may therefore no longer reflect the circumstances several years later.
That is why protection should not necessarily be viewed as a one-off decision made when the first mortgage completes.
Changes to borrowing, income, family circumstances and wider assets can all provide a reason to review whether existing arrangements remain appropriate.
At Henry Dannell, our role is to understand the financial position as a whole rather than viewing the mortgage or an insurance policy in isolation.
For barristers, that means considering the borrowing, the income supporting it and the potential consequences if that income is interrupted.
Because arranging the mortgage is an important part of the financial journey.
Protecting the career and income that support it deserves consideration too.
This article does not constitute tax advice. Clients should take advice from appropriately qualified tax advisers regarding their tax liabilities and payment obligations.
Bridging finance is typically secured against property. Your property may be repossessed if you do not maintain repayments or otherwise comply with the terms of borrowing. Bridging finance can be more expensive than conventional mortgage finance and should be considered carefully. Lending is subject to individual circumstances, security, status and lender criteria.
