HMO Mortgage Broker
The HMO (Houses in Multiple Occupation) sector is a growing market and is increasingly becoming more complex when it comes to lending solutions. Finding a mortgage broker who can take you through the different finance options of this specialist property type is essential - call our mortgage HMO team on 0117 403 4474 or complete our callback request form.
We can provide:
- A personal broker service
- Access to a range of competitive finance products short and longer term
- Solutions for individuals, LLPs and limited companies
- Extensive inhouse knowledge
Licensed and Unlicensed HMOs
The type of HMO mortgage that you require may depend on the property itself.
An HMO is defined as a property that has three or more tenants that share common areas such as a kitchen and a bathroom.
If you have an HMO with five or more tenants that share a bathroom or kitchen, then you have what is known as a “large HMO”. It should be noted that any landlords with large HMOs must apply to their local council to obtain a licence.
The demand for alternative mortgage finance has increased because of the recent changes in the buy to let mortgage market regulations.
The Prudential Regulation Authority’s Effect on HMOs
The Prudential Regulation Authority (PRA) introduced a number of regulations that changed the way traditional lenders consider buy to let applications.
Firstly, the PRA’s regulations forced lenders to apply a stricter income stress test than before. The lenders’ income stress test will scrutinise landlords’ income to assess their affordability. In order to satisfy the income stress test, landlords have to show they can afford mortgage repayments in the event that the interest increases to 5.5%.
Secondly, lenders will require landlords to have a rental coverage ratio of up to 170% for HMO properties. This means that landlords need to ensure they provide a valuation from a professional surveyor that states the landlord’s property will provide 170% of the mortgage repayments.
Finally, lenders will now review a landlord’s property portfolio to ensure all their properties are profitable. Under the new regulations a landlord can no longer spread equity across their portfolio, therefore if one property does not provide a positive return then the landlord’s application will be unsuccessful.
The traditional lenders’ new criteria may make it more difficult for landlords with HMO properties to secure the funding they need.
If you are a landlord who needs a mortgage for an HMO property and do not meet the strict requirements of a traditional lender then it is still possible to secure the finance you need. A good mortgage broker will be able to identify the best deal for you and might be able to access mortgage deals that are not available to the general public.
Why Choose Fair Mortgages for an HMO Mortgage
As a mortgage broker, we specialise in arranging HMO buy to let mortgages for individuals.
Whether you need finance for a licensed or unlicensed House in Multiple Occupation, we have the experience, understanding and knowledge of the financial services industry to find the best financial solution for your set of circumstances.
We regularly work with private banks, specialist lenders, family offices and wealth managers who are willing to provide HMO mortgages to applicants that may not necessarily meet traditional lenders' criteria. Call our mortgage HMO team on 0117 403 4474 or complete our callback request form.