Mortgage Top Slicing may be saviour of Buy To Let Investment

A high profile buy to let lender has announced the launch of top slicing on applications.

This enables investor borrowers to use a proportion of their earned income when the rental income for the buy-to-let property is not sufficient to hit a lender's standard rental cover ratio calculation.

BM's top slicing will require a minimum income of £100,000 per application, with PAYE, self-employment, pensions and profit from UK land and property all accepted.

BM is part of the Lloyd Banking Group.

The minimum stressed rental cover ratio calculation is 125 per cent and the maximum is 145 per cent - and the initiative is being seen as great news for property investment.

Riz Malik, founder and director at R3 Mortgages, says: “BM Solutions should be commended for broadening their criteria to aid more buy-to-let borrowers … Top slicing can indeed be a game-changer in buy-to-let applications, especially considering the current stress tests."

Justin Moy, managing director at EHF Mortgages, comments: “This move by BM Solutions gives landlords some more options for those struggling with low rental income and higher interest rates. The use of personal income to boost affordability is not original, but when one of the largest BTL lenders in the UK makes a move like this, others will need to follow."

Craig Fish, director at Lodestone Mortgages & Protection, states: “It's a step in the right direction. Now we need lenders to reduce their stress tests."

But Ranald Mitchell, director at Charwin Private Clients, cautions: “The criteria shift, though, is ultra-selective and will only benefit landlords with fewer than four properties. They will need to broaden criteria and innovate a lot further than this to help struggling landlords."