HMO mortgage rates tend be higher than buy to let mortgages. HMO mortgage rates tend to be higher than standard buy-to-let mortgage products due to the lower competition among lenders. HMO-friendly lenders will typically charge slightly higher mortgage rates and fees than those who are not willing to lend on the HMO. An HMO should have sufficient income to cover the mortgage, utility bills, and maintenance.
HMOs are more risky than regular BTLs. HMO tenants tend to move more quickly because they are not related, which increases the chance of voids and unpaid rents. They may be less committed to the property, which can lead them to take less responsibility for its upkeep and care. It can be harder to spot any damage or problems with a tenant.
While every case is unique, HMO mortgage applications usually take about the same time as other buy to rent mortgage applications. Pre-pandemic we would expect a mortgage offer to take between three and four weeks, followed by four to six more weeks to complete.
HMO mortgages are offered by 27 lenders to individuals and 23 to limited companies at the time of writing. HMO mortgage rates are more expensive than buy-to-let mortgages because they are a specialty property type. The increase in competition has made rates more affordable for landlords. They start at 1.64% for individuals and 2.69% for limited companies.
HMO properties could be for sale, offering attractive "100%+ gross yields". You wouldn't mind a piece of that! However, HMOs can have very low gross yields. These costs include council tax, insurance, utility bills and management costs. Rent arrears are also included. An HMO might yield a return of 8-10% per year, while a single-tenancy buy to let would earn 4-5%.
HMO Finance rates? The lender and their willingness to consider your unique circumstances will dictate the interest rate that you will be charged.
HMOs are a popular choice for individual tenants because they are usually affordable and fully furnished with bills. This is particularly true for overseas workers, students and contractors who are working visas. HMOs offer the convenience of moving in quickly and at little expense.