An HMO is a rental House that has Multiple Occupants from multiple families, sharing facilities and typically renting. The full name is a House in Multiple Occupation ( HMO ).
That's as complicated as it needs to get but some may get confused as you learn more. A property can be a House in Multiple Occupation (HMO) with or without the need of an HMO Licence.
Only a selection of Mortgage Lenders offer Mortgages for HMO Properties. Most do not offer HMO Mortgages direct to consumer. Available only via mortgage advisers.
With it being Commercial Lending you won't find them available in an HSBC Branch. Besides this, not all mortgage brokers are the same. HMO Mortgages are in a subset of the specialist area of Buy-to-Let Mortgage Advice.
To get the best HMO Mortgage you need to talk to a Mortgage Adviser specialising in HMO Finance. We have several lenders..
We have a wide variety of House in Multiple Occupation (HMO) mortgage lenders with differing products and criteria. Some available via mortgage advisers only and others exclusive products. Some of the lenders we use are:
The cheapest introductory hmo rates currently available on two and five-year fixed-rate HMO mortgages are listed.
Bear in mind, however, that you shouldn’t judge deals by initial rate alone, as there may be some limits that make the ‘best’ deals less attractive or unobtainable.
For example, the Leeds two-year fixes below require the rental income to cover a minimum of 140% of the mortgage payments, while the deal from Precise Mortgages allows applications at 125%.
|Lender||Initial rate||Standard Rate ||Fees||Cashback||Maximum LTV|
|Leeds (small HMO)||2.09%||4.99%||£999||£500||60%|
|Leeds (small HMO)||2.29%||4.99%||£999||£500||70%|
|Leeds (small HMO)||2.49%||4.99%||£999||£500||75%|
|Lender||Initial rate||Standard Rate||Fees||Cashback||Maximum LTV|
|Leeds (small HMO)||2.49%||5.99%||£999||£500||60%|
|Leeds (small HMO)||2.69%||5.99%||£999||£500||70%|
|The Mortgage Works||3.44%||5.24%||2% of the advance||None||75%|
|Foundation Home Loans||3.49%||5.41%||£125 + 2% of advance||None||65%|
Mortgage Lenders for HMO's have criteria on both you and your property. Will you qualify for an HMO Mortgage?
Typical mortgage criteria apply to you such as Credit Rating. Many HMO banks prefer you to have experience as a landlord before your first HMO Property. Others go further requiring experience as an HMO Landlord. There are a few lenders that accept borrowers without landlord experience.
As well as checking yourself and if you have experience or if its an HMO mortgage first-time Landlord. Lenders have different HMO mortgage criteria on other attributes. Some for example only like small HMO's or if they are in student areas.
To check HMO mortgage criteria, you can expect questions on:
As the Government looks to take more of your rental income, landlords like you are looking at HMOs to increase rental yield. The question then is if you should buy the HMO in a Limited Company?
The primary reason for setting up an HMO Investment Company is to help manage your tax affairs. Your first stop should be your accountant.
Limited Company HMO Mortgages often have higher fees or rates. We work with you and your accountant to help them calculate the best.
Though its not all about tax...
HMO Mortgages are available up to 85% LTV for Purchase or Remortgage. That's just a deposit of 15% of the property value.
85% LTV Buy to Let Mortgages are the highest LTV you can get as a property investor. Landlords looking for leveraging prefer an 85% HMO Mortgage.
In 2017 only one Buy-to-Let lender KRBS offered 85% LTV Mortgages. In 2018 they joined by Kensington Mortgages and Vida Home Loans in 2019.
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