The world of social media has given rise to a new class of professionals: influencers. Their income is often derived from a blend of content creation, brand endorsements, and other digital activities. While homeownership might seem daunting for influencers due to their unconventional income streams, it is indeed achievable with the right approach. This guide provides an in-depth look at mortgages for influencers.
Can I Get a Mortgage as an Influencer?
Absolutely! Influencers can secure mortgages, although the process can be slightly different from traditional employment. The key is how you present your income and manage the challenges associated with it. Lenders are increasingly recognizing that income from social media, endorsements, and sponsorships is valid, provided it’s documented properly.
Key Considerations for Influencers When Getting a Mortgage:
- Income Evidence: Lenders need to see evidence of your income, which can be more complex for influencers due to the variable nature of their earnings. Ensuring you have a comprehensive record of your income, including contracts and detailed bank statements, is crucial.
- Income Stability: While influencer income can be substantial, it may fluctuate based on factors like brand collaborations and engagement levels. Demonstrating a consistent income pattern, possibly supported by additional streams of revenue, helps in mitigating lender concerns.
Challenges of Securing Mortgages for Influencers
Consistency of Income
Influencer earnings can be volatile, which poses a challenge for lenders who prefer stable and predictable income sources. For example, if your income fluctuated due to a drop in engagement or changes in platform algorithms, this could affect your mortgage application. To counter this, document a history of stable earnings and consider securing additional sources of income to present a more stable financial profile.
Documentation and Proof of Income
Influencers often lack traditional documentation such as pay stubs or employment contracts. Instead, you might need to provide alternative proofs, such as:
- Detailed Contracts and Agreements: Contracts with brands, sponsorship deals, and other income-generating agreements.
- Bank Statements: Recent statements showing deposits and withdrawals related to your influencer work.
- Tax Returns: Self-assessment tax returns or equivalent forms that show your declared income.
Self-Employment Status
Many influencers operate as self-employed individuals or own their businesses, which can add complexity to the mortgage application process. Lenders might scrutinize the stability and longevity of your business. Showing a strong financial track record and future projections can help alleviate these concerns.
Financial History
Lenders assess creditworthiness based on credit scores, debts, and overall financial stability. If you’re relatively new to influencing or have inconsistent income patterns, building a solid credit history and demonstrating financial responsibility are essential.
Mortgage Affordability
Determining affordability can be challenging for influencers due to income variability. Lenders will evaluate your ability to make monthly payments, considering both your income and existing financial obligations. Providing evidence of additional savings or investments can strengthen your application.
Types of Influencer Income Lenders Can Consider for a Mortgage
Lenders are increasingly accommodating various income sources. For influencers, this includes:
- Social Media Income: Earnings from platforms like YouTube, Instagram, TikTok, or Twitch. This includes ad revenue, memberships, and sponsored content.
- Endorsements and Collaborations: Payments for promoting brands or products.
- Affiliate Marketing: Commissions from driving sales through affiliate links.
- Product Sales: Profits from merchandise, digital products, or courses you sell.
- Speaking Engagements and Events: Fees from public appearances or conferences.
- Sponsorships and Brand Partnerships: Long-term or short-term brand deals and partnerships.
Lenders may require documentation of these income sources to validate their consistency and stability.
How Income is Assessed
Influencers, often classified as self-employed, face similar assessment criteria as other self-employed individuals. Here’s how lenders typically evaluate your income:
Minimum History and Documentation
Lenders generally prefer at least two years of self-employment history, evidenced through accounts or tax returns. Some lenders might accept a shorter history if accompanied by strong projections or additional financial documentation.
Income Averaging
Lenders often average your income over the past two years to account for fluctuations. For example, if you earned $60,000 this year and $30,000 the previous year, lenders might average this to determine your borrowing capacity:
- Average Income Calculation: ($60,000 + $30,000) / 2 = $45,000
- Borrowing Capacity: $45,000 x 4.5 = $202,500
Alternatively, if lenders consider only the latest year’s income:
- Latest Year’s Income Calculation: $60,000 x 4.5 = $270,000
Sole Proprietorship vs. Incorporated Business Owners
For sole proprietors, lenders consider net profit. For incorporated business owners, both salary and dividends are factored into the income assessment. Some lenders can even used Retained Earnings left inside the business. Each lender may have specific criteria for these calculations.
