Video Presentation: HMO Mortgages Explained

This video presentation will leave you fully informed about all the nuances of HMO Mortgage Lenders and their requirements. Understand what’s available on the high street and what limitations that might impose on your lending. We’ll talk you through some of the alternatives and how that can both save you money and allow you to borrow at higher loan to values than many other brokers and lenders can arrange.

Transcript

Today We Will Cover

  • What is an HMO?
  • Why do they require an HMO Mortgage?
  • Who offers HMO Mortgages
  • Important Considerations

What is an HMO?

A property will be defined as a house in multiple occupation (HMO) if it is:

-a shared house that is occupied by more than one household and who share one or more amenities (i.e. w/c, wash hand basin, shower, bath, cooking facilities)

-a house divided into bed sits, occupied by people who do not form one household and who share one or more amenities
an individual flat that is occupied by more than one household and who share one or more amenities

-a building of self contained flats, that do not meet as a minimum standard the requirements of the 1991 Building Regulation, and at least one third of the flats are privately rented.

Why are HMO Mortgages Required?

It is widely recognised that many HMO residents are among the poorest and most vulnerable in society.
The HMOs that they live in can be particularly difficult to manage and can present a greater risk to occupants than houses occupied by single households. Because of the risks associated with HMOs, licensing for this sector has been introduced.

Source: Charnwood Council

Who Offers HMO Mortgages?

The Mortgage Works offers them but with as much as a 3.5% fee, just 65% LTV and significantly more rental cover than for regular buy to let. Leeds building society are an HMO Mortgage Lender but only the smallest (up to 5 room) HMO’s making it unsuitable for professional landlords.

Important Considerations

Don’t believe anybody who tells you 70-75% is impossible on HMO’s – our specialist lending panel can advance that much.

Don’t pay a 3.5% fee just because you are investing in an HMO – better deals are available.

Only specialist commercial and buy to let brokers have direct access to some lenders – don’t talk to a residential broker about your specialist needs.