The role of an influencer is becoming increasingly prominent in society, presenting an exciting and potentially highly lucrative career opportunity. However, it can pose certain challenges when it comes to obtaining a mortgage. Fortunately, with the right advice and planning, most of these challenges can be overcome.
At Strive Mortgages, we have arranged mortgages for influencers of all types, including several high-profile social media influencers. In the guide we explain everything you need to know about securing a mortgage as an influencer.
Can I get a mortgage as an influencer?
Yes, it is certainly possible to get a mortgage as an influencer. Income from social media, endorsements, marketing, and sponsorships are all considered valid forms of income for mortgage purposes. The challenges often revolve around the consistency of income and providing evidence of the income, but as long as you can evidence the income in the right way then you will certainly have options.
What are the challenges of securing mortgages for influencers?
Securing a mortgage as an influencer can come with several challenges. Here are some common ones:
- Consistency of Income: Influencer income can be variable, depending on brand collaborations, sponsored content, and engagement levels. Lenders typically prefer stable and predictable income streams, so proving a consistent and reliable income can be challenging.
- Documentation and Proof of Income: Influencers may face difficulties in providing traditional forms of income documentation, such as pay stubs or employment contracts. Lenders often require extensive documentation and proof of income, so influencers need to find alternative ways to substantiate their earnings.
- Self-Employment Status: Many influencers operate as self-employed individuals or run their own businesses. This can raise additional hurdles, as lenders might scrutinise the financial stability, longevity, and future prospects of the influencer’s business.
- Financial History: Lenders assess the creditworthiness of mortgage applicants based on their financial history, including credit scores, debts, and financial stability. Influencers with shorter careers or irregular income patterns might find it challenging to establish a strong financial track record.
- Mortgage Affordability: Influencers often face the question of mortgage affordability, particularly if their income is not as consistent or predictable as traditional employment. Lenders assess the applicant’s ability to meet monthly mortgage payments, factoring in the level of income and existing debts.
What types incomes can be considered?
Various forms of income earned by influencers can be considered for mortgages. Here are some examples:
- Social Media Income: Income generated through platforms like YouTube, Instagram, TikTok, or Twitch can be taken into account. This includes revenue from ad monetisation, channel memberships, brand partnerships, and sponsored content.
- Endorsements and Collaborations: Influencers often collaborate with brands and receive compensation for promoting products or services. These earnings can be included as part of their income for mortgage purposes.
- Affiliate Marketing: Income generated through affiliate marketing, where influencers earn a commission for driving sales through unique links or discount codes, can be considered.
- Product Sales: Some influencers develop and sell their own merchandise, courses, or digital products. The profits from these sales can contribute to their overall income.
- Speaking Engagements and Events: Influencers may be invited to speak at events, conferences, or workshops, where they receive fees or honorariums. These earnings can be factored in as well.
- Sponsorships and Brand Partnerships: Influencers often enter into long-term or short-term partnerships with brands, receiving payment for promoting products or services. This form of income can be considered when applying for a mortgage.
It’s important to note that lenders may require documentation and evidence of these income sources to establish their stability and consistency.
How is Income assessed?
Almost all influencers will be registered as self-employed, they will be treated similarly to other self-employed applicants by lenders. Here are some key points regarding how lenders typically assess the income of self-employed influencers:
- Minimum History and Documentation: Lenders generally prefer self-employed applicants to have a minimum of two years of self-employment history. This can be demonstrated through the submission of accounts or tax returns.
- Income Averaging: Lenders often calculate an average of the influencer’s income over the past two years to determine their borrowing capacity. This helps to account for any variations or fluctuations in income.
- Sole Trader Net Profit: If the influencer operates as a sole trader, lenders typically consider the net profit as the basis for assessing income. They may average the net profit over the past two years to determine the applicant’s affordability.
- Salary and Dividends (Company Directors): For influencers who are directors of a company, lenders usually consider a combination of salary and dividends as income. The lender may take an average of the salary and dividends received over the past two years to evaluate affordability.
- Exceptions for One-Year History: Some lenders may consider applicants with just one year of self-employment history. However, it’s important to note that not all lenders offer this flexibility, and additional requirements or restrictions may apply.
It’s worth mentioning that each lender may have specific criteria and requirements for assessing self-employed applicants.
How much can I borrow?
