What is a HMO?
Houses of multiple occupancy are rental properties which have at least three non-related tenants living in it. These tenants will share facilities together, such as kitchens and bathrooms.
The key distinguishing factor of these properties to standard buy to lets is that multiple households can live there at one time.
One of the most common examples is student properties, where you have multiple people from different households all living together in a shared accommodation unit.
Properties of this type are becoming more popular, as the returns can often be much higher than traditional buy to lets.
Our experts have a variety of HMO mortgages available that can help you buy or remortgage these properties, allowing you to get your plans underway and start earning some extra income.
What is a HMO mortgage?
HMO mortgages are a type of borrowing solution, which helps you to purchase or remortgage a house of multiple occupancy.
These solutions are therefore designed to assist landlords, as they are typically used for renting out to a selected group of unrelated people.
Our team are experts at handling HMO purchases and HMO remortgages, so we have the right products and skills to assist with your enquiry.
Solutions range from £10,000 up to £5m, with both capital repayment and interest only options available.
If you’d like to discuss what could be achievable for you, either call 0800 032 3535 or email us.
Do you need HMO housing experience to qualify for a mortgage?
Having experience can be beneficial when it comes to applying for a mortgage on these properties, as it indicates that you may be a more reliable borrower. Due to this, it may be easier to get accepted and you may qualify for lower interest rates.
However, experience is not necessary. It can definitely help to support your application and make the process less complicated, but there are still solutions available if you have little or no experience at all in this field.
Even if you’re a first time landlord who doesn’t have any buy to let experience at all, there are still options open to you.
Our team has helped many customers in this exact situation before, so we have the necessary experience to support you.
Is it a good idea?
Investing in a HMO rental can be a lucrative and beneficial opportunity for landlords. Some of the benefits may include:
- Higher returns – Rental returns for these properties can be much higher than traditional buy to lets.
- Lower void periods – It’s unlikely that all your tenants would move out at the exact same time (unless it’s a student property investment, where there may be movement around term times). Therefore, there will be less periods when the property is completely vacant.
- Income protection–Even if one tenant misses their rent payments, you will still be receiving income from the remaining household members. In comparison, with a standard buy to let property if your tenant misses rent payments, you will receive no income at all.
Although these are great benefits, it is also important to consider the potential downsides to these investments. Some of these disadvantages may include:
- Increased regulation – There are more rules and legislation around these properties, which means you may need to engage in more planning to factor in these different requirements.
- Higher upfront costs – As these properties can be much larger in size there may be more work required to get them up to scratch, particularly if it is being let fully furnished. Therefore, you may have higher upfront costs.
- Stricter criteria – The qualifying criteria for these products can be stricter, so it may be harder for you to get approved.
What’s the difference between a HMO and a MUFB?
As previously highlighted, HMO housing is a type of shared accommodation that consists of tenants who are not related.
Multi-unit freehold blocks however are properties that are split into self-contained living spaces (such as apartments, flats and studios), but they are held under one title.
They differ from HMOs in that the facilities are not shared between different tenants, instead they are only used by the person or household living there.
An example of a MUFB could be a house which has been converted into flats. All of the tenants will have their own space entirely to themselves and they will not need to leave their accommodation to access certain facilities.
If you’re looking into investing in one of these properties you will need to look at options for a multi-unit freehold block mortgage.
Our experts offer mortgage products for both property types, so we are likely to have a solution available that meets your plans.
How do you apply for a HMO mortgage?
Applying for this solution is straight-forward, it all starts with a single call or email.