Exceptions for One-Year History
Some lenders might accept applications with just one year of self-employment history, provided you can show strong future projections and contracts for upcoming work.
How Much Mortgage Can I Get as an Influencer?
The amount you can borrow is influenced by several factors:
Downpayment Amount
A higher downpayment typically results in better mortgage terms. Influencers with substantial savings can often access more favorable rates and terms.
Expenses and Affordability
Lenders assess your financial commitments and existing debts to determine how much you can afford to borrow. Lower levels of debt and expenses enhance your borrowing capacity.
Length of Business History
A longer track record of consistent income can positively impact your borrowing potential. Lenders prefer established businesses with proven income stability.
Income Averaging and Multipliers
Lenders may use income averaging to determine borrowing capacity and apply income multipliers (usually 4-5 times your income). For higher earners, some lenders may offer up to 5.5 times income.
Which Lenders Offer Mortgages for Influencers?
Many lenders are open to working with influencers:
Big Banks
Some large banks have developed specific mortgage products for self-employed individuals, including influencers.
Alternative Banks
Known for their flexibility, alternative banks may offer innovative underwriting approaches for non-traditional income sources.
Private Lenders
Private lenders often provide tailored mortgage solutions and have greater flexibility in assessing diverse income sources.
Will I Pay a Higher Mortgage Rate for Being an Influencer?
Interest rates for influencers are generally similar to those for other self-employed individuals. However, a limited selection of lenders might lead to higher rates by default. It’s crucial to work with a broker who can help you find the best possible rates.
Do Lenders Prefer Certain Types of Influencers?
Lenders typically focus on financial stability rather than the influencer’s niche or content genre. The key is demonstrating consistent income and meeting standard lending criteria.
Is It Possible to Get an Influencer Mortgage with One Year of Accounts?
While many lenders prefer two years of accounts, some may consider applications with just one year, provided you present strong future income projections and evidence of ongoing work. Showing forward-dated contracts and financial stability can help.
Improving Your Chances of Securing a Mortgage
Engage an Accountant
A specialist accountant can help maintain accurate financial records and present your financial situation favorably to lenders.
Maintain Clear Records
Document all sources of income and expenses thoroughly. Clear records help in proving your financial health.
Save for a Larger Deposit
A substantial downpayment can improve your mortgage application and access better rates.
Demonstrate Employment History
Providing evidence of previous employment can help if you have recently transitioned into full-time influencing.
Maintain a Good Credit Score
A strong credit history is vital. Regularly review your credit report and manage debts responsibly.
Seek Professional Mortgage Advice
A mortgage advisor or broker experienced with influencer finances can guide you through the process and help secure the best terms.
Required Documents
When applying for an influencer mortgage, prepare to provide:
- Business Bank Statements
- Tax Returns (T1 Generals)
- Corporate Financials or T2’s
- Proof of Down Payment
Mortgage Application Process
- Speak with a Specialist Broker: Engage a broker familiar with influencer mortgages to guide you through the process and get your pre-approved.
- Gather Documents and Check Options: Compile required documents and assess mortgage options with your broker.
- Property Hunt: Search for properties within your budget based on your pre-approval.
- Apply for the Mortgage: Complete the application process with your broker’s assistance and submit necessary documentation. The lender will assess your application and conduct a property valuation.
Securing a mortgage as an influencer is entirely possible with proper preparation and professional guidance. By understanding the unique aspects of your income and working with experts who can navigate the complexities, you can turn your homeownership dreams into reality.
If you’re ready to get pre-approved for your Influencer Mortgage, let’s schedule a call today:
P.S. If you’d like to read about creating a budget for buying your first home, here’s a post on Budgeting for Home Buying.