An HMO is typical amongst students and other separate groups of tenants, often called a house share. A household is generally considered to be tenants who are related or connected through relationships and do not pay for rent individually.
HMO mortgages allow landlords to purchase a property to be used as a ‘house of multiple occupation’ (HMO). This type of accommodation is becoming increasingly popular amongst landlords as they often benefit from a higher rental yield. Its popularity is also growing with tenants as it allows them to have some personal space but can be much cheaper than renting a whole property. Tenants in a HMO are not considered to be of the same household and are charged individually for their rent.
An HMO is typical amongst students and other separate groups of tenants, often called a house share. A household is generally considered to be tenants who are related or connected through relationships and do not pay for rent individually.
A standard buy-to-let mortgage will not allow for multiple occupancies so if you are planning on operating a HMO and you plan to use a mortgage to complete the purchase, you will need a specific HMO mortgage.
You may also need a HMO license if you are purchasing a large property or if there are shared facilities. You should check with the local council whether a license is required.
HMO mortgage lenders will want to make sure that the landlord will be able to afford the repayments and may require you to have some HMO landlord experience, and knowledge of the local market. If the property is in an urban location or near a university, then it is likely to be easy enough to rent out consistently.
The information that you need to provide to a HMO mortgage lender is fairly similar to when you are applying for a buy-to-let or standard residential mortgage, except you will also have to show how you expect to rent out the rooms.
As with standard mortgages, you will need to prove your income, have a decent credit history, and have a significant deposit saved. These factors along with your age and the criteria previously mentioned will be considered. There may be far fewer HMO mortgage lenders out there than residential lenders, however, there are deals to be found, you just need guidance of where to look.
Active Mortgages has a team of HMO mortgage advisers that are experts at working with HMO landlords, securing deals, and making their HMO dreams a reality. Whether it is your first or your tenth property, Active Mortgages’ HMO mortgage team will guide you through the process from application to completion.
Our HMO expert mortgage advisers work with the UK’s HMO landlords to find them top mortgage deals, and it is easy to book a consultation with a specialist. We will work with you to find out what you can afford, what type of rental property you are looking to buy and more about your circumstances, so we are primed to find a mortgage deal that a hard-working landlord deserves.
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