‘Top slicing’ has become increasingly common as people struggle to get sufficient rental cover and turn to their own income to supplement the mortgage. However, an industry source told Mortgage Introducer he was seriously concerned the practice was being abused.
He said: “In itself, taking the rent into account and then topping it up with a self-certed income is fine. What concerns me is if it is being overtly self-certed when the borrower is not self-employed, but employed. In those circumstances, it is an open avenue to fraud. I know for sure people are self-certing things that aren’t true.”
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John Heron, managing director of Paragon Mortgages, said: “Fundamentally, BTL lenders should be driven by principles of whether the property is suitable and does the rent generated cover the mortgage costs. Only in very exceptional circumstances should lenders consider mitigating that. If you are prepared to accept a lower rent income for a higher income, then you should want to prove that income is in place. Whether it’s tantamount to fraud is another debate.
“I’ve not come across this situation before. For us, the property and experience of the broker to manage the property are paramount. Once you start wandering away from those principles, you put the client at risk and that’s unforgivable.”
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Rod Murdison, proprietor of Murdison & Browning, said: “Self-cert is always open to potential abuse. I would think that for BTL purposes it might be less of a risk though, as you have a form of guaranteed income. There is an individual person showing there is an income and covering the majority of the mortgage.”