The amount that influencers can borrow for a mortgage will indeed depend on various factors. Here are some key considerations:
- Deposit Level: The size of the deposit the influencer can put towards the property purchase will play a significant role. Generally, a higher deposit can lead to more favourable borrowing terms and potentially access to a wider range of mortgage products.
- Outgoings and Affordability: Lenders assess an applicant’s affordability by considering their income and existing financial commitments, such as loans, credit cards, and other regular expenses. Lower levels of existing debt and outgoings can positively impact the borrowing capacity.
- Length of Trading: The length of time the influencer has been trading as a self-employed individual can influence the lender’s decision. Lenders often prefer applicants with a consistent and established trading history.
- Income Averaging: Some lenders will average the most recent two years of income to determine the borrowing amount. This can be beneficial if the influencer’s income has significantly increased in the latest year, as it allows for a higher borrowing capacity.
- Income Multipliers: Lenders typically offer a loan amount that is a multiple of the influencer’s income. While the standard range is around 4-5 times income, some lenders may be willing to offer up to 5.5 times income, especially for higher-earning influencers.
Average of 2 years calculation
Based on the given income of £60,000 this year and £30,000 in the previous year, and assuming the lender averages the two years’ income and lends 4.5 times the income, we can calculate the potential borrowing amount.
• (£60,000 + £30,000) / 2 = £45,000
• £45,000 x 4.5 = £202,500
Based on these figures, the potential borrowing amount would be £202,500.
Latest years income calculation
If the lender considers only the latest year’s income instead of averaging the two years, the borrowing amount would be based solely on the £60,000 earned in the current year. Assuming the lender still lends 4.5 times the income, we can calculate the potential borrowing amount.
Borrowing amount: £60,000 x 4.5 = £270,000
In this case, the potential borrowing amount would be £270,000 based on the latest year’s income of £60,000. It’s important to note that lending criteria can vary significantly between different lenders and most lenders will average the 2 years.
Which lenders offer mortgages for influencers?
Several lenders offer mortgages to influencers, and it’s important to find those whose criteria and affordability models understand the unique nature of the influencer role. Here are a few examples of lenders known for accommodating influencers:
- Specialist Mortgage Brokers: Working with specialist mortgage brokers who have experience in arranging mortgages for influencers can be beneficial. These brokers have access to a wide range of lenders and can help identify those with favourable criteria for influencers.
- High Street Banks: Some high street banks have recognised the growing influence and income potential of social media influencers. They may have specific mortgage products or tailored criteria for self-employed individuals, including influencers.
- Challenger Banks: Challenger banks are known for their flexibility and ability to consider non-traditional income sources. They may have innovative underwriting approaches that can accommodate the income streams of influencers.
- Private Banks: Private banks often provide personalised mortgage solutions and have a greater level of flexibility in considering various income sources. They may be more willing to tailor lending criteria to suit the unique circumstances of influencers.
- Specialist Lenders: There are specialist lenders in the market who specifically cater to self-employed individuals and those with non-traditional income sources. These lenders may have a deeper understanding of the influencer industry and can offer more flexible mortgage options.
Will I pay a higher rate for being an influencer?
The interest rates and mortgage products offered to influencers are generally similar to those offered to any other individual. However, due to the nature of the influencer role, you may have a more limited choice of lenders. This limited selection of lenders could potentially result in higher interest rates by default.
It’s important to note that while influencers may have a narrower pool of lenders to choose from, there are still lenders who understand the unique income streams and financial circumstances of influencers.
Do lenders prefer certain types of influencers?
No, In general, mortgages do not prefer certain types of influencers over others. Lenders typically assess mortgage applications based on factors such as income stability, affordability, credit history, and other financial considerations, rather than the specific type of influencer or their niche.
The lending criteria focus on financial aspects rather than the influencer’s industry or content genre. As long as the influencer can demonstrate a reliable and consistent income, meet the lender’s affordability requirements, and fulfil other standard criteria, they should be eligible for a mortgage.
Is it possible to get an influencer mortgage with 1 years accounts?
While it is generally more common for lenders to require a minimum of two years’ worth of accounts or self-employment history, there are some lenders who may consider offering mortgages to influencers with just one year of accounts.
Having one year of accounts as an influencer may limit the number of lenders available to you, as some lenders prefer a longer track record to assess income stability. However, it is still possible to find lenders who are willing to consider your application based on your one-year financial history. Lenders may want to see projections and confirmation from an accountant that your income is likely continue at the current level. It can also help to evidence forward dated contracts for future work.
