HMO (Houses in Multiple Occupations) mortgages differ from conventional buy-to-let mortgages. Our specialist team of advisors can help to point you in the right direction.
HMO’s can prove to be more of a lucrative investment compared to a traditional buy to let property. In recent years, we’ve received an increase in enquiries for HMO mortgages. Having the right mortgage for you and your property will ensure your profits are maximised.
An HMO is defined as a property that is rented to three or more unrelated tenants, often with shared facilities such as bathrooms or kitchens. If you are renting out to more than three tenants from separate households, you will require a separate HMO mortgage. Regular buy-to-let mortgages are designed for single-household tenants, so are not suitable for properties with multiple tenants. The lender could take action if you break the terms and conditions of the mortgage by taking out a regular buy-to-let mortgage on an HMO property.
HMO Mortgage Criteria
For most HMOs, the mortgage lenders will require landlords to have experience in the letting industry. More experienced operators might be able to benefit from more competitive rates compared to inexperienced HMO landlords. In certain circumstances, the lender might request that the property is managed by a specialist lettings agency as opposed to managing it on your own.
The mortgage process for HMO’s is significantly more comprehensive compared to standard buy to let mortgages. Despite the growing popularity of HMO mortgages, they are still considered relatively niche mortgage products, and are typically only available through qualified mortgage brokers due to the complexity.
When applying for an HMO Mortgage, you should expect to be requested to provide the following information:
What rates are available for HMO mortgages?
As with conventional mortgages, the rates available to you for HMO properties will depend on many factors, including your personal finances. However, across the board HMO mortgage rates tend to be higher than standard buy to let mortgage products, as the HMO mortgage market is less competitive in terms of the amount of lenders.
LTV ratios typically start at 80%, with most lenders taking into account the proposed or actual rental income of the HMO.
Please note: Some forms of BTL mortgages are not regulated by the FCA
Start your HMO mortgage process with us
As we are not tied to any specific lender, we can make sure that we help you to select the right mortgage for you and your property. Call us for an initial, free of charge consultation. There is no obligation to use our services and you can meet in one of our offices in Horsham and Southwater, or arrange a phone based appointment.
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Paul’s advice was clear and concise and we ended up with an affordable mortgage on our dream home!