hmo finance gov
HMOs are not valued by all lenders based only on rental income. Lenders will instead value the HMO as a standard house. This can limit your ability to borrow money, which can defeat the purpose behind an HMO mortgage.
What is the cost of obtaining a HMO licensure? The cost of obtaining an HMO permit will vary depending upon where you are located. Some councils may charge by the number or bedrooms of a property. Others will charge an additional fee, which can be anywhere from a few hundred to several thousand. Lenders will be aware of the length of time it takes to issue a licence and may accept proof during the underwriting process of a mortgage. However, it's important to plan ahead so you don't get stuck at this point.
HMOs don't always produce three times the rental income from a typical buy to let. Utility bills are typically paid by landlords. As you can see, even with a PS2k-3k per year utility bill there is still a lot of rental income.
HMOs are not valued by all lenders based only on rental income. Lenders will instead value the HMO as a standard house. This can limit your ability to borrow money, which can defeat the purpose behind an HMO mortgage.
An HMO is a better option for landlords than letting to families. You will be able charge per room individually and thus charge more overall. To do this, you will need a specialist mortgage.
Before you make any investment, speak to the HMO licensing officer at your local authority. Before you invest, make sure to check the local definitions and licensing requirements. These may include minimum kitchen size, living space, kitchen facilities and number of toilets.
HMO mortgages were offered by 27 lenders, 23 to Limited Companies, and 23 to Individual applicants at the time. HMO mortgage rates can be more expensive than traditional buy to lets because they are a specialist type of property. This sector is more competitive than ever thanks to the increased competition. Rates are now starting at 1.64% and going up to 2.69% in Limited Companies.
HMO mortgages will be required for rents to more then three tenants. The reason is that your property wonÕt be eligible for a regular Buy to Let mortgage. They are only intended for single-household tenants. If you were to apply for a regular mortgage to an HMO property, it would be a violation of the mortgage terms. Lenders could take legal action.