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.
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.
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.
Multilets are similar to HMOs in that they can be rented to tenants who are not related and share common facilities within the property. However, their main difference is that they are unlicensed.
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.
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.
An HMO will not be valued by every lender based on rental income. Instead, the lender will consider the HMO to be a standard home. This could limit the amount that you can borrow, which is counterproductive to the purpose of an HMO mortgage.