HMO Finance rates? The lender and their willingness to consider your unique circumstances will dictate the interest rate that you will be charged.
There are only a few UK lenders that are willing and able to lend money on large HMO properties. They also understand the risk associated with multiple tenants, which can lead to lower yields. They can set their own HMO definitions and lend against what they want. This is why you need to hire a broker to assist with your application. CMB, a seasoned broker, can package and tailor your application to the lender that will offer you the best terms. This dramatically speeds up application processing.
HMO mortgage rates can be more expensive than traditional buy-to-let mortgage products. HMO mortgages are more competitive because of the smaller number of lenders. HMO loan lenders will have higher rates and fees. However, HMO income should be enough to cover mortgage, utility bills, maintenance and other expenses.
Before you invest, get in touch with the HMO licensing officers at your local authority. Before you make any investment, ensure that you know the requirements of your area. These could include minimum dimensions for kitchen and living space, kitchen equipment, bathroom facilities, number of toilets, showers, firewood, and others.
HMO properties could be for sale, offering attractive "100%+ gross yields". You wouldn't mind a piece of that! However, HMOs can have very low gross yields. These costs include council tax, insurance, utility bills and management costs. Rent arrears are also included. An HMO might yield a return of 8-10% per year, while a single-tenancy buy to let would earn 4-5%.
An HMO's running costs are usually higher and require more effort and time. An HMO will have more safety and security guidelines than a regular buy-to-let. Each room will need locks. An HMO setup cost will be more expensive than a regular buy-to-let.
A House in Multiple Occupation is a property that is rented out to multiple tenants. These tenants may share common facilities like a kitchen or bathroom. An HMO allows landlords the flexibility to rent multiple properties to tenants, rather than renting a single property to one household.