BM Solutions has launched top slicing aimed at aiding qualifying buy-to-let applications.
This feature comes into effect immediately and is designed to provide a solution for landlords unable to meet the required lending amount due to insufficient rental income from their buy-to-let property, based on BM Solutions’ standard Rental Cover Ratio (RCR) calculation.
The top slicing option allows eligible applicants to use a portion of their earned income to supplement the shortfall in rental income. This includes income from various sources such as PAYE, self-employment, pensions, and profits from UK land and property.
However, certain restrictions apply to the newly launched feature. It is not available to Portfolio Landlord customers or Let to Buy customers. The minimum income requirement stands at £100,000 per application for the first two applicants.
Furthermore, the scheme sets the stressed RCR boundaries at a minimum of 125% and a maximum of 145%. Below or above these limits, the standard RCR calculation is applied.
Leigh Church, head of BM Solutions, said: “We recognise the needs of landlords and brokers and have made these changes to support them. We continue to innovate and flex our approach and products to support the market while maintaining robust controls on affordability.”
Reaction
Riz Malik, founder & director at R3 Mortgages:
“BM Solutions should be commended for broadening their criteria to aid more buy-to-let borrowers. However, with a minimum income requirement of £100k 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.”
Jamie Lennox, director at Dimora Mortgages:
“Although it is great to see BM Solutions adapting to the changing market, the criteria seem too restrictive and they are only interested in taking on the cream of the crop. This still leaves many landlords up the creak without a paddle. Fingers crossed the criteria will evolve as time passes, which will open up more options to a wider audience.”
Justin Moy, managing director at EHF Mortgages:
“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 buy-to-let lenders in the UK makes a move like this, others will need to follow.”
Craig Fish, director at Lodestone Mortgages & Protection:
“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 four or more properties, and as clients need to earn at least £100k 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:
“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.”
