hmo mortgages for first time landlords
What type of returns can I expect to receive from an HMO
A House in Multiple Occupation is a property that is rented out to multiple tenants. These tenants may share common facilities like a kitchen or bathroom. An HMO allows landlords the flexibility to rent multiple properties to tenants, rather than renting a single property to one household.
HMO licenses issued by local authorities are valid for five consecutive years if approved. HMO licences must be provided for each property. A landlord might have three HMO properties. Each HMO will require a license.
What type of returns can I expect to receive from an HMO
What is HMO finance? - An HMO mortgage is a type of mortgage specifically for landlords who want to rent out their property to more than three tenants who aren't from one household.23 Mar 2022
HMOs without licenses are not eligible for a mortgage. Lenders might instead offer you a buy to rent mortgage.
HMO mortgage lenders are likely to take your rental income into account. This can help to increase your mortgage limit. HMO mortgages could be offered at tracker or variable rates. LTV rates generally start at 80% LTV. More attractive rates can be offered with higher deposits or lower LTV ratios.
However, this does give unlicensed HMOs a negative connotation. It suggests that they are illegal or "fly-by-night". These smaller HMOs are often referred to by local authorities, lenders, and owners as multi-lets, "HMOS not Required To Be Licensed", or "nonlicensable MMOs".