What is an HMO?
In England and Wales, a property let to three or more people from more than one household is classed as an HMO.
For five or more people, this is classed as a 'large' HMO and requires specific licenses and inspection from the local council. HMO properties have more than one tenancy agreement in place.
As a niche category of property, the number of available mortgage providers is lower than for standard properties.
How is an HMO mortgage different?
HMO mortgages are a relatively new mortgage designed for landlords.
This follows a reclassification of some shared properties to HMO. To respond to this change in legislation, lenders have launched HMO mortgages with a Loan to Value of 60-75%. These mortgages are not generally available on the open market, but as a whole-of-market mortgage broker, Money Helpdesk can help. Complete our quick and easy online form today to start the process.
What should I know?
- HMO mortgages can be more expensive than traditional buy-to-let mortgages, are typically assessed based on the potential rental income as a whole, rather than to each individual.
- HMO mortgages tend to be linked to LIBOR rates rather than the Bank of England base rate.
- Lenders will need to go through a specialist valuation process which adds cost.
- The minimum property value is generally £100,000.
- You must demonstrate experience in being a landlord; at least two years or one year as an HMO landlord.
- The property must have a communal seating area.
- No more than four habitable storeys and no more than one kitchen are allowed.
How can I learn more?
Our advisors have helped landlords like you to get the best deal possible on their mortgage. Complete our online form to start the process today.
