I’m a mortgage expert – beware of these mortgage “tips” from TikTok

A mortgage expert from Darlington Building Society has issued a warning about “tips” being given by so called “finfluencers” on TikTok about buying a house.

In a recent poll, nearly a quarter of 18-34-year-olds* said that they would turn to the internet as their preferred source for mortgage advice and information.

The revelation came from a survey of more than 1,000 UK adults from Darlington Building Society.

Similarly, a report by Deloitte at the end of 2023 found that 25% of 18-24-year-olds use social media for financial guidance**.

A huge number of financial influencers, or ‘finfluencers’, have taken to apps like TikTok to share financial and money-saving tips, with 13 million TikTok views coming from the hashtag ‘#financialeducation in the last 120 days and over 1 billion views overall. Half of those views are young people, with 83% of those views coming from the 18-34 demographic.

People are also taking to TikTok to get mortgage guidance, with 8 million views of the hashtag #mortgagerates in the last 120 days.

Experts are warning that with this influx of information, the public needs to be vigilant, especially with big purchases and outgoings like mortgages. We asked an expert about three pieces of TikTok mortgage advice to see whether they stood up to the test.

1. Split your monthly mortgage payment and pay every two weeks.

As a way of overpaying, a popular recommendation is that users could consider paying their mortgage every two weeks instead of the usual monthly payment.

For example, with a mortgage payment of £2,000 per month, the advice would suggest that you pay £1,000 every two weeks. The suggestion is that you could save £100,000 in interest over the mortgage lifetime. Not only that, but the technique could also result in paying off the mortgage years earlier.

But is it too good to be true?

What a mortgage expert says: Important checks before making any changes

Louise Thorpe, Distribution Director at Darlington Building Society, said: “While paying your mortgage in biweekly increments, or overpaying, is a fairly good idea if you can afford it, there are a few things you’d need to consider before deciding if this is the right move for you. Firstly, your lender will expect the full £2,000 repayment in the first instance, with the £1,000 top-ups every two weeks putting you ahead of your payments, ensuring you’re never in arrears. Next, can you guarantee this level of affordability, or could you experience some changes in the future? Thirdly, does your mortgage product allow you to do this? Some mortgage products only allow a certain number of overpayments per year, per month, or per product cycle. If you go over this, you could end up overpaying because you’ll be charged early repayment charges by making extra additional overpayments. Also, does your lifestyle permit you to keep on top of this? Your direct debit would come out automatically, but you need to remember to make these regular overpayments. With busy lives, it can be easily missed.”

1. You can borrow up to 5.5 times your salary.

Many TikTok influencers use figures that reference being able to borrow between 4.5 and 5.5 times your pre-tax salary when discussing mortgage queries. That means that if you earn £30,000 per year, you could typically borrow around between £135,000 and £165,000.

What a mortgage expert says: Don’t rule out being able to borrow more.

Louise said: “Borrowing between 4.5 and 5.5 times your salary is a good rule of thumb, but individual circumstances could mean that you’re able to borrow more. For example, if you’re on a certain career pathway or if you work in healthcare as a doctor, certain mortgage providers and products allow you to borrow up to 6.5 times your salary. Ultimately, what you can afford per month is what the lender will base their mortgage offer on. You can also boost your affordability by looking at options such as joint borrower, sole proprietor mortgages, which let you factor in more incomes. It could mean the difference between buying in the area you want or getting that additional bedroom, so it’s worth having this discussion with an expert.

1. Get the longest long term you can.

Many finfluencers on the app are recommending that you seek out the longest loan term you can to reduce payments and ease the monthly financial burden. With it being reported that record numbers of people will be repaying mortgages into retirement, is this really the best option?

What a mortgage expert says:

Louise said: “The longer you can take out your mortgage agreement, the lower your monthly repayments are likely to be, generally speaking. It’s a good way of boosting your affordability and getting on the property ladder. The risk is that no one can predict the future, and you’re accepting a financial responsibility later in life, when health concerns might be on the increase and impact on your ability to work. It also might not be an option that is available to everyone, with the average age of first-time buyers on the increase.

“If you do have a longer-term mortgage, you can look at overpaying when you can afford it to reduce your term overall. Again, being aware of your mortgage product and the limits on overpayments in your terms and conditions. You also need to factor in that a longer term means paying back more interest. While it may be good to borrow more, if you don’t plan on repaying the mortgage early or eventually switching to a mortgage with a shorter term, ultimately you will end up paying up to tens of thousands more over the course of the mortgage.

“If you don’t qualify for a longer-term mortgage, there are alternative ways to boost your affordability considering options such as joint buyer, sole proprietor, or shared ownership. Similarly, you can look at schemes like the ‘First Homes’ scheme, which offers you a discount on the value of a property for first-time buyers in some local areas, or mortgage products that specifically support you in buying a house on a new build development and often allow you to put down a 5% deposit, making this a more accessible option for some.”

Louise added: “It’s great that people are finding new ways to access financial advice and information, but it’s important to be mindful that this advice isn’t regulated, nor is it personal to you. It might even be putting off homebuyers who would otherwise be proceedable. You’re best speaking to your lender or a mortgage advisor who will take your whole situation into account to find the right options for your circumstances.”