A HMO mortgage lender will also take into consideration your rental income. This can greatly increase the amount of mortgage available. HMO mortgages may be offered at variable or tracker rates. LTV rates start at 80% LTV. Lower deposits and higher LTV ratios lead to more attractive rates.
A House in Multiple Occupation is a property that is rented out to multiple tenants. These tenants may share common facilities like a kitchen or bathroom. An HMO allows landlords the flexibility to rent multiple properties to tenants, rather than renting a single property to one household.
What is a HMO, exactly? What is a house in multiple occupation? A standard HMO can be run by a landlord with no more than four people. HMOs require different mortgage requirements than buy to let mortgages for entire-property tenancies.
A House in Multiple Occupation is more profitable than traditional buy-to-let. The UK has a high rental demand and landlords can maximize their rental yields by using low-interest rates. The key to maximising your rental income is securing the right mortgage.
HMO lenders may be concerned about the knock-on effects on your ability of to pay the mortgage. These higher risks are reflected in the current interest rates. They currently hover around 3%.
HMO properties generate higher yields but are more difficult to setup. HMO licences might be required depending on what the HMO is.
HMO licences can be obtained from local councils. They are valid for five year if approved. HMO licences can be obtained for each individual property and not just for the landlord. If an HMO requires a licence, for example, a landlord may need to have a licence for each of his three properties.