HMO properties have higher yields, but are more complicated to set up. HMO licenses are required depending on the nature of HMO properties.
Because this is a more complex type of property, lenders will not offer loans to such cases. However, those who are willing to offer them will likely have their own criteria.
A HMO mortgage lender will also take into consideration your rental income. This can greatly increase the amount of mortgage available. HMO mortgages may be offered at variable or tracker rates. LTV rates start at 80% LTV. Lower deposits and higher LTV ratios lead to more attractive rates.
An HMO mortgage lender will often take rental income into account. This can significantly increase the mortgage amount. HMO mortgages are available on tracker and variable rates. LTV rates typically start at 80% LTV. Higher deposits and lower LTV ratios offer more attractive rates.
In assessing the HMO's value, lenders might consider your rental income. This is especially useful if you are trying to withdraw equity or have converted the property.
HMO buy-to-let4 bedroom semidetached house with two reception rooms1 conversion room to a bedroomRent to five single-working professionalsMonthly rental Income per Tenant = PS400Monthly rentals income =PS2000Annual rental income =PS24,000. The above example shows why HMO properties are becoming more popular with landlords. The difference between gross rental income and net rental income can be staggering.
You should also consider void periods. An HMO has more void periods than a traditional buy-to-let. HMOs may have higher maintenance costs than traditional buy-to-let models. This is due to shared communal areas like bathrooms, kitchens, and living rooms (where appropriate).