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The Mansfield launches ‘top slicing’ buy to let to 80% LTV

by: Tim Chen
  • 13/10/2017
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The Mansfield launches ‘top slicing’ buy to let to 80% LTV
The Mansfield Building Society has launched a “top slicing” buy-to-let mortgage, which takes a landlord’s personal income into consideration alongside the Interest Coverage Ratio (ICR) when assessing affordability.

By taking into account a landlord’s personal income, also known as top slicing, lenders use a borrower’s personal income to make up for any shortfalls in rent during the mortgage approval process.

The announcement comes in the wake of new regulations introduced on 30 September by the Prudential Regulation Authority (PRA) — which introduced stress tests to see if a borrower can afford repayments if interest rates were to hit 5.5%, and requiring lenders to check a landlord’s entire property portfolio before approving a buy-to-let mortgage.

To qualify for the product, landlords must have a minimum rental income equivalent to 100% of the monthly mortgage payment, calculated at the product pay rate which is currently 3.99%.

The lender offers up to 80% Loan to Value (LTV), inclusive of fees, and is available for purchase and remortgage, including capital raising.

Because the society underwrites mortgages individually instead of using automated credit scoring systems, there are opportunities created by the PRA’s new regulatory framework, says Mike Taylor, head of products and savings: “Not only can our individual approach more easily adapt to the latest regulatory changes, we can take into consideration the broader circumstances of a buy-to-let landlord.”

“If there’s firm evidence of sustainable personal income in the background then we will take a common sense view on affordability.” Taylor added, “As the buy-to-let sector continues to evolve, we believe brokers will welcome our pragmatic response.”

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