Wealth Check: Brief advice for a barrister

Sarah Branson was made a tenant barrister a few weeks ago. The 31-year old, who specialises in family public law, is enjoying her new position. "I was called to the bar in 2001 and I was a pupil barrister for a year," she says. "It's certainly nice to be more secure now I'm a tenant. My billings and takings should increase, although I'm not sure by how much."

From 1998 to 2002, Ms Branson was a researcher at the House of Commons for the Labour MP, Geraint Davis, and studied law at evening classes. She has also worked for the United Nations High Commission for Refugees.

Ms Branson went to Iran and Afghanistan this year to check on legal advice for Afghan refugees. She believes life in Afghanistan has improved since 2001. "The security situation is bad but if you ask any person walking down the street they will still tell you their life is better," she says.

Ms Branson is in Coram Chambers, Middle Temple, and her earnings are £2,000 to £3,000 a month before expenses, although since she is self-employed, this varies. She still works one day a week at the Commons for Mr Davis, which pays £500 a month. "Sometimes it's consultancy, sometimes it will be drafting a Bill or writing a brief," she says. "It just gives me a regular income I don't have at the bar since I'm so new."

She is renting a room in Brixton, south London, for £350 a month but wants to buy her own place. She has saved a deposit of £11,000 in a cash Isa and would like advice on what sort of mortgage she can afford. "Can I get a two-bedroom flat, rent a room out and get a larger mortgage?" she asks.

Pension advice would also be welcome. She has a 10 per cent non-contributory pension from the Commons, which she has paid into since 1998. She has had a letter stating her Commons plan will become a stakeholder pension, and wants to know what she should do. She has not set up a private pension from her barrister work.

We put her case to Steve Martell, director of Martell Investment Management, Liz Lyke, managing director of ILP, Matt Pincher, consultant at Towry Law and Mark Dear, business development manager of Charcol Holden Meehan.

SARAH BRANSON, 31

Family: Single;

Income: Barrister, £2,000 to £3,000 a month; Commons researcher, £500 a month;

Debts: Student loan £1,200; overdraft £1,000;

Savings: £11,000 in cash Isa;

Pension: 10 per cent non-contributory;

Property: Renting room;

Outgoings: (Per month): Rent £350; food £200; entertainment £300; travel £250; bills £150; clothes £100; phone £100; holidays £75; cleaner £28

Solution 1: Savings

Mr Pitcher says Ms Branson should establish a budget and stick to it. Then she will then be able to judge her monthly cash surplus and this will allow her to determine how much she can afford to save and contribute to a pension.

Mr Dear says cash Isas are safe. No tax is payable on the interest and she can invest up to £3,000 per tax year. When she buys a property Ms Branson should consider longer-term savings, such as equity Isas, which offer better returns.

Ms Lyke says Ms Branson should continue to save into cash Isas. If she can afford more than £3,000, she should save into an internet or postal bank deposit account for the highest interest rate.

Solution 2: Debts

Mr Dear says Ms Branson should pay off her debts. She should clear her overdraft as she is probably being charged a high interest rate.

Mr Martell says Ms Branson should carry her debts until she has bought her home, because she will have the full £11,000 to put to a deposit.

She should tackle her debts after she has moved. She could consolidate them into the mortgage and go for a flexible loan where she can repay part of the capital when she wishes.

Solution 3: Pension

Mr Pitcher says Ms Branson should ask her Commons pension administrators for an illustration of her projected pension in retirement from her contributions between 1998 and 2002. She then needs to decide on the funds the stakeholder will invest in.

Mr Dear thinks Ms Branson should join the new Commons stakeholder scheme. Payments can be made monthly, singly or a combination of both, which should suit a barrister's irregular earnings. She should also contribute to a separate pension from her self-employed earnings.

Mr Martell says Ms Branson may defer further pension contributions until she has bought a home. Her earnings as a barrister are likely to grow considerably.

Solution 4: Flat

Mr Martell says Ms Branson is able to borrow more than most. Some lenders will advance her as much as six times her income because of their expectation that her earnings will grow significantly.

Renting a room will help towards her mortgage and may mean Ms Branson can buy a property sooner than she thinks.

Ms Lyke says mainstream high street lenders such as Halifax or Cheltenham & Gloucester should favour Ms Branson's application.

They could lend Ms Branson up to four times her total earnings, which would enable her to borrow about £160,000 and buy a property worth £170,000.

Mr Dear says Ms Branson should take out a critical-illness plan to cover her mortgage, and also consider permanent health insurance, now she is self-employed.

If you would like to be given a financial health check-up, write to: Wealth Check, 'The Independent', 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk.