HMO Mortgages

ARE YOU A LANDLORD LOOKING FOR A MORTGAGE ON A PROPERTY THAT WILL BE RENTED TO MULTIPLE PEOPLE FROM DIFFERENT HOUSELHOLDS?

Houses in Multiple Occupation mortgages (HMO mortgages) cater to properties that are either purpose-built flats or have been converted from one property into multiple dwellings. These properties often present unique challenges and opportunities, making it essential to navigate them with expert mortgage guidance.

At THE MORTGAGE CHOICE, we can help you navigate an HMO mortgage, understanding the intricacies involved and providing tailored solutions to meet your HMO mortgage requirements.

UNDERSTANDING HMO MORTGAGES

An HMO mortgage is essential when you intend to rent out a property to three or more unrelated individuals, creating multiple rental units within a single dwelling. These mortgages come with additional criteria compared to standard residential or buy-to-let mortgages, particularly regarding the size and configuration of the property.

HOW DO HMO MORTGAGES WORK?

Similar to Buy-To-Let mortgages, HMO mortgages typically operate on an interest-only basis, allowing landlords to manage cash flow efficiently. Rates for HMO mortgages can be fixed or variable, depending on the lender and market conditions.

HOW DO I APPLY FOR AN HMO MORTGAGE?

When seeking an HMO mortgage, you’ll encounter three types of lenders:

• Regular banks and building societies: While these lenders may offer competitive rates, they often have stringent criteria.
• Specialist HMO lenders: Tailored for larger or more complex HMO properties, these lenders provide more flexibility in their criteria.
• Commercial mortgage lenders: Offering the most flexibility, these lenders cater to unique circumstances but may come with higher interest rates. * A commercial mortgage lender may be beneficial for those with complex HMOs, first-time HMO landlords lacking experience, or those with unusual circumstances.

WHAT IS THE ELIGIBILITY CRITERIA FOR AN HMO MORTGAGE?

To qualify for an HMO mortgage, lenders typically look for:

• Experience as a landlord with at least a year of property portfolio history.
• Demonstrable experience with Buy-To-Let and HMO properties.
• Stable income, satisfactory credit rating and a suitable deposit amount.
• Detailed information about the property, including its value, location and intended use.

HOW MUCH DEPOSIT IS REQUIRED FOR AN HMO MORTGAGE & HOW MUCH CAN I BORROW?

While deposit requirements for HMO mortgages vary, they typically range from 15% to 25% of the property’s value. Some lenders may offer higher loan-to-value ratios (LTV), up to 85%, depending on the borrower’s circumstances.

The amount you can borrow with an HMO mortgage depends on various factors, including your income and the expected rental yield from the property. However, it’s essential to note that higher rental income from multiple occupants may not always translate to increased borrowing capacity.

INTEREST RATES IN THE THE HMO MORTGAGE MARKET

Interest rates for HMO mortgages tend to be higher than those for standard residential or buy-to-let mortgages. This is due to the increased risk associated with managing properties with multiple tenants.

THE MORTGAGE CHOICE CAN HELP YOU FIND THE RIGHT HMO MORTGAGE. 

Given the specialised nature of HMO mortgages and the limited availability of products and lenders, it’s crucial to seek expert advice from a reputable mortgage broker.

With our experience and extensive network of lenders we will help to help you secure the best HMO mortgage deal tailored to your unique requirements.

Let us guide you through the process and unlock the potential of your HMO property investment.

OUR PROMISE TO YOU

We will carefully assess your personal circumstances, your mortgage requirements and based on this we will make a recommendation giving you the most suitable mortgage advice.

themortgagechoice is located in Byfleet, Surrey. We have clients in Guildford, Woking and throughout the UK.

Your home may be repossessed if you do not keep up repayments on your mortgage.