HSBC has introduced top slicing alongside its buy-to-let mortgages.  

The bank says the move allows the personal income of borrowers to supplement rental income in affordability assessments, “unlocking greater borrowing potential, especially in lower-yield areas”. 

Landlords whose rental income falls short of a property’s interest coverage ratio, may be able to bridge the gap with surplus personal income. 

It provides an example of how the new lending rule can boost borrowing. 

The lender says a landlord who wants to borrow £225,000 at 75% loan to value 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, but from today, by using a landlord’s personal income, they could borrow the full amount of £225,000 – an increase of 20%.  

HSBC head of mortgages Oli O’Donoghue says: “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. 

“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.”