An HMO mortgage is required if you rent to more than three tenants coming from different households. Because your property is not eligible for a regular mortgage to buy to let, they are only for single-household tenants. You could be sued by lenders if you took a regular mortgage on an HMO home.
What is HMO finance? - An HMO mortgage is a type of mortgage specifically for landlords who want to rent out their property to more than three tenants who aren't from one household.23 Mar 2022
HMO mortgages may only be available to experienced landlords. Lenders will not accept applications from anyone who has been a landlord for two years or more and/or has experience in HMO leasing. Additional requirements may be required by lenders. A HMO mortgage will not be approved for a first-time landlord. Instead, you'll need to rent a property to one household.
HMO properties are more likely to yield higher yields but they can be more difficult to set up. A HMO licence may be required by landlords depending on the HMO's nature.
HMOs often have higher running costs and are more difficult to manage. HMOs will require locks for each room, and there are more detailed safety and health guidelines than regular buy to rent. The setup costs of an HMO are more costly than regular buy to rent.
Location is not a limitation for traditional rental properties. We work with letting agents across the country who have rented properties in nearly every possible location. They've all been rented, whether in the country, city or rural.
HMOs without licenses are not eligible for a mortgage. Lenders might instead offer you a buy to rent mortgage.