£475K Buy-to-Let Remortgage with Debt Consolidation & Top Slicing

The Situation

A new client approached us to explore refinancing their buy-to-let property with the aim of consolidating unsecured debt.

They had struggled to find a suitable solution due to current market conditions. Many lenders have tightened their criteria around debt consolidation in recent years, making it increasingly difficult to obtain approval.

In addition, the rental income from their buy-to-let property was not sufficient to cover the level of borrowing they required under standard affordability assessments.

They came to us to see if we could find a solution.

The Solution

We secured an offer from a high street lender at a competitive two-year fixed rate. The offer was made slightly outside standard policy, given the level of debt being consolidated.

Crucially, the lender was able to “top slice” the rental shortfall by taking into account both applicants’ personal income from employment and self-employment.

The Process

Since late 2022, debt consolidation has become increasingly challenging, with lenders reducing their risk appetite. Many have capped the amount of debt that can be consolidated or lowered maximum loan-to-value (LTV) ratios.

For our clients, the challenges were threefold:

• They wanted to consolidate using their buy-to-let property as security, but as non–owner occupiers, the pool of high street lenders willing to consider this was already limited.
• The debt to be consolidated exceeded £50,000, further restricting available options.
• The property’s rental yield was relatively low compared to current rental stress tests, meaning that top slicing would be essential.

While specialist lenders were an option, their rates were in the high 5% to low 6% range. We believed a more competitive high street solution could be achieved if the case was packaged correctly with clear supporting commentary.

We presented the case to a well-known high street bank, compiling a detailed business case. A key factor in securing approval was a thorough explanation of how the debt had been accrued, supported by strong evidence of both applicants’ sustainable income. This reassured the underwriter that the debt would not be re-accumulated after completion.

Although the property was down-valued during the valuation stage, the underwriter was satisfied with the overall strength of the case and agreed to offer a near market-leading product.

The Outcome

Despite the challenges, we achieved an excellent result for our clients.

While the process took slightly longer than usual due to the level of detail required, the outcome was highly positive. Both clients and lender were satisfied, and we look forward to supporting the clients again when their fixed-rate term ends in two years.