Finding the right HMO loan for you can be complicated. Lender criteria vary and each one will have different requirements. Our expert buy to let team is available to assist you in finding the right HMO mortgage.
Renting affordable accommodation is still very popular as young buyers cannot afford to buy a house. For information on the strength of tenant demand, visit local listing sites such as Zoopla, Gumtree ...)and Rightmove.
HMO mortgages are required for landlords who rent out to more than 3 tenants from different households. Your property will not be eligible for a regular buy-to-let mortgage as they are designed only for single-household renters. A regular mortgage would be required on HMO properties. This could lead to lenders taking legal action.
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 Valuations: Lender methods for valuations can vary slightly. Lenders may use traditional surveyor inspection, as well as comparing the property to similar properties within the same area. If there are no other HMOs in your area, the valuation will be done based on the sale price as if it were one household. This method does not account for the additional income HMOs can attract from multiple rental incomes. It limits the amount that you can borrow.
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.
Many HMOs can be furnished fully. This adds an additional cost. Traditional buy-to-let properties are often rented unfurnished.