By -

Sponsored content

Becoming a partner at your law firm is a monumental achievement—congratulations! With a significant pay rise around the corner, you may want to leverage your higher income to upgrade your home and lifestyle.

As you embark on this new chapter in your career, you may encounter some unique challenges when it comes to borrowing money for a mortgage.

Your income as a partner isn’t limited to a straightforward salary. It often includes base salary, profit distributions, and bonuses. This complexity can pose challenges when borrowing money as lenders typically favour predictable and steady income streams, regardless of your tax bracket.

Being a law firm partner means you’re technically considered self-employed. Without two years of tax returns to validate your income, securing a loan can be challenging due to the stricter criteria imposed on self-employed applicants from lenders.

Alternative Income Verification

Despite this, there are ways to verify your income with select lenders with less than two years of financials. Depending on the firm you work for, some lenders will accept alternative forms of income evidence, such as:

  1. CFO Letter: A letter from your firm’s CFO can provide a comprehensive overview of your earnings, including your previous year’s income and forecasts for the year ahead.
  2. Distribution Statements: These statements outline your profit distributions and can serve as proof of income.
  3. Bank Statements: Showing regular deposits from your firm can help demonstrate the consistency of your income.

Credit policies and accepted firms will vary from lender to lender, so it is always best to seek expert advice at the start of your journey.

What To Consider:

Fixed and special draws:

  • Your income may include fixed draws, which are regular payments, and special draws, which are additional distributions. It’s important to clearly document both types of draws to provide a thorough picture of your earnings.
  • The timing of these payments can affect how lenders view your income stability. Ensure you have a consistent record of these draws over an extended period to demonstrate reliability.

Trust distributions:

  • Be cautious with trust distributions to parties other than your spouse. Many banks will not consider income from trusts distributed to individuals other than a spouse as part of your attributable income.
  • If you do receive trust distributions, ensure they are well-documented and clearly traceable in your financial records to present a transparent view of your income sources.

How Legal Home Loans Can Help

As a law firm partner, your lending requirements are unique. As Australia’s only mortgage broking firm exclusively for legal professionals, we comprehensively understand your position and can help you maximise your borrowing power.

We know various credit options available to suit your needs and facilitate the loan process on your behalf for your convenience, to make your property goals a reality.

Whether it’s your first home, an investment property or restructuring of existing debts, Legal Home Loans will navigate the market on your behalf and help you select a loan that best suits your unique situation.

Plus, if you’re a member of the Law Society of NSW, you can get $500 cash back upon loan settlement to help with transaction costs*.

Contact our legal lending experts today to explore your options and take the next step toward achieving your property goals.

*Rebate applies to the member’s first loan settled with Legal Home Loans. Legal Home Loans will honour the highest valued rebate applicable to the client. Limit of one rebate per loan in the case of multiple qualifying applicants. Loan value must exceed $250,000 to be eligible.