Mortgages for Houses in Multiple Occupation
Our new and improved range of mortgages for Houses in Multiple Occupation (HMO) offers brokers even more lending options for clients in the buy to let market.
For landlords seeking a bigger return
As buy to lets have been hit by stamp duty and interest tax relief changes, landlords are looking elsewhere for higher returns. Here’s why we think demand for HMO is set to grow:
- HMO properties typically achieve the highest rental yields at 7.2% on average.*
- That’s 1% above the average buy to let yield.*
Tailor made Small and Large HMO mortgages
We use specialist valuers and underwriters to provide a service that’s tailor-made for both Small HMO properties (housing up to and including 6 occupants) and Large HMO properties (housing more than 6 occupants).
- Rental value will be based on 100% occupancy of lettable rooms for all HMO properties.
- Large HMO valuations are commercial and yield based.
- Small HMO valuations are calculated in a similar way to standard buy to lets.
New improved criteria
To widen the appeal of HMO mortgages, we’ve improved our qualification criteria:
- LTV is now 75% for greater purchasing power.
- The maximum loan value is now £750,000 as HMOs tend to be more expensive.
- Minimum ICR on HMO properties is now 165% to account for higher maintenance, running and management costs.
- The upper limit of bedrooms is now 8 to help landlords access a wider range of HMO properties.
Choosing a Large or Small HMO product
Before we can underwrite your HMO application, we’ll need to carry out the appropriate valuation. With this in mind, it’s vital you base your choice of a Small or Large HMO product on the correct criteria. If you have any doubts, please don’t hesitate to contact your BDM.
Let’s get started
*Source: BDRC Landlords Panel report (Q3 2018)