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 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.
HMOs: Why should you invest? - A higher rental income: As a rule of thumb, you can expect to net approximately twice the rent. Four-bedroom houses can be let out to one family at PS800 each month. This compares with four separate tenants who pay PS400 per month. You may charge rent inclusive of all bills to attract tenants. However, your costs could be significantly higher.
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.
HMOs are rented by young professionals and students who are unable to rent whole properties or aren't yet settled enough to live with a partner. It is more affordable to rent a single room than an entire house, but the rents for the whole property are usually higher than the rents that could be charged to a single family. The HMO allows landlords to make a greater rental income.
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.
An HMO mortgage is required if you rent to more than three tenants coming from different households. Because your property is not eligible for a regular mortgage to buy to let, they are only for single-household tenants. You could be sued by lenders if you took a regular mortgage on an HMO home.