Are HMO mortgages different? - HMO mortgage rates tend to be higher than standard buy to let mortgage products. This is because the HMO mortgage market is less competitive in terms of the number of lenders. Lenders that are prepared to lend on an HMO will charge slightly higher fees and rates for a mortgage.
Many HMOs come fully furnished. This can also be a cost. Traditional properties that are available for rent are usually unfurnished.
This can give the term "unlicensed HMOS" a negative meaning, suggesting they are illegal or fleecy. Owners, local authorities and lenders call these smaller HMOs multi-lets or "HMOS Not Requiredly To Be Licensed", also known as "nonlicensable HMOs".
HMO landlords will often pay utility bills if the property isn't converted to flats and has separate title deeds.
HMO mortgage lenders will also need to know details about the property. Some HMO mortgage lenders may have restrictions about how the property is built. It is important to get a lender to approve renovations before you sell the property. A mortgage broker can assist you with navigating these different restrictions and conditions so you can find a willing lender.
Before you invest, get in touch with the HMO licensing officers at your local authority. Before you make any investment, ensure that you know the requirements of your area. These could include minimum dimensions for kitchen and living space, kitchen equipment, bathroom facilities, number of toilets, showers, firewood, and others.
HMO mortgages tend to be restricted to experienced landlords. For example, some lenders won't consider applications from someone who has been a landlord for more than 2 years and/or has experience in HMO-letting. Lenders might have additional requirements. It is possible to apply for an HMO mortgage but it may be difficult to obtain approval if you are not a landlord.