All hail top-slicing on buy to let mortgage affordability calculations

Jeni Browne explains how one landlord used income from her day job (not rent) to boost the amount she could borrow when remortgaging her buy to let property and save c£6,000 over two years.

A client approached me for a remortgage of her only rental property. Valued at £645,000 with a rental income of £1,475 pcm she wanted to remortgage at £350,000. She and her husband are home-owners and a have a good income of c£100,000 combined.

Her current lender was offering her a new rate of 3.49% fixed for two years with a £995 fee.

Running the numbers, I found most lenders would offer between £221,000 and £262,000 based on the rental income, with only a couple getting close to where we needed to be but on really high rates.

So, I looked at the lenders which will use top-slicing when the rental income falls short.
Essentially, this is where a lender looks the borrower’s overall finances, including income and expenditure, and if they can get comfortable that the landlord has sufficient surplus income, then they will use this to top up the rental calculation in order to increase the amount that can be borrowed.

Top-slicing is where a buy to let lender uses a borrower’s personal income to top up any shortfall in rent which is needed for the borrower to obtain the loan amount they require.

The end result? My client was saved around £6,000 over two years and was able to borrow the full £350,000 at 2.49% fixed for five years with a lender arrangement fee of £1,999 plus a free valuation and free legals.

You can read more about top slicing here.


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