There are only a few UK lenders that are willing and able to lend money on large HMO properties. They also understand the risk associated with multiple tenants, which can lead to lower yields. They can set their own HMO definitions and lend against what they want. This is why you need to hire a broker to assist with your application. CMB, a seasoned broker, can package and tailor your application to the lender that will offer you the best terms. This dramatically speeds up application processing.
HMOs are often considered more risky than standard BTLs. HMO tenants can move faster because they aren't related and have a greater chance of voids. They are less committed to the property and can take less responsibility for its maintenance and care. Tenants are also more difficult to identify if there is damage or a problem.
HMOs are an excellent investment. - Higher rental income. As a rule, you could expect to earn roughly twice as much rent. One example is a four-bedroom house that's let to a family for PS800 per months, and four other tenants paying PS400 each. In order to attract tenants you may charge rent including bills, which will make your costs much higher.
What is commonly called an HMO but is in fact a large HMO. This is a property that has five or more tenants and where they share a toilet, bathroom, or kitchen. The building may have a certain number of stories. To operate Large HMOs, Landlords will need to have a HMO license. This licence is valid for five year and can be referred to as Licsenced HMOs.
Your HMO may not require a license. This could make it unsuitable for an HMO mortgage. Therefore, lenders may only offer you a mortgage to buy and let.
HMO mortgage requests take approximately the same amount time to process for lenders as other buy to lease mortgages. Every case is different. Pre-pandemic, it took three to four weeks to get a purchase loan offer. Then, it took four to six additional weeks to complete the transaction.
HMO finance rates The exact rate of interest you pay will depend on your lender and their willingness and ability to consider your personal circumstances. This includes your experience, the number bedrooms and the location.