Under The Influence: How Do Influencers And Content Creators Access Mortgages And Finance?

Although influencers have emerged as the winners of the social media boom since the early 2010s, the Oxford English Dictionary only added 'influencer' as a referenceable word in 2019, making it a relatively new term and official career path. But with big-time influencers and content creators now able to make anywhere from a few thousand pounds to five or six-figure sums off a single post, and influencers operating at the top of their field bringing in huge income, influencing is now a valid - and sometimes exceptionally lucrative - career.

But despite their success, influencers and creators can find it tricky to access mortgages and finance, predominantly because of how lenders view their financial situation. Lenders will also typically question the potential longevity of an influencer in their chosen niche, and many influencers won't have been established and earning significant income for four or more years, which usually supports higher loan-to-value ratios and more competitive rates. 

How Do Lenders View Influencers?

Lenders invariably view influencers and content creators as high-risk borrowers regardless of how much income they generate. Their income can be irregular or sporadic, even if it is significant and they are solid six-figure earners on an annual basis. Many will have only started generating very good income in a relatively recent period, often in a completely different field than any previous employment or their studies, meaning lenders can't analyse their potential earning trajectory over the course of the loan. Influencers also rely heavily on social media platforms for their success, but that comes with downsides - they are constantly at the mercy of changing algorithms, and their fanbase may be regularly in flux. A sharp decrease in relevance or popularity can mean that their income will drop suddenly and with little to no warning, which lenders will typically baulk at. Influencers also tend to move in the same circles, which can mean that their partners are also in the influencing, content creation or entertainment business, which can add another layer of complexity for joint mortgage or financing applications. 

Further challenges can arise regarding how influencers or creators carry out their business affairs and how 'tidy' these are. Despite essentially being entrepreneurs, many influencers fail to recognise themselves as a business and set themselves up as such from the get-go. They don't always raise proper invoices, get professional advice regarding accounting, structuring income or tax, or they may not separate business and personal expenses (especially those that are self-employed). Haphazard fees will also raise a red flag: lenders need to be able to understand a broad pricing structure and roughly what the influencer charges for what kind of service provision or collaboration. Tax returns can also pose a problem if influencers take a short-term view. While it can be tempting to legitimately maximise expenses (thus minimising annual income on a tax return), a tax return is the first thing lenders will look at when an influencer put in a finance or mortgage application, so it's not always the easy win it first looks to be. 

Lenders don't usually take a view on where an influencer's income comes from in the sense that they won't make a distinction between revenue that comes from a large social media following or gaming success, brand deals, affiliate marketing, blogging, their own products or services, an app or paid appearances. Most important is how much income is generated, how regular income is, and how long the influencer can reasonably be expected to continue earning at that level. 

Catch 22: Financing Diversification And Business Ventures

Many influencers understand the importance of diversifying their income streams and setting up ventures that bring in what may ultimately become more stable, passive and recurring income. Diversification allows influencers to leverage their online success and following, and become less reliant on social media or third-party platforms in exclusivity. It also allows them to plan their financial future effectively and with a degree of sustainability, rather than hedging their bets on an ever-growing fanbase and retaining their popularity. Typically, brick-and-mortar ventures (restaurants, beauty salons etc.), apps (such as fitness apps), and commercial or residential real estate all tend to be popular avenues for influencers to explore.

It's a logical route to follow, but the catch is that accessing finance to back these ventures is tricky if the influencer's accounts and financials aren't on firm footing long before they want to make the jump. Lenders will typically offer lower loan-to-value for anyone with irregular income and who is self-employed or a business owner, and influencers will typically be viewed similarly, albeit in a particularly high-risk sector.  

Mortgages And Finance For Influencers

Both residential and commercial mortgages and corporate finance are available to influencers and content creators, although these deals need to be brokered carefully. Ultimately, lenders may require higher deposits given the risks associated with offering finance to individuals working in a high-risk and emerging career.

When it comes to mortgages, influencers need to plan ahead of time. Good credit history is of utmost importance, and lenders will also want to see at least two years of tax returns that indicate solid income and profit. Ideally, tax returns will be prepared by an accountant or adviser and, wherever possible, show 'real' income rather than significant expenses that eat into take-home pay. 

Financial Services for Creators

For influencers that pay themselves a salary via a limited company, it's often possible to make a case for lending based on profits and income into the business rather than the monthly salary the influencer draws down, which is usually significantly less to limit tax liability. On this basis, increasing how much an influencer can borrow is often possible. Influencers that have increased their income significantly in the last 12-18 months (often not shown on the most recent tax returns) can sometimes access larger mortgages if a careful case is made to a lender. This is especially useful if they have experienced an increase recurring income that is the result of a successful branch into their own venture, such as the launch of an app or subscription that isn't wholly reliant on a social media following. 

Corporate finance is also possible if influencers want to diversify their income streams by branching out and investing in new ventures such as restaurants, salons and other projects. This is possible if they are well-established and have good cash flow and solid capital built up within their business, as lenders will still want to keep risk to a minimum. Here, profit and loss statements, company accounts and tax filings are essential, as well as a viable business plan that isn't over-ambitious.

For something like a restaurant investment, borrowers will typically need to be able to show there is a solid market for the business that isn't reliant on their personal brand, but that will generate income in its own right. However, subsequent business ventures may be easier to finance on the back of a well-thought-out and successful project that generates good income that is structured and managed professionally. As with mortgages, higher deposits may be required, and personal guarantees may also need to be put in place.