HSBC UK has increased support for landlords by expanding the accessibility of its buy-to-let (BTL) mortgages with the introduction of top slicing.
This enhancement allows the personal income of applicants to supplement rental income in affordability assessments, unlocking greater borrowing potential, especially in lower-yield areas.
Traditionally, BTL mortgage affordability is based solely on rental income.
This can limit borrowing power for properties in certain locations or make it difficult to secure extra funds for value-adding home improvements.
With top slicing, landlords whose rental income falls short of the interest coverage ratio (ICR) can now bridge the gap with surplus personal income, enabling landlords to more confidently pursue property investment opportunities or remortgage to HSBC UK.
For example, a landlord wants to borrow £225,000 at 75% loan-to-value (LTV) to purchase a BTL property.
With a rental income of £1200 a month, lending of up to £186,000 would be possible by solely using the property’s rental funded affordability, from today by utilising their personal income, they could borrow the full amount of £225,000 – an increase of 20%.
This launch follows HSBC UK’s recent increase of loan-to-income (LTI) multiples, including for first-time buyers, facilitating borrowing increases of tens of thousands of pounds towards home purchases or remortgaging.
Oli O’Donoghue, head of mortgages at HSBC UK, said: “We are committed to supporting our customers by providing solutions for both the residential and BTL mortgage markets.
“The introduction of top slicing into our BTL mortgage range is a key example, designed to make BTL mortgages more accessible, while ensuring affordability remains at our core.”
He added: “Many landlords, particularly in London and the South East, have strong earnings but are limited by yield-driven constraints.
“By increasing the amount that can be borrowed through top slicing, we’re enabling more landlords to achieve their property investment ambitions due to providing greater borrowing capacity.”
