For a great long-term return, it is important to get the best finance deal. Reach out to our HMO Mortgage finance specialists.
Once you have some experience in renting property, you might be able to transition to HMO letting. It is possible to either convert an existing property or purchase a new one. However, you will need a specialist HMO loan. If you already own a property with an ordinary buy-to - let mortgage, your lender will want to talk to you about remortgaging it to an HMO.
HMO properties may be available for sale that offer irresistible "100%+ Gross Yields". One would not want to miss out on that opportunity. Be aware of the gross yields in HMO sectors: Your costs include insurance, council tax and utility bills. You also have to pay rent arrears or voids. A HMO could have a ROI of between 8-10% and 4-5% per year for single-tenancy buys-to-let.
HMO mortgage rates are generally higher than those for standard buy-to-let mortgage products. HMO mortgage rates are higher because there is less competition in the market for HMO mortgages. HMO lenders will be more willing to lend money, but they will charge higher rates and fees. However, an HMO's income should be sufficient to pay for a mortgage, maintenance, and utility bills.
Many HMOs can be furnished fully. This adds an additional cost. Traditional buy-to-let properties are often rented unfurnished.
The HMO will generally yield a greater return on investment than letting out a home to a tenant. You can charge by the room and so charge more. This will require a specialist loan.
HMO properties are more likely to yield higher yields but they can be more difficult to set up. A HMO licence may be required by landlords depending on the HMO's nature.