Buy to Let Mortgage Multiple Occupancy
Special features of what we offer include:
Whole of market service - We work with most UK lenders
Great rates! - Access to leading market mortgage rates
Exclusive deals - Access to exclusive loan deals not available on the high street
Fast turnaround - Speak to us today if you need to move quickly. We can access bridging loans and short term finance
Raising finance? - Looking to raise additional finance on top of your existing buy to let mortgage? - we have access to a range of finance solutions
What is a Multiple Occupancy Property?
A buy to let mortgage for a multiple occupancy property is tailored for properties that are rented out to at least three people, who are not from the same household but share areas of the house such as the kitchen or bathroom.
You can convert a standard buy to let to a multiple occupancy property with relative ease, providing there are up to four tenants. If you are letting to five people or more who are not from one household, then the property is classified as a ‘large HMO’ (house in multiple occupation) and you will need to gain a licence.
You can obtain a licence for a large HMO by submitting an application to the local council. The cost of an application varies from council to council.
The types and availability of buy to let finance is likely to differ depending on whether or not your property needs a licence.
Buy to Let Mortgages for Non-Licensed Multiple Occupancy Properties
Sourcing a buy to let mortgage for a multiple occupancy property may be a more straightforward process than an HMO that requires a licence.
Although accessing finance may be more straightforward, you may still benefit from contacting a mortgage broker, who can help you find the best rates and best buy to let mortgage solutions for your personal circumstances.
Buy to Let Mortgages for Licensed Multiple Occupancy Properties
As a general rule, obtaining finance for a licensed multiple occupancy property may be more difficult and costly, as not all lenders choose to lend money within this area.
The lenders who are prepared to provide buy to let mortgages for licensed multiple occupancy properties usually like to see experience and a proven track record within this industry when considering your application. However, there are still a good number of lenders who do not see this as a barrier to finance. To access the best financial solution for your buy to let, it may be the best course of action to contact a mortgage broker.
If you are considering letting a multiple occupancy property, you should bear in mind the latest tax rules.
Landlords will no longer be able to deduct all the financial costs from their buy to let properties when calculating their profits in a self-assessment for the financial year. The new tax rules are not applicable to limited companies and therefore the financial costs of limited companies are not affected. This has led to more landlords looking to set up limited companies to avoid the effect of the new tax rules.
However, if you wish to set up your own limited company for your buy to let property, you should familiarise yourself with the associated costs before doing so.
Also, it may be beneficial to be aware of the changes to how the buy to let mortgage market is regulated. These changes may make it more difficult for landlords to secure buy to let mortgages for multiple occupancy properties.
Lenders will implement a stricter affordability stress test. This will require landlords to show lenders that they can afford the mortgage repayments in the event that interest rates hit 5.5%.
To ensure landlords have an additional cushion for their mortgage payments, lenders will require landlords with multiple occupancy properties to have a rental coverage ratio of at least 170%.
Under the new regulations, landlords can no longer spread equity across their entire portfolio. Lenders will not look at buy to let properties in isolation and instead they will review a landlord’s property portfolio as a whole. If a landlord has one or more properties that are not profitable, then a lender will refuse to provide the finance required.
We work with the majority of UK lenders, and have access to exclusive buy to let mortgage deals for HMOs that are not available on the high street, which means we can make that process of finding a HMO buy to let mortgage that bit easier.
To find more information about buy to let mortgages for HMOs, why not call us today on 0117 403 4474, or fill in our online contact form to request a call-back for a free initial consultation with one of our advisers.