HMO Mortgage Advice

What are the criteria for an HMO mortgage?

The criteria for an HMO mortgage can and likely will vary from lender to lender. However, the principles remain constant with that of a standard mortgage. There are some distinct differences that lenders will typically apply to HMO mortgages.

Examples of some of the typical areas of HMO criteria are as follows:

• Experience – HMO mortgage lenders will typically not consider a first-time buyer or first-time landlord. Applicants will likely need a minimum of a 12-month track record.
• Occupancy – The maximum number of bedrooms applied by the majority is eight. However, there are lenders that may consider more.
• Client types – Loans are available in personal names and limited companies. They are also available for portfolio landlords.
• Loan sizes – Rental cover will be looked at on a multi-let basis. This invariably will give a greater loan size that a typical single let dwelling.
• Loan to Value (LTV) – Typically restricted to 75% but some lenders will consider more. Loan size may also be relevant to the maximum loan to value permitted.
• Property value – the minimum HMO property value is usually £100,000. However, this may be increased if it’s in London. As with all criteria, this amount may vary with some lenders not imposing any minimum amount.

Getting the best HMO mortgage rates

Although the rental returns for property investors can be extremely rewarding. With an HMO property, lenders invariably perceive these loans to be a higher risk. Therefore, they offer slightly higher HMO mortgage rates to those of standard Buy-to-Let mortgages.

As with all mortgages, the bigger the deposit the better rate of interest will be available. Other factors influencing your rate will be the amount of any fees. Although this is not correct for all lenders, a lower rate is usually available if you pay a higher fee.

The type of product or scheme can also determine what rate you are charged. As a rule, a fixed rate will be priced higher than a tracker or discounted variable rate. Furthermore, if opting for a fixed rate, the longer the rate is fixed for, the higher it will be priced at. For example, a five-year fixed will be priced higher at the outset than a two-year scheme.

With many options available and varying criteria, why not get in touch with us at Just Mortgage Brokers?

Who are the best HMO mortgage lenders?

HMO mortgages represent a fairly specialist niche within the market. Therefore, you should not necessarily expect your local high street bank to offer them.

Each HMO mortgage lender will have its own criteria and definitions of what properties make an HMO. For example, it’s not unusual for a lender to refuse to lend on a property with more than a certain number of rooms.

HMO mortgage lenders can also vary in lending limits, deposit requirements and whether they offer lending to new landlords.

Finding the right lender isn’t always easy. At Just Mortgage Brokers we have years of experience in sourcing lending for landlords. Contact us today to discuss how we can help secure the mortgage that is right for you.

HMO mortgages for limited companies

With various changes in tax allowances for landlords, two areas have seen significant growth within the sector. Limited Company Buy-to-Lets and HMOs. Therefore, it’s no surprise to see the demand for a combination of the two increase. With the level of enquiries from people on the rise asking the question, can I get a Limited Company HMO mortgage?

In short, the simple answer is yes. HMO mortgages are much less available than standard single dwelling Buy-to-Lets. Although, it’s likely if a lender considers lending on HMO property, they will also permit this via a limited company.