Let Us Help You Find a Mortgage

HMO Mortgage Advice

If you are looking to buy a property to let out to multiple tenants, then we have a network of specialist mortgage brokers who can arrange HMO (Houses in Multiple Occupation) mortgages.

HMO Mortgages are a specialist kind of Buy To Let Mortgage that are specifically for Houses in Multiple Occupation. The government defines a House in Multiple Occupation as “a property rented out by at least 3 people who are not from 1 ‘household’ (for example a family) but share facilities like the bathroom and kitchen. It’s sometimes called a ‘house share’.”

As a landlord, you may feel that in the past you have been made to jump through hoops in order to get an HMO mortgage – We are here to ensure you have a better experience this time around. Or, perhaps you are new to HMO mortgages and you need a helping hand getting started. Either way, our friendly and experienced HMO mortgage brokers are the right people to speak to. Get in touch today for a free initial consultation.

With Whole of Market access, we find you the right deal to match your individual circumstances. We aren’t attached to any lender.

Our team are knowledgeable and considerate of your requirements. We’ll talk you through all of your options for HMO and Buy to Let Mortgages.

HMO Mortgages Explained

Buy-to-let for HMO

If you’re looking to purchase a buy-to-let property, it may be more lucrative to let this property to a group of tenants rather than to a single person or family. This is because you can usually charge more total rent across seperate tenants, than you could to one person or family.

HMO’s are typically large houses with several bedrooms, shared by students or working people who wouldn’t be able to afford the whole rent by themselves. Most landlords furnish HMO properties before letting them out, as this makes them more attractive to renters who may only looking to be in shared accomodation as temporary solution.

Each tenant in an HMO will have their own bedroom but share communal facilities such as a kitchen or bathroom. Usually they’ll each have their own tenancy agreement too, although this is not always the case for students where there may just be one tenancy agreement covering all of them.

While they can be more profitable, there are other factors and elements of risk which you need to be aware of with HMOs. For these reasons, standard mortgages don’t cover HMO or Large HMO properties – you’ll need a special type of buy-to-let mortgage known as an HMO mortgage. If you were to let out an HMO property on a regular mortgage, you’d be breaking the terms and conditions of your loan agreement.

How do you get an HMO mortgage?

HMO mortgages are considered a niche mortgage type and the application process is slightly more complex than with other mortgage types. For this reason, they aren’t generally offered directly to landlords, but through mortgage brokers who can advise and assist throughout the application process.

Most (but not all) lenders will require applicants to have experience in letting property before accepting them for an HMO mortgage. There are a few lenders that will consider accepting new landlords, but the rates offered may be higher than average in order to cover the extra risk. Lenders might also prefer a letting agency to manage the HMO too, rather than a landlord managing it on his/her own.

Ultimately each application is unique and the deal you are offered will depend on your specific circumstances. If you’d like to discuss this with a broker who has extensive experience in HMO mortgages, please get in touch today.

Stress tests for HMO Mortgages

Stress tests are what lenders use to determine how much they are willing to loan you, if anything at all. Since you’ll likely be relying on rental income in order to pay back the mortgage loan, they’ll want to know how much monthly rent you plan to charge, among other finanical assessments.

As a guide, rental income should be at least 125% of the interest amount. HMO’s are typically taken out on an interest-only basis, so this will ensure that you can comfortably cover the monthly payments and extra, in case interest rates were to rise.

Enquire Now To Speak To An HMO Mortgage Broker

Why Choose Us?

Whole of Market Access

Although it’s a niche mortgage type, there are several different providers of HMO mortgages. Each one has their own criteria and lending terms, so finding the best deal means exploring the whole market. Our brokers have Whole of Market access, including products not available from high street lenders.

We Are On Your Side

We understand the complications involved with applying for an HMO mortgage, and it’s our aim to make this process smoother for landlords. Throughout all stages, we work for you not the lender, matching you with the best deal and the right product for your individual circumstances.

We Do The Hard Work For You

Applying for HMO finance isn’t easy, due to strict lending criteria and other complications throughout the application journey. With our help, you won’t need to jump through hoops as we’ll handle the entire process for you. This includes all of the paperwork and where appropriate, arranging solicitors too.

We Consider Your Circumstances

We pride ourselves not only on being HMO specialists, but on being considerate and friendly to deal with as well. We’ve had years of experience arranging HMO mortgages and we understand that each case is unique, which is why we take the time to listen to your individual circumstances before making any recommendations.

HMO Mortgages FAQs

The maximum percentage of the property’s value you can borrow (referred to as the loan-to-value or LTV) is typically 75%, although it is possible to find HMO mortgages up to 80% Loan To Value. The amount you can borrow will ultimately depend on each lenders individual criteria, and your financial circumstances.

If you are considering an HMO Mortgage and you are concerned that you have a low credit score, it is always a good idea to speak to a specialist bad credit mortgage advisor first. They will be able to advise on your individual case, and search the whole of the market for lenders with criteria that meet your circumstances.

With their help you’ll be able to access banks, building societies and other providers that you would not be able to approach directly, thus increasing your chances of getting a mortgage.

We always recommend the sooner the better. As mentioned, there are strict criteria and other complications involved with applying for an HMO mortgage so speaking to us earlier gives us a greater chance to help. It also reduces the stress and disappointment of not being able to secure the finance that is specifically suited to your needs.

Yes. Whilst they are usually more lucrative than standard buy-to-let mortgages, there are additional criteria that you or the property will need to meet to be accepted for an HMO Mortgage. Each lender is different, but common criteria for HMO mortgages include:

  • A minimum property value, (e.g £75,000 or £100,000)
  • The applicant having previous experience as a landlord
  • A maximum property size (you may not be able to get an HMO mortgage on a property with more than four storeys)
  • A maximum number of bedrooms (e.g 6 or 8)
  • No more than one kitchen
  • A communal seating area

The above are in addition to any standard criteria that you would have to meet for a regular buy-to-let mortgage, such as your age, income, credit history etc.

The maximum LTV is usually 75%, although it has been known to find HMO mortgages up to 80% LTV.

Since they are not as common as regular mortgages, there are not near as many lenders that offer HMO mortgages. And those that do tend to be niche lenders rather than mainstream ones.

Many only offer their deals through broker networks such as ours. You may currently be able to find HMO mortgages through the following lenders:

  • Aldermore

  • Foundation Home Loans

  • Kent Reliance

  • Landbay

  • Leeds Building Society

  • LendInvest

  • The Mortgage Works

  • Paragon Bank

  • Precise Mortgages

Your Mortgage Options are whole of market, impartial and independent. We aren’t attached to any of the lenders listed above. Get in touch today to discuss all of your options when it comes to HMO mortgages.

HMO Mortgage Broker - Enquire For a Free Consultation