What is an HMO Mortgage? HMO mortgages are mortgages that landlords use to rent out their properties to more than three tenants. These mortgages are specialized in buy-to-let and have key differences.
HMO licenses issued by local authorities are valid for five consecutive years if approved. HMO licences must be provided for each property. A landlord might have three HMO properties. Each HMO will require a license.
This lends an unfortunate meaning to "unlicensed" HMOs, which suggests they are somehow illegal and fly-by night. So local authorities, lenders, or owners may refer to smaller HMOs as multilets, "HMOS NOT REQUIRED TO BE LICENSED", or "non�licensable HPMOs".
You should also consider void periods. An HMO has more void periods than a traditional buy-to-let. HMOs may have higher maintenance costs than traditional buy-to-let models. This is due to shared communal areas like bathrooms, kitchens, and living rooms (where appropriate).
Number crunching will make your HMO more profitable. Our HMO mortgage advisors are experts and can help maximise your rental income. Securing the best deal for your HMO is key to making it profitable. Majority of lenders that offer preferential rate often do so through mortgage brokers.
HMOs must have a valid five-year license from the local authority where the property is situated. It is important to ask the relevant local authority about the policy regarding your area of interest. A licence is required for properties with less than five tenants. Because it is dependent on the location, you will have the best chance of submitting your application.
HMO Buy to Let4 bedroom semi detached house with 2 receptions rooms1 reception room converted into a bedroomRents to 5 single-working professionalsMonthly renting income per tenant = PP400Monthly renting income = PP2000Annual rental revenue = PL24,000. The above example illustrates why HMO property owners are more interested in them. The difference in gross rent income can be very significant.