Being an athlete brings its own set of challenges and financial intricacies that can impact the mortgage process. From
unconventional income sources (sponsorship deals and performance-based earnings) to age and career length, athletes need a tailored approach when seeking a mortgage. In this blog post, we’ll delve into the mortgage process, highlighting key aspects that are specific to athletes.
Understanding the Mortgage Process
Before delving into the athlete-specific elements, it’s important to grasp the basic mortgage process:
Preparation and Research: Like any other potential homebuyer, athletes need to assess their financial situation, credit score, and understand how much they can afford. This involves analysing their monthly income and expenses, as well as setting a realistic budget for the property.
Mortgage Options: Athletes, just like everyone else, can choose from various mortgage types, such as fixed-rate,
variable-rate, or interest-only mortgages. However, their unique income structure may influence which type is most
suitable.
Documentation: Athletes must provide thorough documentation of their income, which can include employment contracts, tax returns, bank statements, and any additional sources of income. This step can be more complex for athletes due to the nature of their earnings.
Property Search and Valuation: Once athletes are pre-approved, they can begin their property search. The lender will
also conduct a valuation of the property to ensure it aligns with the loan amount.
Approval and Completion: Upon successful property valuation, the mortgage application moves forward for approval. Once approved, legal processes are undertaken, and upon completion, the property officially belongs to the buyer.
Potential Athlete-Specific Issues
As an athlete myself, I had to provide countless explanations on how I was paid, my unique income structure wasn’t something most people out with sport had an understanding of. I also had lenders offers pulled after finding out more about my ‘job’ and income stability. Looking back now, knowing what I know, I would of benefited greatly from having a mortgage advisor that understood the complexities involved.
So, let’s explore the athlete-specific elements that come into play during the mortgage process:
Unconventional Income Streams: Athletes often earn income from various sources, including performance-based bonuses and sponsorships. Lenders might need to take a closer look at these sources to determine their consistency and reliability.
Seasonality and Income Fluctuations: Many athletes experience income fluctuations due to the seasonal nature of their sport or performance-based earnings. Lenders may assess the consistency of income over time to ensure borrowers can meet mortgage payments. If you can have proof of income consistency, this can help convince lenders
that you will be able to pay mortgage payments each month.
Age and Length of Mortgage Term: Some lenders may restrict the mortgage term length based on the age of the athlete and the potential retirement age from the sport. For example if you are a 25 year old footballer, you might be only be able to get a mortgage term of 10 years. This is based on the assumption that lender thinks you’ll most likely retire at 35, providing evidence of a transition career after sport can help with this.
What’s you Plan B?: Having a transition plan or plan B, can often help. Knowing and demonstrating what you’ll do after sport can help reduce risk in the lenders eyes. This again is where it is helpful to have a mortgage advisor that understands the landscape, they will help guide you through the process and highlight the areas that will help secure you the mortgage you desire.
FAQ’s
- How does my athlete status and income potential impact my mortgage eligibility and borrowing capacity? Answer: Lenders may view your income differently due to its variability and uniqueness. Your broker can help you find lenders experienced in working with athletes who can better assess your unique financial situation.
- Can you explain the different types of interest rates and their implications for my mortgage, especially
considering my variable income?
Answer: Interest rates can be fixed or variable. Fixed rates provide stability, while variable rates can fluctuate
with market conditions. Given your income variability, you might consider a fixed rate to ensure predictable monthly
payments. - What is the minimum deposit I need to secure a mortgage, and are there any special arrangements available
for athletes?
Answer: The minimum deposit typically depends on the lender and the type of mortgage. Your broker can explore options like higher deposits or guarantor mortgages to improve your eligibility. - How can I ensure that my mortgage is flexible enough to accommodate my irregular income, bonuses, and
endorsement deals?
Answer: This one is dependent on your specific circumstances. Discuss your income sources with your broker,
they can help you select a mortgage with features like overpayment flexibility and offset accounts to manage your
variable income effectively. - Are there any specific insurance or protection products that I should consider alongside my mortgage to
safeguard my financial stability, given the unpredictability of my career?
Answer: Yes, you could consider income protection and mortgage protection insurance to cover mortgage debt
and repayments, your broker can help you explore these options and will advise on what products are more suited to your circumstance.
*Please note that these answers provide general guidance, and it’s important to consult with a qualified mortgage broker
in the UK for personalised advice based on your specific circumstances and the current market conditions.
Conclusion
For athletes, the journey towards securing a mortgage can involve an extra layer of complexity due to their unique income sources. Successfully navigating the mortgage process requires careful planning, documentation, and potentially seeking professional advice. Due to the complexities, consulting with financial advisors and mortgage brokers who have experience working with athletes can be invaluable. These professionals can help present a clear and compelling case to lenders. At Gameplan Financial, we are strongly linked with athletes and sport, many of our advisors are current and ex-professional athletes themselves.
If you want to find out more about mortgages for athletes, reach out to our partners at Gameplan Financial.