Mortgage brokers warn against social media mortgage advice

Mortgage brokers warn of property influencers promoting mortgage fraud that could land people with criminal records.

A news story by This is Money, reveals influencers on social media are telling their followers they could become landlords of two properties while putting down a five per cent deposit on each.

The method involves taking out a normal residential mortgage to buy the first property, moving in, then applying for consent to let from the lender in order to rent it out.

However, those buying a home they intend to rent should instead apply for a buy-to-let mortgage, which typically requires a higher deposit and has different lending rules.

A mortgage broker has now told Property118, social media influencers who promote this are breaking the law.

Breaking the law

Malcolm Jones, director of Brooklands Commercial Finance, explains to Property118 the tactic influencers are encouraging their followers to use.

He explains: “There is a growing trend on social media platforms for so-called ‘property influencers’ to promote what is effectively mortgage fraud.

“They encourage their viewers to obtain a residential mortgage to purchase a property and then use it as a rental property. This has two potential benefits for the purchaser, firstly the possibility of buying with just a 5% deposit, as opposed to a normal 25% for a BTL mortgage and secondly obtaining a better interest rate.

“They then promote repeating the process, by obtaining consent to let on the first property.

However, Mr Jones warns the trend is not only misleading, but illegal: “Many of these influencers are breaking the law, and any landlord who follows this advice is also breaking the law by making false mortgage applications.”

Impossible to obtain any mortgage

Mr Jones says only mortgage advisers have the relevant qualifications to give out mortgage advice and warns of the consequences of following the advice.

He tells Property118: “Only the Financial Conduct Authority (FCA) are responsible for regulating residential mortgages and require mortgage advisers to have qualifications such as Certificate in Mortgage Advice & Protection (CeMAP).

“Besides this being a criminal activity, if the mortgage provider becomes aware of this, they will report this to CIFAS (Credit Industry Fraud Avoidance System).

“CIFAS will then put a marker on the person’s credit report, which will remain there for six years, making it virtually impossible to obtain any mortgage or any other form of credit.”

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