The property market in the UK is an extremely healthy position, with the private rental market booming. More people than ever are entering into this market and looking for good quality rental accommodation.
That being said, it’s not just a surge in rental demand that’s driving the property boom, but also a distinct shortage of supply that’s pushing up demand and prices with it, which in turn is driving up property yields. Yields, in simple terms, is the measurement used to show how much rent you’re able to command, per year, as a percentage of the value of the property.
All of these factors have created a fertile ground for landlords and property investors, and has meant that there’s now much more demand for specialist investor lending and mortgages as a result. With a desperate need for property stock comes a lot more demand for property that can be converted as well as land.
As a result of all of this, HMO properties have become much more popular in recent times, especially in city and urban centres. HMO mortgage, and large HMO mortgage applications have exploded along with these trends, showing that many more property investors and landlords are now looking at this asset class as a great way to earn income.
Because we’ve seen a big increase in enquiries about finance such as a large HMO mortgage, we’ve put together a short guide.
What is a large HMO mortgage?
A normal HMO mortgage is where you borrow money over the long term to fund the purchase of a property that will have multiple occupants. A property is considered a House in Multiple Occupation (HMO) if at least 3 tenants live there, forming more than 1 household.
A large HMO mortgage would cover a larger HMO property which would be considered, under law, as a property with 5 tenants or more forming more than 1 household.
For most HMO mortgage providers they have a lending cap of between £500,000 and £1 million, so that would restrict larger HMO landlords from applying, however, there are specialist lenders on our panel who are more than willing to consider larger HMO mortgages for our clients.
So, for the purposes of this definition, consider a larger HMO mortgage as one that is for a property for 5 or more tenants with a value of £1 million and above.
What is a large HMO?
A large HMO, as opposed to small or regular HMO, would be considered as such if there are 5 or more tenants living within the same property forming one household.
A small, or regular HMO is considered as such when 3 tenants form one household.
Why choose us as your HMO mortgage broker?
Hank Zarihs Associates are specialist and highly-experienced intermediaries in the development finance and investment funding industry. We work with a tried and tested panel of specialist funders with an excellent track record in the market, who can offer high leverage and gearing.
As an HMO landlord, or larger property investor, you need a broker and a provider than actually understands the market and what it entails.
Whilst it’s true that the profits and returns can be very good, it’s also true that it’s added stress and much harder work to maintain and finance such a property.
We’ve been in this industry for years and our brokers and lenders understand what it is you need and what’s required to succeed in this asset class. Over the years we’ve carefully cultivated close relationships with some of the best and most experienced lenders on the market.
We’re able to talk you all the way through the process, and because we’ve been working with our panel for so long we’re able to get exclusive rates and preferred partnerships which means we can get our clients market beating rates they won’t find anywhere else.
Apply for a HMO Mortgage
Ready to apply for HMO Mortgage? We work with a tried and trusted panel of lenders who are actively lending. The deals that we can recommend to our clients are updated daily, so you have complete peace of mind that you are receiving details of the best possible HMO Mortgage products on the market in real-time.
HMO mortgage calculator
To give you a better idea of the costs may be, and what an HMO mortgage may entail, we’ve put together a calculator that you’re able to change around with the interest, amount, term and Loan To Value (LTV). This is intended to be a rough guide and provides typical rates and terms, so if you’re looking for something more specific it’s a good idea to get in touch with one of our brokers directly.
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We work with specialist HMO lenders
If you’re looking to buy or get a mortgage for a large HMO, then it’s important that you work with lenders and providers who understand the market and what it takes to make this successful.
As opposed to a traditional residential mortgage, our lenders don’t just look at your personal credit rating. They like to take a look at the property itself, your experience, and the viability of the project.
Our panel of lenders are all hugely experienced in this field and with HMO mortgages in general, and we have access to lenders that you wouldn’t normally be able to deal with through traditional methods. We work with, for example, pension funds, foreign investors and foreign banks who have an appetite for this type of exposure in the UK with HMO mortgages.
All of our HMO mortgage lenders understand the UK market and judge each application on its own merit.
Can I get an HMO mortgage if I have bad credit?
Yes, you can, although it may mean a slightly longer application process. Of course, each case will be different and will have different requirements, however, your personal credit rating isn’t the be all and end all of any HMO mortgage application.
Speak to one of our brokers to run through what type of bad credit you’ve got, whether that be defaults or CCJ’s, and they can talk you through your options. It may be the case that you’re asked for a slightly higher deposit, or perhaps to put some security forward, or it may even be that the property is a fantastic investment, so it won’t matter.
The truth is, we won’t know until we speak to you and put you forward to our lenders.
Things to consider
First and foremost, it should be said that a large HMO is more work than other types of property. The maintenance and management can be stressful and expensive at times, although the financial reward is what drives many towards these types of assets.
Secondly, these types of bigger HMO mortgages don’t take any longer than normal applications, as long as the legal paperwork and valuation aren’t delayed, of course.
Finally, experience is quite key when lenders are considering your application, so if you’re completely new to the market then it may well be worth considering whether it may be easier starting with a smaller project first.
Who can apply?
Realistically, anybody can apply, but again it’s worth mentioning that experience can be a key factor with these types of HMO mortgages.
However, individuals, partnerships, Limited companies, and Special Purpose Vehicles can all apply for these types of HMO mortgages.
Can I apply if I’m overseas?
Yes, you can. Expats and overseas applicants can apply for these HMO mortgages, and anybody looking to invest in these types of properties.
The application process may be a little lengthier in that you may be asked to prove your income, resident status, etc, however that doesn’t exclude you as a non-resident.
Speak to our brokers today about large HMO mortgages
We’ve got the experience, the team, and the lending panel to make your project a success. The application process is really simple, and our friendly and helpful brokers are there for you every step of the way. If you’re looking for some more information get in touch today.
Please refer to below mentioned few testimonials from our loyal customers