How to improve your chances of securing a mortgage
To improve your chances of securing an influencer mortgage, consider the following steps:
- Engage an Accountant: Hiring an accountant who specialises in working with self-employed individuals, including influencers, can help ensure your financial records are well-maintained and accurately reflect your income. They can provide professional advice on tax planning, expense management, and help present your financial information in a favourable light to lenders.
- Maintain Clear Record Keeping: Keeping meticulous records of your income, expenses, and financial transactions is crucial. This includes documenting all sources of income, business expenses, and any relevant financial statements. Clear record keeping demonstrates financial responsibility and makes it easier to provide evidence of your income to lenders.
- Save for a Larger Deposit: Increasing your deposit can strengthen your mortgage application. A larger deposit reduces the loan-to-value ratio, which can improve your eligibility and potentially provide access to better interest rates and mortgage products. Saving diligently and aiming for a higher deposit amount demonstrates financial stability and commitment to the mortgage process.
- Demonstrate Employment History: Lenders generally prefer applicants with a minimum of two years of employment history, whether as a self-employed influencer or in another field. If you have recently transitioned into full-time influencing, providing evidence of previous employment history can help establish stability and a consistent earning potential.
- Maintain a Good Credit Score: A healthy credit score is vital for mortgage approval. Paying bills on time, keeping credit utilisation low, and managing existing debts responsibly can contribute to a positive credit score. Regularly reviewing your credit report and addressing any inaccuracies or issues can also help improve your creditworthiness.
- Seek Professional Mortgage Advice: Working with a mortgage advisor or broker experienced in assisting influencers can be invaluable. They can guide you through the mortgage process, provide access to a wider range of lenders, and help identify mortgage products that suit your specific needs and financial situation.
By following these steps, you can enhance your chances of securing an influencer mortgage.
What documents are required?
When applying for an influencer mortgage or any mortgage as a self-employed individual, lenders typically require several documents to assess your financial situation and eligibility. Here are the common documents lenders may request:
- Identification and Address Verification: You will need to provide proof of identification, such as a valid passport or driver’s license, and proof of address, such as utility bills or bank statements.
- Accounts and SA302s: Lenders typically require copies of your business accounts or self-assessment tax returns for the past two or three years, depending on their specific requirements. SA302s are official tax calculation documents issued by HM Revenue & Customs in the UK, providing evidence of your declared income.
- Accountant’s Reference: Some lenders may request a reference from your accountant, confirming the accuracy of your accounts and providing additional details about your financial situation. This reference can help validate the information you’ve provided.
- Projections or Business Plan: In certain cases, lenders may request projections or a business plan outlining your expected income and financial prospects for the future. This is especially relevant for newly established businesses or if your income has significantly changed over recent years.
- Bank Statements: Typically, lenders ask for the last three to six months of your personal and business bank statements. These statements allow them to review your income, expenditure, and overall financial stability.
- Proof of Deposit: You will need to provide evidence of your deposit funds. This can include bank statements or investment statements showing the accumulation of your deposit savings.
Remember, the specific document requirements may vary depending on the lender’s policies and individual circumstances.
What is the process?
The process for applying for an influencer mortgage typically involves the following steps:
- Speak with a Specialist Mortgage Broker: Engaging a specialist mortgage broker who has experience working with influencers can be highly beneficial. They can provide guidance, assess your financial situation, and help you understand the available mortgage options tailored to your specific circumstances.
- Collate Required Documents and Check Options: As mentioned earlier, gather all the necessary documents, such as identification/address verification, accounts and SA302s, accountant’s reference, bank statements, and proof of deposit. Your mortgage broker can review these documents and assess your eligibility, providing you with a clear understanding of the available mortgage options.
- Secure a Decision in Principle (DIP): A Decision in Principle, also known as an Agreement in Principle or Mortgage in Principle, is an initial assessment from a lender indicating the amount they may be willing to lend based on a preliminary review of your financial information. Obtaining a DIP gives you an indication of your borrowing capacity and helps in making informed decisions while property hunting.
- Property Hunt: Once you have a DIP and a clear understanding of your budget, you can start searching for suitable properties within your price range. Collaborate with estate agents or conduct your own research to find properties that match your requirements.
- Apply for the Mortgage: Once you have found a property, you can formally apply for the mortgage. Your mortgage broker can assist you with completing the application and submitting all the necessary documentation to the chosen lender. The lender will then conduct a detailed assessment of your application including a valuation of the property.