House Of Multiple Occupancy Mortgage

Rapid HMO Mortgages

For over 10 years, buy to let landlords and HMO landlords have partnered with Rapid to find the mortgages they need offering the most competitive rates and the most favourable borrowing terms.  

To speak with one of the UK’s leading HMO mortgage brokers, please call us on 0208 150 7528 or email us at info@rapidbridging.com.

Looking for help finding a mortgage for multiple occupancy house? Get in touch with our expert team today.

What is an HMO mortgage?

Like a buy to let mortgage, an HMO mortgage is a secured loan on a property you intend to rent to residential tenants but which you do not intend to live in yourself.

The definition of what HMO rental properties are varies from lender to lender. 

Many lenders consider a HMO as a property capable of accommodating five or more households. These lenders would not offer you a mortgage on a standard HMO but you could apply to them for a standard buy to let mortgage instead.

Get in touch with us and share as much information as you can with our team about your HMO – we’ll search both the HMO mortgage market and the buy-to-let mortgage market to find the funding you need.

How Do I Repay a HMO Mortgage?

As with buy-to-let mortgages, most HMO mortgages are interest-only mortgages.

With each monthly mortgage payment, you don’t repay the “capital” – the amount of money you borrowed – you just repay interest on the capital. Interest is the charge you pay to your lender for advanced money.

The advantage of interest-only HMO mortgages is that you pay a lot less every month than you would if you were also repaying the capital. This presents you with the opportunity of making additional profit from the monthly rental income you collect from your tenants.

The disadvantage is that, if your mortgage goes to term (normally 25-35 years), you’ll be expected to pay the lender the original purchase price of the property in full. If you can’t, your property will be repossessed.

However, this rarely happens as most landlords hold onto their properties for 11.5 years before selling them. By doing this, they can repay the capital to the lender from the proceeds as well as making profit from any increase in the value of the property.

Requirements For HMO Mortgage Application

From first-time investors to portfolio landlords, we’ll ask you a number of different questions.

Your answers will help us determine which HMO mortgage lenders to present your funding request to.

The types of questions we’ll ask includes:

• Are you a first time landlord?
• How many properties do you own which you rent out?
• Would you be prepared to fix your mortgage for 5 years to potentially increase your borrowing?
• Does the property have an HMO Licence?
• How many lettable rooms does the property have?
• How much monthly rental income do you get or expect to get?
• Will or is the property held in a limited company?
• Do you have an SPV in place?
• How much personal income do you earn?

Who Are The Lenders For HMO Mortgages

There are a handful of lenders specialising in offering borrowers new HMO mortgages including but not limited to LendInvest, Kensington Mortgages, The Mortgage Lender, Precise Mortgages, Landbay, Kent Reliance, Aldermore, Paragon Bank, and Foundation Home Loans.

By using an experienced HMO mortgage broker like Rapid Bridging, you save time and money because we only approach the lenders on our panel most likely to approve your request for funding – in some cases, buy to let mortgages are more suitable and offer better value than HMO mortgages.

Once we’ve contacted the underwriting team at each of the lenders we select to seek pre-approval on your deal, we present them with the particulars of your deal correctly packaged to ensure swift processing.

In most cases, we’re able to deliver funding to you in as little as 15 working days and, on many occasions, within 10 working days.

Can You Get A House Of Multiple Occupancy Mortgage iF You’re An LTD. Company?

If you wish to purchase HMO property through a limited company or SPV, we can arrange this for you.

You should consult with your accountant or solicitor prior to buying an HMO through a limited company or before transferring HMO properties you own personally into your limited company.

Second charge, secured loans on HMO property

If you want to release funds from equity accrued over time in an HMO property, you can do so by taking out either a secured loan or a larger mortgage with a new provider.

To work out how much you could borrow with a secured loan, subtract the current outstanding mortgage amount from the likely open value of the property – this is your “equity”.

Many HMO landlords use the funds raised from a secured loan or from remortgaging to pay for the deposit on another property, for debt consolidation purposes, or to pay for home improvements on their current property.

To find out more about taking out a secured loan on the equity in your HMO property or a re-mortgage, please call us on 0208 150 7528 or email us at info@rapidbridging.com.