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Social Media Mortgage Advice: Brokers Warn Against “Dangerous” Finfluencer Claims
Aspiring home buyers are being cautioned against heeding “dangerous” mortgage advice dispensed by some social media influencers, often referred to as “finfluencers.” Mortgage brokers are raising concerns that some of this advice could lead individuals down a path resulting in criminal charges.
The Risks of Social Media Mortgage Advice
Certain finfluencers, some boasting hundreds of thousands of followers on platforms like TikTok, have suggested strategies that could potentially implicate individuals in fraudulent activities. One such strategy involves acquiring multiple properties with minimal deposits by misleading lenders.
- The advice often revolves around obtaining a standard residential mortgage for an initial property and subsequently seeking “consent to let” from the lender after moving in.
- This approach circumvents the usual requirement of a higher deposit typically associated with buy-to-let mortgages, intended for properties purchased specifically for rental purposes.
Consent to Let: Intended for Temporary Circumstances
It is crucial to understand that “consent to let” is designed for homeowners who need to rent out their primary residence temporarily due to unforeseen changes in their situation.
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The “Step-by-Step Guide to Mortgage Fraud” on Social Media
The finfluencer’s advice extends to repeating this process to accumulate multiple rental properties. This approach has been sharply criticized by industry experts.
Expert Reactions
- Sean Horton, Managing Director at Respect Mortgages, characterized such videos as a “step-by-step guide to mortgage fraud.” He emphasized the potential for followers to acquire criminal records and jeopardize their financial well-being.
- Horton urged the Financial Conduct Authority (FCA) to take decisive action and prosecute these individuals, highlighting the blatant nature of the activity being broadcast as entertainment.
Wild West of TikTok Mortgage Advice
Bob Singh, Founder at Chess Mortgages, described platforms like TikTok as turning into the “Wild West” regarding financial advice. He cautioned against creators who, despite potential qualifications, promote schemes that encourage rule-breaking instead of adherence.
Other Questionable Advice Highlighted
Other online videos have suggested dubious practices such as advising business directors with poor credit to temporarily replace themselves with a friend to secure a mortgage.
- Singh pointed out that this advice ignores the fact that lenders scrutinize all significant shareholders, accusing the influencer of prioritizing inquiries over professional ethics.
- He called on social media platforms to expedite the verification process for finfluencers to protect clients from negligent advice that could ruin their financial futures.
Potential Criminal Consequences
Craig Fish, Director at mortgage broker Lodestone, echoed the warnings, emphasizing the severe repercussions of following such advice.
Quote from Expert
“If someone follows it, they could end up with a criminal record or even a prison sentence. It’s that serious,” said Fish.
FCA Enforcement Campaign
The FCA recently launched a week-long enforcement campaign targeting unlawful investment promotions by social media finfluencers.
FCA’s Warning to Finfluencers
Steve Smart, Joint Executive Director of Enforcement at the FCA, issued a clear warning, stating that finfluencers must act responsibly and only promote financial products if they are authorized to do so, or face the consequences.