With the buy-to-let market in a transition period following a raft of new regulations, property investors may tend to feel under fire whichever way they turn.
This can also be true when looking to make their mortgage arrangements and finding that the maximum loan they are permitted, based upon the rentable income of the property, is less than they need.
Investors with financial affordability where income is concerned are now starting to access greater borrowing opportunities, with more lenders considering ‘top slicing’ – where a buy-to-let lender uses a borrowers personal income to top-up any shortfall in rent so they can get the loan amount needed.
One such lender to recently enter this arena is the Post Office for Intermediaries, which is offering this facility for applications that cannot meet its 145 per cent rental cover assessment (at 5 per cent on a five-year fixed or 5.5 per cent on all other business).
The main criteria points are: the applicant must have £40,000 minimum income (sole or joint); all applicants must reside at the same address; a minimum property value of £100,000; and rental income must still cover 125 per cent at 5.5 per cent (loan amount plus any product fee added).
The Post Office for Intermediaries has seen the opportunity to lend to those that otherwise they may not have been able to assist and who still represent a safe and secure proposition based on the borrower’s overall financial situation.
With lenders looking for new ways to continue to assist would-be borrowers in what is a very lucrative market for them, top slicing in one guise or another is perhaps the way forward for many to ensure they continue to prosper from this sector.
Carl Shave is director of Just Mortgage Brokers