Mortgages for HMO Properties

A HMO mortgage is a necessary option for landlords buying or refinancing properties let to multiple tenants from different households. While HMOs can generate higher rental yields, some lenders view them as more complex and higher-risk investments.

Here we’ll explain what a HMO mortgage is, how buy-to-let HMO mortgages work in practice, the eligibility criteria, examples of UK HMO mortgage lenders, and where to compare the best HMO mortgage rates to get the cheapest deal.

What is a HMO mortgage?

HMO stands for “House of Multiple Occupation”, and this is a type of buy-to-let (BTL) mortgage for a property rented to three or more tenants within one household, who share facilities such as a kitchen or bathroom.

Because HMOs involve higher tenant turnover, stricter regulation, and more intensive management, most lenders won’t allow them under standard buy-to-let terms. Instead, a specific mortgage for an HMO property is required.

Are there specialist HMO mortgages?

Yes, there are dedicated specialist HMO mortgages offered by lenders that focus on complex or higher-yield buy-to-let HMO properties.

Some mainstream lenders will consider small HMOs (three to four bedrooms), but large HMO mortgages (over five bedrooms or licensable HMOs) almost always require a specialist HMO mortgage lender.

How do they work?

A buy-to-let HMO mortgage is primarily assessed on the total rental income across all rooms. Typically, HMO mortgage lenders will:

• Calculate affordability using combined room rents

• Apply higher stress rates than standard BTLs

• Often require higher deposits

• Need to factor in licensing, council rules, layout, and management risk

Most HMO buy-to-let mortgages are arranged on an interest-only basis, though repayment options do exist with certain lenders.

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Eligibility criteria for a buy-to-let HMO mortgage

Each lender has its own HMO mortgage criteria, but most assess your application based on a combination of legal compliance, lending risk, and investment opportunity:

• HMO classification and licensing: Lenders will expect confirmation of whether the property is a licensable HMO and evidence that the correct licence is in place (or being applied for). Non-compliant properties are rarely accepted.

• Property size and layout: Minimum room sizes, number of shared facilities, and overall layout must meet the local authority and lender standards. Larger HMOs usually face more scrutiny.

• Deposit and loan-to-value (LTV): Most HMO mortgages require at least a 25% deposit, though some lenders may offer 80% LTV HMO mortgages (meaning a 20% deposit) in specific scenarios. 85% LTV HMO mortgages are rare and usually restricted to small HMOs.

• Rental income and stress testing: Affordability is based on the total aggregated room rents, stressed at higher interest rates and rental coverage ratios compared to standard buy-to-let properties.

• Experience and credit: Many lenders prefer prior landlord experience, particularly for large HMOs. However, first-time landlord options may exist with specialist lenders. Your credit file will also be reviewed (whether you’re applying as an individual or as a limited company).

Compare the best HMO mortgage rates online

HMO mortgage rates can vary significantly depending on the size of the property, the number of tenants, whether you’re buying personally or through a limited company, and your level of landlord experience. As a result, the headline rates rarely tell the whole story.

If you’d like to compare today’s HMO mortgage rates online, you can use our free rate calculator comparison tool. Alternatively, if you’d like a tailored comparison, we can introduce you to a HMO mortgage broker who can show you which lenders are most suitable for your property and easily find the best HMO mortgage deals.

You can compare the latest buy-to-let mortgage deals for free below.

UK HMO buy-to-let mortgage lenders

Here are some examples of a few popular UK HMO buy-to-let mortgage lenders, along with specific details on the types of HMO products they offer:

• Shawbrook Bank: Will consider investment-grade HMOs and is open to buy-to-let mortgages ranging between £40,000 and £35 million. Applications for complex buy-to-let HMOs are assessed by a specialist underwriting team at Shawbrook.

• Paragon: Allows up to 20 rooms, multiple kitchens, locks on doors, and single or multiple tenancies. Paragon are also willing to consider a variety of tenant types for HMOs, including students, young professionals, benefit recipients, and lets directly with the local authority or housing association (up to five years).

• Leeds Building Society: The minimum property valuation for a HMO mortgage with Leeds Building Society is £100,000 throughout most of the UK or £250,000 in London. You don’t need a minimum personal income, and there’s no maximum age at the end of the term. The maximum LTV offered is 75%, but they do not accept first-time landlords.

Limited company HMO mortgages

A limited company buy-to-let HMO mortgage is a popular option for landlords who want to hold HMO properties within a Special Purpose Vehicle (SPV), often for tax efficiency (particularly for higher rate taxpayers) or long-term portfolio planning.

Certain specialist lenders are comfortable offering HMO mortgages to limited companies, provided the company is set up correctly (usually an SPV with SIC codes 68100 or 68209). In most cases, lenders still assess the personal directors’ experience, credit, and assets, even though the mortgage is in the company’s name.

With a limited company HMO mortgage, you can expect:

• Slightly higher interest rates than personal borrowing

• Similar deposit requirements (but usually more flexible sources)

• Full underwriting of directors and the SPV

• Greater flexibility and scalability for landlords looking to grow portfolios

• Higher unit and bedroom counts plus larger loan sizes

There are usually dedicated HMO mortgage rates for limited companies, but it’s crucial you deal with a specialist lender comfortable with this type of application and finance.

Mortgages for HMO refurbishments

HMO refurbishment mortgages are designed for landlords who want to purchase, convert, renovate or upgrade a property into a compliant HMO, or improve an existing HMO to increase rental yield or meet licensing standards.

For a HMO refurbishment mortgage, lenders will usually assess:

• The current and post-refurbishment value of the property

• A schedule of works with costings and timescales

• The expected rental uplift once the HMO is complete

• Licensing position and compliance with local authority standards=

Most lenders will treat HMO refurbishments as a light or heavy refurb project, depending on the scale of works involved:

• Light refurbishments: Such as reconfiguring rooms, adding en-suites, or upgrading kitchens and fire safety features can often be funded through specialist buy-to-let HMO mortgages.

• Heavy refurbishments: More extensive projects, including structural changes or conversions, typically require short-term bridging finance, followed by refinancing onto a long-term HMO mortgage once the works are complete. This often results in a higher valuation and a lower LTV, which can help improve your cash flow.

Speak with a specialist HMO mortgage broker

HMO mortgages are more complex than standard buy-to-let loans, with stricter criteria, specific licensing requirements, and fewer lenders to choose from. That’s why working with a specialist HMO mortgage broker can make a real difference.

At Money Helpdesk, we can introduce you to brokers who understand the nuances of HMO mortgage lending criteria, allowing them to find you the most suitable lender and structure your application correctly from the outset.

Here’s why landlords and property investors across the UK choose Money Helpdesk to help them get the best HMO mortgage:

• Access to specialist HMO mortgage lenders with exclusive deals

• Free initial chat with no obligation to proceed further

• Speak to brokers with experience financing all types of HMOs

• Support for both first-time HMO landlords and experienced investors

If you’d like to compare HMO mortgage rates or speak with a broker who has plenty of experience arranging HMO mortgages, you can get started here.