Top Slicing Secures a High-End Lake District Holiday Let

The Client

Matt approached Drake Mortgages looking to purchase a high-end holiday let in the Lake District. He was a strong applicant in most respects: an established professional with a substantial and reliable earned income, a healthy deposit, and a clear plan to run the property as a furnished holiday let in one of the most sought-after tourism regions in the country.

On paper he looked exactly like the kind of borrower a lender would welcome.

The Objective

Matt had identified a premium property and needed a specific loan amount to complete the purchase at the price agreed. The property was well suited to holiday letting, but it was a higher-value purchase, and the loan he required was correspondingly large.

His priority was straightforward: secure the full loan needed, on holiday let terms, without having to find additional deposit or renegotiate the purchase.

The Complication

When we ran the numbers through a standard holiday let assessment, a problem emerged. Most holiday let lenders size the loan purely on projected rental income, applying an interest coverage ratio against a stressed interest rate.

Despite the property’s strong letting appeal, the projected income, assessed in isolation and stressed in the usual way, did not quite stack up against the size of loan Matt needed.

On a rental-cover-only basis the holiday let loan would have been capped below his requirement, leaving a shortfall that risked the purchase.

The frustration was clear. Matt could comfortably afford the mortgage. His earned income left a significant surplus each month over and above his existing commitments. Yet a property-only calculation ignored that strength entirely, judging the case solely on what the holiday let itself would produce on conservative assumptions.

How We Assessed Options

As a whole-of-market specialist broker handling holiday let mortgages directly, Drake was able to look beyond the lenders that assess on rental cover alone.

The key was to distinguish between lenders whose criteria stop at the property’s projected income and the smaller group of more innovative lenders that will take verified surplus personal income into account, an approach known as top slicing.

The Steps We Took

Step 1 – Establishing the true affordability position

We reviewed Matt’s full income position rather than looking at the property in isolation. By documenting his earned income and existing outgoings, we could evidence the substantial monthly surplus available to support borrowing over and above the projected rental income.

Step 2 – Identifying lenders that top slice

We filtered the market for holiday let lenders whose criteria permit top slicing, then narrowed further to those whose treatment of surplus income and stress assumptions best fitted Matt’s profile and the property type. This is where whole-of-market access mattered: the lenders that decline on rental cover alone and those that will lend the full amount can look almost identical until you know their criteria in detail.

Step 3 – Packaging the case to the right lender

We presented the case to a lender prepared to combine the projected letting income with Matt’s verified surplus earnings. With the affordability evidenced clearly, the lender was able to support the full loan required rather than the reduced figure a rental-only calculation would have produced.

Identifying the Right Route

The decisive factor was recognising early that the obstacle was the assessment method, not Matt’s affordability.

A borrower turned away by a rental-cover-only lender can often be placed in full with a lender that top slices, on identical facts. Identifying which lenders take that approach, and matching Matt to the one best suited to a high-value Lake District holiday let, was central to securing the outcome.