Home buyers are being warned to not be taken in by social media influencers giving ‘dangerous’ mortgage advice.
Mortgage brokers have flagged the advice of some so-called finfluencers that could land people with criminal records.
For example, one such person on TikTok with hundreds of thousands of followers has spoken about how someone could become the landlord of two properties while putting down just a five per cent deposit on each.
However, this would require them to mislead their mortgage lender which could lead to a fraud conviction.
The finfluencer advises that people could take out a normal residential mortgage to buy the first property, then get consent from their lender to rent it out after they have moved in.
Those buying a home they intend to let out should apply for a buy-to-let mortgage, which would usually require a higher deposit.
The ‘consent to let’ allowance is intended for people who need to rent their main home out for a limited time due to a change in circumstances.
The finfluencer then suggests that someone could repeat this process so they would have two buy-to-let properties.
One broker, Sean Horton, managing director at Respect Mortgages, described videos such as this as a ‘step-by-step guide to mortgage fraud’.
‘The advice given could land followers with criminal records, whilst destroying their financial futures,’ said Horton.
‘The Financial Conduct Authority must stop playing games and start prosecuting. The evidence is there for all to see.
‘This is criminal activity being broadcast as entertainment, and it needs shutting down immediately before more victims get caught up.’
Bob Singh, founder at Chess Mortgages, added: ‘TikTok is a great platform for delivering financial education and content but it’s turning out to be the Wild West.
‘Dangers lurk behind some creators who despite being qualified and possibly regulated in some shape or form go on to effectively promote scheme abuse and manipulation.
‘The education is aimed at breaking the rules, rather than working within them.’
In other videos shared online, business directors who want to apply for a mortgage but have poor credit are advised to enlist a friend to replace them as a director, whilst they retain a 100 per cent shareholding.
‘Lenders underwrite all significant shareholders, but the content conveniently ignores this fact – presumably in a bid [for the influencer] to get enquiries in seemingly at any cost and a total disregard for professional ethics,’ said Singh.
‘Social media platforms needs to start verifying these influencers sooner than later before innocent clients have their financial futures ruined by such negligent advice.’
Craig Fish, director at mortgage broker Lodestone also warns of online content promoting mortgage fraud.
‘If someone follows it, they could end up with a criminal record or even a prison sentence. It’s that serious,’ said Fish.
Earlier this month, The Financial Conduct Authority launched a week-long enforcement campaign aimed at shutting down unlawful investment promotions by social media finfluencers.
Steve Smart, joint executive director of enforcement at the FCA, said: ‘Our message to finfluencers is loud and clear.
‘They must act responsibly and only promote financial products where they are authorised to do so – or face the consequences.’
Contact one of our highly experienced mortgage advisors today on 0121 500 6316 to discuss your mortgage needs.
