Raising Capital From A 24-Bed HMO To Purchase A 28-Bed HMO
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The latest industry news and guides from Active Mortgages.
Our client, an experienced portfolio landlord, came to us looking to expand their HMO portfolio. They owned a 24-bed HMO outright and were in the process of purchasing a new 28-bed HMO.
Most mainstream lenders cap lending at 10-bedroom HMOs, meaning both properties were outside standard lending criteria. The client needed specialist lenders – and fast – due to agent pressure to move quickly on the purchase. The structure had to balance short-term flexibility with long-term value, while navigating complex commercial-style underwriting.
We recommended a smart two-part mortgage strategy:
✔ Port the client’s existing mortgage (£700,000) to the new property – keeping the 1.69% rate and avoiding the ERC.
✔ Top up the borrowing with a new 2-year tracker product at 4.89% to reach the full 75% LTV required.
The tracker product was selected strategically – it had low early repayment charges, giving the client flexibility. When their current fixed deal ends, they’ll be in a strong position to combine the full mortgage into one product.
✔ £500,000 raised from an unencumbered HMO.
✔ £1,000,000 mortgage secured for the new 28-bed HMO.
✔ Strategic use of a 2-year fixed and 5-year fixed to balance flexibility and stability.
✔ Case moved quickly to meet the agent’s timeline.
✔ Accessed the specialist HMO market – bypassing the 10-bed cap most lenders impose.
✔ Large HMOs require specialist lending – don’t assume all lenders will support above 10 bedrooms.
✔ When planning to sell or refinance in the near future, short-term products provide essential flexibility.
✔ Working with a broker who knows the specialist market and has direct lender contacts can make or break a deal on time-sensitive transactions.
Book a call with one of our team to talk about your requirements.
