Find the perfect HMO mortgage for your multi-occupancy investment property.
The HMO mortgage market can be tricky. Banks and building societies might be unwilling to lend to those investing or buying multiple occupancy homes because of the perception that they’re high risk.
If you’re interested in an HMO mortgage and dislike the approach of traditional providers, then you’ve come to the right place. We can arrange a variety of HMO loan products designed to meet your needs, whether you’re a seasoned investor or somebody taking out a mortgage for the first time.
HMO Mortgages – Mortgages With A Difference
An HMO or a “house in multiple occupation” is a unique type of household. The government defines an HMO as a situation in which unrelated people live together, share communal facilities, but are not mutually dependent, like a family.
Many people buy HMOs as investment properties. Homes in multiple occupation provide opportunities to generate income streams from several clients, helping to boost returns.
HMO mortgages, however, are not the same as regular mortgages. People wanting to buy a property to rent out as an HMO need to apply for a buy to let or commercial mortgage, for larger properties. These are more difficult to obtain, and banks can impose rules on borrowers that make it hard for budding landlords to get the money they need.
Ascot Mortgages is here to help. We look into your situation and find out whether any stumbling blocks could hinder your application.
Get Help With HMO Licenses
If you want to become an HMO landlord, then you may have to apply to the local authority for a license. If the property that you want to rent out has more than three bedrooms or more than five people occupy it, then you have to register it with the local authority, under current rules.
It’s essential to have a license in place before you apply for a mortgage, although some lenders may proceed with proof you have applied for a license. Some lenders will refuse to provide a loan if they can’t see evidence you’re able to rent out the property to multiple people.
Find Affordable HMO Mortgages
Because of the perceived increased risk of lending on the HMO market, many mortgage lenders charge a higher rate than the standard mortgage market. Paying more interest naturally makes HMO mortgages more expensive.
Furthermore, you often have to put down a bigger deposit. Most lenders offer a maximum loan-to-value rate of between 65 and 75 per cent meaning that they will only provide you with a maximum of 75 per cent of the value of the property in the form of a mortgage – the other 25 per cent, you’ll need to pay yourself.
At Ascot Mortgages, we specialise in helping people find the right HMO mortgage for what they want to achieve.