BM Solutions introduces top slicing on buy-to-let

BM Solutions has announced the launch of top slicing on buy-to-let applications.

Top slicing enables borrowers who have a shortfall in their required lending 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 criteria is not available for portfolio landlord or let-to-buy customers.

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

The minimum stressed rental cover ratio calculation is 125% and the maximum is 145%.

Brokers shared their views via news agency, Newspage.

Riz Malik, founder and director at R3 Mortgages, said: "BM Solutions should be commended for broadening their criteria to aid more buy-to-let borrowers. However, with a minimum income requirement of £100,000 per application, it seems that wealthier borrowers with a few properties stand to gain the most, benefiting from the reduced cost of funds that BM Solutions, being part of the Lloyds Banking Group, can offer. 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, commented: "Yet another improvement for landlords. It must feel a bit like Christmas at the moment. Importantly, 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, said: "This is great news for the buy-to-let market and a sign that lenders are trying to do more to assist the landlord. Sadly though it doesn't help portfolio landlords, those with 4 or more properties, and as clients need to earn at least £100,000 to be able to benefit, there will still be many who won't be helped by this. Nevertheless, it's a step in the right direction. Now we need lenders to reduce their stress tests."

Ranald Mitchell, director at Charwin Private Clients, added: "Top slicing is not new. This is an indicator that BM Solutions is struggling to lend in the current climate and making necessary changes. 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."