HMO Mortgages

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What is an HMO mortgage? 

HMO stands for a House of Multiple Occupancy, which is where the property is being mortgaged and is rented to three or more unrelated tenants. Typical tenants are young professionals or students.

What are the different types of HMO mortgages?

HMO mortgages are available from specialist lenders, but those lenders that are looking to offer these types of mortgages still sell a wide variety of products, which can be fixed rate and variable rates and Interest-only or Repayment, so there should be a product suited to all landlords.

Who can get an HMO mortgage?

Multiple Occupation HMO mortgages can be available for both first time and experienced landlords and they can be achieved through individual or limited company applications.

When would you use an HMO mortgage? 

This sort of mortgage is going to be needed when you’ve got a property that you plan to let out to three or more unrelated tenants.

How would you arrange an HMO mortgage? 

Because of the complexity of this type of application, we would always recommend that you use an experienced broker to assess the various types of HMO mortgage. There’s lots of different factors that need to be taken into consideration, such as each lender’s criteria, the type of property and also what licencing requirements there are. Some lenders will not actually allow customers to go direct and insist you use a broker. 

How are HMO mortgages different from Buy to Let mortgages?

There’s quite a few differences between an HMO and a Buy to Let mortgage. For example, a standard Buy to Let property should be rented to no more than two single tenants or a family, and should be laid out on a shorthold tenancy agreement. HMOs can have three or more unrelated tenants. 

There are also a couple of different types of HMOs that need to be considered as well, both small and large. A large HMO is a property that is linked to five or more unrelated tenants or two or more separate households and there is always a license required from the relevant Local Authority. For a small HMO it’s a bit more complex, with some needing a license and others not. This is another reason why a Mortgage Broker is advisable for this type of mortgage.

What else should I consider when taking an HMO mortgage?

There are extra responsibilities for the landlord of an HMO, such as ensuring that there are the correct fire and gas safety measures in place, that there’s enough kitchen and bathroom facilities for the number of tenants in the property and that the rooms are of the required size and the electric in these type of properties will also need to be checked every five years.

There’s also specific responsibilities to ensure that the properties are of an acceptable standard. Landlords do have to apply to the local council through the government website for the licence, and there is an admin fee that needs to be taken into consideration, which is £300 – £400. And some councils will also require to see property plans as a part of that process. If you fail to get the relevant licences you could be subject to an unlimited fine.

How can The Mortgage Broker help me with my HMO mortgage?

At The Mortgage Broker, we specialise in supporting landlords in obtaining high standards Buy to Let and HMO mortgages for both personal landlords or through limited companies. We have access to over ninety lenders and have a wealth of experience in this area, which 

means we’re able to find the lender with the most competitive deals to fit your needs. We’re also able to help determine if you do require a licence or not for your property, and can support you through to the completion of the mortgage.

We offer free, no obligation advice to support you through the process, so navigate to the contact page on The Mortgage Broker website and get in touch with a member of the team.

HMO Mortgages

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