An HMO mortgage lender will often take rental income into account. This can significantly increase the mortgage amount. HMO mortgages are available on tracker and variable rates. LTV rates typically start at 80% LTV. Higher deposits and lower LTV ratios offer more attractive rates.
Landlords have two options for managing their HMO property: a single, joint and severally liable agreement or an individual contract per tenant.
HMO mortgage rates are typically higher than the standard buy-to let mortgage products. HMO mortgage markets are less competitive due to fewer lenders. HMO mortgage lenders may charge slightly more for loans and higher rates than those that would be willing to lend. The income from an HMO should not be less than what is needed to cover a mortgage and utilities bills, as well as maintenance.
HMO properties can generate higher yields than other types of property, but they are also more difficult to set-up. HMO licences may be required for landlords, depending on the nature and purpose of the HMO.
What is an HMO-mortgage? HMO mortgages can be used by landlords to rent their property to more tenants than one household. These specialist buy to let mortgages offer some key distinctions.
A House in Multiple Occupation could be more profitable than traditional buy and let. With low interest rates landlords can maximise rental yields because of the high demand for rental properties in the UK. A mortgage that is right for you will ensure your rental income makes the most of your profits.
Although every case is different, HMO mortgage applications generally take the same amount of time to process by lenders as other buy-to-let mortgages. We would estimate that a purchase mortgage offer takes three to four weeks and completion takes four to six weeks.