HMO Mortgages FAQS

An HMO Mortgage is one that allows you to borrow money against a property that is let out as a House in Multiple Occupation. The definition of this at least 3 people who are not from ‘1’ household and who share a toilet, bathroom or kitchen facilities. Learn more >

HMO Mortgages FAQS

How much can I borrow with an HMO Mortgage?

HMO Mortgage lenders may lend up to 75/80% of a property’s value, the amount they can lend is based on the rental income of the property.

Can I have interest only on an HMO Mortgage?

Yes. Most HMO Mortgage lenders will allow you to take the mortgage out on an interest-only basis as it is classed as an investment. This does mean you will need to have a plan in place to repay the loan at the end of the mortgage term, also called a ‘repayment vehicle’

How much deposit do I need for an HMO Mortgage?

The minimum deposit required on an HMO Mortgage is at least 20/25% of the property’s value. On top of that, you will also need to have funds to cover other costs, such as stamp duty and solicitor’s fees.

What’s the process to apply for an HMO Mortgage?

To apply for an HMO Mortgage, the process would include:

• Initial enquiry.

• Agreement in principle.

• Mortgage application (borrower checks, rental confirmation, valuation etc)

• Mortgage offer issued.

• Solicitor progression.

• Completion and release of funds.

Should I use a broker to apply for an HMO Mortgage?

It depends on how difficult your personal circumstances are and how well you know the lender’s criteria! The process of applying for an HMO Mortgage is similar to applying for a residential mortgage, but there are lots of extra things to think about before you get to that stage. For example, will the lender lend you enough based on the rental income? Will they accept the property type? Do they need a minimum personal income? If you are unsure, you should speak to a broker for some guidance as they will have the experience to find you the right lender, first time.

What fees will I need to pay when I apply for an HMO Mortgage?

When applying for an HMO Mortgage some of the typical fees include:

• Valuation fee

• Lender arrangement fee (can sometimes be added to the loan)

• Legal fees

• Stamp duty

• Tax liabilities (speak to your accountant or a tax adviser)

Can I convert a property to an HMO and apply for an HMO Mortgage?

Yes. You would need to have already made the relevant changes and applied for any HMO licences required, before you can apply for an HMO Mortgage.

Can I apply for an HMO Mortgage in a company name?

Yes. You can apply for an HMO Mortgage in a Limited Company name, whether it is a newly formed company, designed to hold property (SPV – Special Purpose Vehicle) or a trading company.

Do I need a licence to apply for an HMO Mortgage?

Most HMO lenders will require you to have at least applied for the HMO licence to be able to apply for an HMO Mortgage, although we have funding options that allow you to borrow money while this is in situ.

Can I have an HMO Mortgage if I’m a first-time landlord?

Yes, you can apply for an HMO Mortgage, although it will be much more difficult as lenders would consider you to be more of a risk due to your inexperience. There are a few that many consider this scenario but if you have at least one Buy-to-Let, you will have many more options available to you.

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Book A Call To Discuss HMO Mortgages

If you have an enquiry and would like to discuss HMO Mortgages in more detail, please get in touch or schedule one of our HMO Mortgage broker experts to give you a call.

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At MRG Private Clients, we believe in providing our clients with personalised guidance and support when it comes to making important financial decisions. We are based in Medway, Kent but offer our specialist mortgage services nationwide. Learn more about our specialist mortgage services >