HMO mortgages are required for landlords who rent out to more than 3 tenants from different households. Your property will not be eligible for a regular buy-to-let mortgage as they are designed only for single-household renters. A regular mortgage would be required on HMO properties. This could lead to lenders taking legal action.
Renting affordable accommodation is still very popular as young buyers cannot afford to buy a house. For information on the strength of tenant demand, visit local listing sites such as Zoopla, Gumtree ...)and Rightmove.
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.
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.
HMOs may be restricted to a specific area. HMOs target specific tenants, such students or single professionals. HMOs are typically located in urban centers or other areas that have easy access to public transport and other amenities. It would be unwise to locate an HMO somewhere in the middle if it was in a rural setting.
There are also void period to be aware of. Traditional buy to let has fewer void period, while HMOs have longer void periods. HMOs can also have higher maintenance fees than traditional buy to rent models. This is due to the shared communal areas, such as bathrooms and kitchens, or living rooms (where applicable).
It is not a good idea to approach lenders for the purpose of getting a mortgage. You won't be able to fully understand each lender's requirements. Specialists can help you find the right lender and get you the best rates. To get started, you can either make an inquiry or ask our experts questions about your mortgage.