Financing Houses Of Multiple Occupation (HMOs)
Houses with Multiple Occupation (HMO) also know as Houses with Multiple Occupancy, HMOs provide an ideal route to maximising the income from a rental property. With many landlords moving into the HMO space, we’re going to look at financing houses Of multiple occupation (HMOs) and some factors to consider in advance.
The good news is there’s a reasonably broad range of HMO lenders. If you are looking to raise finance for your HMO concern, regardless if you’re buying as an individual or as a Ltd company. However, each lender is likely to have slightly different rules in respect to both property type and with regard to the actual borrower.
In terms of interest rates, while they are typically higher than for a standard mortgage, there are competitive HMO rates to be found. If you know where to look of course!
As is often the case, the higher your deposit amount, the more attractive the rate available. However, with 80% LTV products available, there’s no shortage of HMO mortgages to suit your needs.
Additionally, HMO finance is not only available to UK residents, but to expats as well as overseas investors. Cornerstone Finance will be able to provide a range of options to suit your circumstances.
We referred to it earlier, and an important point to consider with an HMO mortgage is the lender criteria. The numbers and the overall plan might stack up, but they’ll also be looking at you, the borrower. Your experience in the BTL or HMO market also plays a factor in whether a lender will offer to finance your HMO property or not.
If you don’t have landlord experience, the number of lenders shrinks somewhat, and as with other types of specialist financing, the services of a specialist finance broker will often prove invaluable. In fact, many HMO offerings simply aren’t available without using a broker such as Cornerstone Finance.
Doing your homework in advance is important to ensure a smooth application process. Basic information is essential and as a minimum you’ll need to have details available for:
- Your experience as a landlord
- Estimate of the rental income
- Number of rooms to be let
- Status of tenancy agreement(s)
- Tenant type (student/professional etc.)
- Management (self-managed or by agent)
- Licenced or non-licenced HMO
- Location and type of the property
- Amount of borrowing required
- LTV ratio
- Personal or company borrowing
As is always the case with all borrowing, your credit status is also a factor with an HMO mortgage.
You will have realised by now that there are many considerations in gaining the most appropriate HMO financing for your needs.
Armed with this information, your finance broker will be able to source your best HMO mortgage options, including product type, rates, repayment options, LTV’s and more.
For more information or to start your HMO financing application, simply contact Cornerstone Finance today.
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