HMOs are not valued by all lenders based only on rental income. Lenders will instead value the HMO as a standard house. This can limit your ability to borrow money, which can defeat the purpose behind an HMO mortgage.
HMO lenders may be concerned about the knock-on effects on your ability of to pay the mortgage. These higher risks are reflected in the current interest rates. They currently hover around 3%.
This gives the term "unlicensed MMOs" a pejorative connotation, implying that they are either illegal or flying blind. Some local authorities, lenders and owners refer to these smaller HMOs in the following ways: multi-lets; "HMOS Not Required to Be Licensed" or "non-licensableHMOs".
A number crunching is necessary to make an HMO a profitable one. Our HMO mortgage specialists can help you maximise your rental income. They will also assess your proposal. You can make your HMO as profitable and profitable as possible by securing a great deal. A majority of lenders offering preferential rates do so via mortgage brokers.
How much does it cost to obtain a HMO license? Costs associated with getting an HMO license will vary by location. Some councils charge based upon the number of bedrooms within a property. Others will charge a fixed fee that can range from a few hundred pounds up to more than a thousand. Lenders will know how long it takes to issue a license and may accept proof of application during mortgage underwriting. This is despite the fact that it is important to be prepared for this stage.
It is not a good idea to approach lenders for the purpose of getting a mortgage. You won't be able to fully understand each lender's requirements. Specialists can help you find the right lender and get you the best rates. To get started, you can either make an inquiry or ask our experts questions about your mortgage.
HMOs do not always generate the same rental income as buy-to-let properties. Remember that utilities bills are often paid by landlords. With the above example, even with an annual PS2k-3k utility bill, there's still a lot of rental profit.