hmo mortgage natwest
HMOs that don't require licenses may not be eligible for an HMO loan. Therefore, some lenders might only give you a buy-to-let mortgage.
An HMO mortgage will require a large deposit. LTV ratios must be between 60% to 75% for most lenders. A minimum of 25% deposit. Lenders will consider rental income when calculating their stress tests. However, they will base their calculations on the rental income from renting the property to one household. Your mortgage should be affordable and with large margins. A mortgage broker will be able to advise you as to how much an HMO mortgage is possible for you (according to your lender).
HMO mortgages may be needed if your property is rented to more tenants than one tenant from different households. This is because the HMO mortgages are not designed for single-household tenants and won't allow you to qualify for regular buy to rent mortgages. If you do take a regular mortgage for an HMO property you could be violating the terms of the mortgage, which could result in lenders taking legal action.
HMOs that don't require licenses may not be eligible for an HMO loan. Therefore, some lenders might only give you a buy-to-let mortgage.
An HMO will not be valued by every lender based on rental income. Instead, the lender will consider the HMO to be a standard home. This could limit the amount that you can borrow, which is counterproductive to the purpose of an HMO mortgage.
After gaining some experience with letting properties, you might be ready for letting out HMOs. Either you convert an existing property to an HMO (or buy a brand new one), but in either case, you will need an HMO mortgage. You will need to contact your lender again if you are already a homeowner with an ordinary mortgage to buy a property.
HMO mortgages can only be obtained by experienced landlords. Some lenders won't accept applications from landlords who have been in the business for at least two years and have had experience in HMO letting. These may be additional requirements for lenders. If you are a first-time landlord, it will be difficult to get an HMO mortgage approval. You will likely need to let a single family's property.
HMO mortgage requests take approximately the same amount time to process for lenders as other buy to lease mortgages. Every case is different. Pre-pandemic, it took three to four weeks to get a purchase loan offer. Then, it took four to six additional weeks to complete the transaction.