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Why our enhanced top slicing offering could give customers the choice and flexibility they want

Andrew


Andrew – Senior Product Manager Pricing

Published 22.05.2019

Here at Precise Mortgages we’re always looking for new ways for brokers to help their customers secure the buy to let product term and loan amount they’re after. Take our enhanced top slicing offering, for example. It provides a new way to meet your customer’s needs, but what it really gives you and your customer is choice; the choice to consider two and five year fixed rates, as well as giving greater flexibility around loan size and ultimately giving them more choice with how they manage their portfolio.

Landlords are a resilient bunch. The tax changes and the minimum underwriting standards have resulted in some exploring the higher yields that HMOs offer, while others are incorporating in limited company structures. To help these landlords, we’ve extended our top slicing offering across our entire buy to let range*. As well as personal ownership, we now accept applications from HMO and limited company structures, single property and portfolios, even holiday lets and refurbishment buy to lets.

Top slicing requires that the landlord’s rental income meets a minimum 110% of the product pay rate, with the ability to meet standard financial stresses by:

  • using the rental income of the property (the historical method)
  • using rental income from their wider portfolio
  • using personal earned disposable income
  • or a combination of the above

The clear benefit of this is that landlords can manage their properties in a way they choose, because they now have greater access to the products and loan sizes they want. Here are two examples which demonstrate how our enhanced top slicing offering can help your customer:

Example 1: Landlord gains access to a two year fixed rate at the loan size wanted

Landlord A owns two buy to let properties. They are reaching the end of the incentive period on one and are considering options, but don’t want to be tied in for more than two years. With many other lenders, however, they would need to choose a five year fixed rate in order for the rental income to meet the ICR.

To get the loan size they want, they choose a two year fixed rate with Precise Mortgages. The property easily meets the 110% threshold and they have sufficient disposable earned income to demonstrate that they could meet the standard financial stresses. What’s more, as the two year fixed rate is lower than the five year fixed rate, it’s a better fit for their needs.

Example 2: Landlord uses portfolio income to support their new purchase

Landlord B has a portfolio of eight properties and is looking to invest in a relatively low yielding property for capital growth. Many lenders disregard the portfolio income and so can’t offer them the product and loan size they want.

Their broker recommends Precise Mortgages as we take into account the surplus rental income from other properties to demonstrate an ability to meet financial stresses. The landlord gets the product and loan size they want and can expand the portfolio accordingly. And as they’re using portfolio income to support their application, we won’t need to see any further proof of income.

We’ve also made it easier to access top slicing via our online mortgage system. At the end of the process you’ll be shown the products and loan size available using rental income alone, as well as top slicing. It’s great to be at the forefront of an offering that focuses on customers’ needs and also provides brokers with great options to help their customers.

To find out how much your customer could borrow, click here to try our online calculator. If you’ve got any questions about top slicing, you’ll find the answer you need in our updated Top Slicing Frequently Asked Questions factsheet.

If you’d like to speak with someone, contact our Sales Team or call our dedicated support team on 0800 116 4385.

*Excluding first time buyers, first time landlords and repayment applications.

For intermediary use only
BBR 0.75% / 3 month LIBOR 0.85%