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Sports stars lose out in mortgage stakes

by: Chris Hall, operations director at Mortgage Guardian and mortgage adviser at 1st Call 4 Mortgages
  • 14/03/2017
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Sports stars lose out in mortgage stakes
Professional sports people need somewhere to live, just like the rest of us, and quite often need the assistance of a mortgage adviser to help them buy the property they have set their sights on.

A career in sport can be lucrative but it can be a complex arena as not all mortgage lenders will entertain the thought of lending to a professional sportsperson.

“their career could be over on a Saturday night”

Primarily, there is the risk of injury. Boxers in particular struggle to get mortgage finance more than most – their career could be over on a Saturday night in their prime.

Lenders often need to take into account income as per contract, appearance fees, sponsorship deals, image rights and endorsements.

There are of course extra income possibilities if the sportsperson or team wins. Footballers get additional bonus payments if their team is promoted at the end of the season.

Relegation from the Premier League can be seen as an income disaster but help comes from the FA in the form of parachute payments to clubs.

Some sportspeople get income from other sources and some are simply self-employed and can readily produce accounts showing prize money from tournaments.

Lenders generally seem to be quite rigid in terms of lending criteria, while some minority lenders consider the merits of each case; finding reasons to lend while still observing responsible lending. This may or may not go hand in hand with private banking arrangements.

 

Early retirement

Retirement seems to be a major hurdle for most sportspeople who are in physically competitive sports such as football. Mortgage lenders will not allow borrowing past the age of 35 unless there is evidence of enough income into retirement.

“not all sportspeople are going to land a job with Sky Sports”

In reality not all sportspeople are going to land a job with Sky Sports when they retire and, if they do, it can be over too quickly if they say the wrong thing.

If an ex-footballer is in line for a pension from the Professional Footballers’ Association and starts a coaching career, that person will still face a massive reduction in income which may render a mortgage unaffordable in the longer term.

Snooker and darts players as well as golfers can carry on past age 35 and their mortgage term can reflect this.

Footballers’ partners can also contribute towards affordability in retirement as they too often have income from their own business interests.

 

Peak earning potential

Current top Premier League players have salaries typically ranging from £190,000 up to £290,000 per week with possibilities of income into retirement being wide and varied depending upon their career path.

Towards the bottom of the Premier League salaries typically range from £10,000 per week to £85,000 per week with retirement income coming down to around £1,200 per week if a player lands a reasonable post-retirement coaching role.

Only a few players get the chance to earn £20,000 to £30,000 a week as a TV pundit for Match of the Day.

Olympians, on the other hand, do everything for the love of their sport. They get a grant from the Olympic sports fund to cover equipment and living expenses with no additional income, even if they bring home a gold medal.

This can prove tricky when getting a mortgage due to affordability unless, of course, they have reached the pinnacle of their sport and receive lucrative sponsorship deals as in the case of gold medallists Mo Farrah and Bradley Wiggins.

 

Specialist lending

Buying a property for parents with the aid of a mortgage is also common with high earning sportspeople. Income must either cover both mortgages or in some cases a joint borrower sole proprietor arrangement can work.

Non-Premier League footballers generally need to borrow only one or two times income on their first residence.

Buy-to-let mortgages are in demand as well as commercial lending on popular premises such as boutique hotels, bars, restaurants, shops and cafés as sportspeople extend their investment portfolio.

It is worth noting that even lower league footballers can earn as much as ordinary working class people over their entire career but their sports career is much shorter.

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