Mortgages for homes with multiple occupants
If you require a mortgage or remortgage for a HMO (House of multiple occupancy) then our buy to let mortgage experts can help. They have access to the whole of market and will search, compare and arrange your HMO buy to let mortgage.
How to find Mortgages for HMOs & Multi lets
Why lenders are reluctant to supply HMO mortgagesLetting out to more than one family can make it hard to find the right sort of mortgage. Finding mortgages for single homes with multiple occupancies (known as HMOs), or for multiple units where apartments are let in a single property, may mean talking to specialist HMO mortgage lenders, because ordinary lenders may not be so keen to lend to these types of properties. There are several reasons why there are fewer mortgage lenders who are willing to allow mortgages for HMOs or Multiple Lets, and also reasons why you should still be able to find potential lenders.
HMO landlords often have to struggle to find a new mortgage, and there are a number of reasons for this. Firstly, HMO homes tend to require not only investment in the property itself, but also in conversion into apartments rather than a single family home. This will increase the amount of money that the landlord requires in order to create the HMO. With multi-let properties, the risk of multiple tenants occupying the same property means that there is still a relatively small number of lenders willing to allow this kind of mortgage when compared to the normal range of buy to let mortgages.
There is also another another potential issue, which is that lenders always consider the type of property which will be bought with the mortgage, since they may have to auction the property if it is repossessed. HMOs are generally not appealing prospects to mainstream mortgage lenders because they can be harder to sell and may not recover the full cost of the mortgage in the event of a repossession or loan default. Most buy to let lenders prefer to promote their mortgage ranges with new borrowers and with first-time landlords, and are not so keen on professional landlords renting out to a group of tenants, in non-standard rentals such as HMOs.
Can I still get a reasonable mortgage for my HMO?
What can I expect to pay? Although most lenders are likely to refuse landlords who want to take out mortgages for HMOs or Multiple Lets, in fact the number of lenders allowing loans for these types of mortgages has increased in recent years as HMOs have been more popular with certain types of BTL investors and those who rent out rooms to students. This means that even though there are a limited number of mortgages available, it is still possible to find a range of different options available to landlords which can help to fund the buying and conversions of multiple occupancy homes and property, there are still some types of mortgage available to those interested in buying an HMO or multiple lets.
Anyone who takes out a mortgage has to consider the consequences of borrowing and particularly the issues relating to repayments of the mortgage. Some lenders may require a higher deposit on the loan, including deposits of 35% and over, although there are some HMO lenders offering an 85% mortgage on multiple lets. Other companies will ask for a 4.84% repayment for smaller HMOs, and discounted percentage rates for those with more rooms, although the cost of the original mortgage will probably be higher, meaning that you could end paying the same interest regardless of discounts.