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Guide to Buy-to-Let HMO Remortgages

We can compare an HMO Product Transfer and HMO Remortgage for you to maximise your rental yield when you compare from some of the leading HMO mortgage providers in the UK with our nationwide mortgage specialists. Obtaining the best LTD Company HMO Mortgage for your circumstances.

Only a minority of Mortgage Lenders offer HMO Remortgages, a smaller minority offering Limited Company HMO Mortgages. Add in the rules around landlord finance from unusual properties, rental stress tests and more so for portfolio landlords. Then your personal circumstances can limit options from minimum income, credit score and experience. A sensible property investor will seek advice from a specialist in HMO Mortgage Finance.

If you are looking to release equity from your HMO by remortgaging our advisers can look at Further Advance (from the current lender) and compare to a remortgage, to get the best product for your circumstances.

What equity is needed?

The minimum HMO Mortgage equity is 15% of the property value (85% LTV).

The rental amount can limit the maximum loan achievable, requiring higher equity. Landlords with more substantial deposits can enjoy better HMO Mortgage products and rates.

What are the best HMO Remortgage Rates?

The HMO Mortgage market is in constant flux with lots of competition. This means rates vary from time to time within the Loan-to-value (LTV) ranges. If you have a small HMO a minority of lenders may allow you to mortgage on standard buy-to-let rates, large HMOs may require commercial rates.

Given these complexities - it's always best to talk to a specialist HMO Mortgage adviser at Bespoke Finance to find the best mortgage for your needs and circumstances.

What is an HMO remortgage?

If you intend to remortgage a property to rent it out to more than one household, you require a House of Multiple Occupancy (HMO) Mortgage.

Your standard Buy to Let Mortgage contract often limits the number of households that can live in a property and limits tenants to having just one tenancy.

An HMO mortgage is a different contract with a mortgage lender. These contracts allow you to have multiple households and each of them to have their individual tenancy (if required).

If your property does not require an HMO License, you can benefit from traditional Buy-to-Let rates in certain circumstances. Available from a select few mortgage lenders.

If your property requires an HMO License you will need an HMO Mortgage.

You will often remortgage your HMO for one of two reasons:

What deposit is needed? (85% LTV HMO)

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. 

... read more on What deposit is needed? (85% LTV HMO)

Guide to HMO Mortgage Criteria

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:

... read more on Guide to HMO Mortgage Criteria

How are HMO Properties Valued?

Your HMO Property is valued in one of two ways — either Brick & Morter or on an Investment Basis (aka Commercial Valuation).

Brick & Mortar valuation is your standard residential property valuation.  It is based on the resale value of the property as a typical home. Comparable with other none-HMO properties on the street. 

An Investment Valuation instead calculates the value as a business. The surveyor will base the amount on a multiple of the Rental Income of the property as an HMO. It is based on the resale value to another HMO Investor.

... read more on How are HMO Properties Valued?

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