Taking silk is one of the most significant milestones in a barrister’s career.
Yet the period surrounding that progression can create an unusual position from a mortgage perspective.
Professionally, the barrister may be advancing towards one of the most senior stages of practice. Financially, however, the latest accounts may show that income has fallen.
For a lender assessing self-employed earnings, that can immediately raise a question:
Why Have Earnings Reduced?
There may be a perfectly reasonable explanation.
The period leading up to taking silk can involve changes in the nature and balance of a barrister’s work, including greater pro bono commitments. As Henry Dannell’s existing guidance on the financial journey of a barrister recognises, this can contribute to a temporary reduction in earnings.
The important point is not to dismiss the lower figure.
It is to understand what sits behind it.
A Lower Year Does Not Necessarily Mean A Weaker Practice
Lenders understandably look closely at the direction of self-employed income.
If earnings have increased consistently for several years before falling materially in the latest period, an underwriter may question whether that reduction represents a change in the underlying strength of the practice.
That is a reasonable concern.
But falling income can have more than one explanation.
For a barrister progressing towards silk, the lower period may coincide with a very particular stage of their professional career. If more time has been committed to pro bono work, there may have been correspondingly less time available for fee-generating instructions.
The result can be a lower set of historic figures at precisely the point when the barrister’s professional standing is progressing.
Viewed in isolation, the accounts show a reduction.
Viewed in context, they may tell a more nuanced story.
The Same Figures Can Tell Two Very Different Stories
Consider how the position might initially appear to a lender:
Year one: strong income.
Year two: strong income.
Year three: lower income.
Without further explanation, the obvious question is whether earnings are now trending downwards.
But add the professional context.
During that third period, the barrister was progressing towards appointment as King’s Counsel and undertaking greater pro bono commitments. They have subsequently taken silk and moved into the next stage of their practice.
The figures themselves have not changed.
What has changed is the lender’s understanding of what produced them.
This is why mortgage advice for barristers cannot simply be an exercise in extracting figures from accounts and placing them into an affordability calculator.
Sometimes the most important work is understanding why those figures look the way they do.
Taking Silk Does Not Mean The Lower Year Can Simply Be Ignored
Context is important, but it does not remove the need for evidence.
A lender cannot simply disregard a lower year because the barrister has subsequently become a KC.
Nor should the appointment itself be used to assume that future earnings will necessarily increase.
Professional progression and mortgageable income are not the same thing.
The lower year still happened and, where it is material to the application, it needs to be understood.
When did income begin to reduce?
What changed within the barrister’s practice during that period?
Did increased pro bono commitments contribute?
When was the barrister appointed as King’s Counsel?
What has happened within the practice since?
And what evidence is available to support the position being presented?
These questions help distinguish between a temporary reduction associated with a particular stage of the barrister’s career and a more fundamental deterioration in earnings.
Timing Can Make The Figures More Complicated Again
There is another characteristic of income at the Bar that can influence the picture.
Work being undertaken, fees being billed and payments actually being received do not necessarily happen at the same time.
Depending on the accounting basis and the timing of receipts, the financial impact of a change in workload may not sit neatly within the period in which that change occurred.
A reduction in fee-generating work while progressing towards silk could therefore interact with the normal timing of billing and receipts, creating further movement between accounting periods.
That is why one lower figure should be investigated before it is automatically treated as the barrister’s new level of sustainable income.
The accounts matter.
But so does understanding the period those accounts represent.
What Does The Practice Look Like After Taking Silk?
For a recently appointed KC, this can become one of the most important parts of the mortgage conversation.
The latest completed accounts are inherently historic.
They may largely reflect the period before appointment, including the time during which the barrister was progressing towards silk.
The mortgage application, however, is being made based on the barrister’s circumstances today.
That can create a gap between the most recent completed accounts and the current position of the practice.
Depending on the lender and circumstances, more recent information may help provide context around what has happened since appointment.
The objective is not to project what a KC might earn in the future and ask a lender to treat that projection as established income.
It is to understand whether the latest evidence supports the explanation for the historic reduction and provides a clearer picture of the practice today.
The Right Lender Matters When Income Needs Interpretation
Different lenders can approach falling self-employed income differently.
Some may place considerable weight on the latest completed figure. Others may have greater scope to consider the circumstances behind the reduction and additional evidence relating to the current position.
That difference can become important where the borrowing required depends on a lender taking a more detailed view of the income history.
The question is not simply which lender offers the most attractive mortgage.
It is which lender has an underwriting approach capable of understanding the circumstances being presented.
That does not mean asking for favourable treatment because somebody has taken silk.
Affordability still needs to work. The evidence still needs to support the case. And the lender ultimately determines which income it is prepared to use.
The objective is simply to make sure an unusual period in the barrister’s financial history is understood for what it was.
Professional Progression and Income Do Not Always Move Together
We tend to think of career progression and income progression as moving in the same direction.
For barristers, the journey can be less linear.
There may be periods where significant professional development requires commitments that temporarily affect fee-generating work.
Taking silk can be one of those periods.
A barrister can therefore reach an important professional milestone while presenting a lower latest income figure to a mortgage lender.
Those two things are not necessarily contradictory.
The mistake would be assuming that the second automatically undermines the first.
Explain The Lower Year Rather Than Trying To Explain It Away
At Henry Dannell, our role is not to make an inconvenient year disappear from the application.
It is to understand why it happened.
Where income has reduced during the period surrounding silk, we want to understand the chronology, what changed within the practice and what the financial position looks like following appointment.
From there, we can consider the evidence available and which lenders may have an appropriate approach to assessing the circumstances.
Because a lender looking only at the latest accounts may see one thing:
Falling income.
A lender given the appropriate context may see something more complete:
A temporary reduction that coincided with a significant period of professional progression and now needs to be assessed alongside the barrister’s current position.
The lower figure still matters.
But so does the reason behind it.
And when a mortgage application involves an income profile that does not tell its own story, context can make a considerable difference to how that story is understood.
A mortgage is secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Mortgage availability and lending are subject to individual circumstances, status and lender criteria.
