The launch of top slicing on buy-to-let applications by BM Solutions could be a “game-changer in buy-to-let applications”, according to R3 Mortgages founder and director, Riz Malik.
He explained that BM Solutions should be "commended for broadening their criteria" to aid more buy-to-let borrowers.
These comments follow BM Solution's recent launch of top-slicing on buy-to-let applications which occurred yesterday (September 7).
BM Solutions explained that this enables customers who have a shortfall in their required lending to use a proportion of their earned income, when the rental income for the BTL property is not sufficient, to hit its standard rental cover ratio calculation.
Malik's positivity was shared by Rose Capital Partners founder, Richard Campo, who stated: “I think this delivers a hugely positive message to the much beaten up buy-to-let market.”
Additionally, EHF Mortgages managing director, Justin Moy, stated that this represented “yet another improvement for landlords.”
Moy argued that this move by BM Solutions gives landlords some more options for those struggling with low rental income and higher interest rates.
Meanwhile, RNR Mortgage Solutions director and mortgage broker, Ani Mistry, described the launch as “truly fantastic news for borrowers who find themselves in this income bracket” and stated “this is nothing short of a boost for them.”
The optimism was also shared by others, recognised as a sign that lenders are trying to do more to assist the landlord.
However, Lodestone Mortgages & Protection director, Craig Fish cautioned that this may not provide universal benefit, identifying portfolio landlords, those with four or more properties, as a group that might not receive assistance.
“Nevertheless, it’s a step in the right direction,” Fish added.
Criteria concerns
Fish was not alone in expressing concern however as worry was also articulated due to BM Solution's announced criteria, which includes a minimum income of £100,000 per application for the first two applications.
Malik argued that this minimum income requirement could mean “wealthier borrowers with a few properties stand to gain the most".
The rigidity of the criteria was also called into question.
Campo said: “From looking at the criteria, there are quite tight parameters and it clearly favors higher earners."
A similar sentiment was shared by Dimora Mortgages director, Jamie Lennox, who cautioned: “Although it is great to see BM Solutions adapting to the changing market, the criteria seem too restrictive.”
While many were cautius and had their concerns, some, such as Montgomery Financial founder and director, Charles Breen, acknowledged that BM Solutions’s criteria “are on the restrictive side” but added that it is “a step in the right direction”.
Additionally, Lennox pointed out the criteria could improve in the future: “Fingers crossed the criteria will evolve as time passes, which will open up more options to a wider audience.”
Thanks to the Newspage community for sharing their thoughts with FTAdviser
tom.dunstan@ft.com
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