Personal income can now supplement rental income in affordability checks for landlords
HSBC UK has broadened its support for landlords by introducing top slicing to its buy-to-let (BTL) mortgage offering. This change permits applicants to use their personal income, in addition to rental income, when lenders assess affordability.
The move is expected to increase borrowing options, particularly in areas where rental yields are lower.
Traditionally, the amount landlords could borrow for BTL mortgages has been determined solely by the rental income generated by the property. This approach has sometimes restricted borrowing, especially for properties in certain regions or when landlords sought additional funds for property improvements.
With the introduction of top slicing, landlords whose rental income does not meet the interest coverage ratio (ICR) can now use surplus personal income to bridge the gap. This adjustment allows landlords to access higher loan amounts or remortgage with HSBC UK.
For instance, a landlord seeking to borrow £225,000 at 75% loan-to-value for a BTL property, with a monthly rental income of £1,200, would previously have been eligible to borrow up to £186,000 based on rental income alone. By factoring in personal income, the full £225,000 can now be accessed—representing a 20% increase.
This development follows HSBC UK’s recent changes to loan-to-income (LTI) multiples, which included increases for first-time buyers. These measures have enabled customers to borrow larger sums for property purchases or remortgaging, reflecting the bank’s ongoing efforts to support a diverse range of property ambitions.
“We are committed to supporting our customers by providing solutions for both the residential and buy-to-let mortgage markets,” said Oli O’Donoghue (pictured right), head of mortgages at HSBC UK. “The introduction of top slicing into our BTL mortgage range is a key example, designed to make Buy To Let mortgages more accessible, while ensuring affordability remains at our core.
“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.”
According to HSBC UK’s Broker Barometer, which surveyed more than 1,100 mortgage brokers in July, 93% of brokers believe that increasing borrowing power is important for their clients. Additionally, 78% of brokers reported a rise in the amount of lending agreed for their clients.
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