HMO
Mortgages
Looking to purchase, refinance or expand a house in multiple occupation? Our property finance team can help you explore HMO mortgage options tailored to your property, rental income and investment plans.
This will not effect your credit score
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What is an HMO mortgage?
An HMO mortgage is a specialist buy-to-let mortgage for a property rented to multiple tenants who form more than one household and share facilities such as a kitchen or bathroom. It can be used to purchase an existing HMO or refinance a property you already own.
HMO lending can involve more than a standard buy-to-let application. A lender may look at the number of tenants or rooms, rental income, the property’s condition, your experience as a landlord and any relevant licensing or planning requirements. We’ll help you present the property and your plans to lenders whose criteria fit the case.
A property can generally be an HMO with three or more tenants from more than one household; it does not have to house five people. The five-person threshold is relevant to mandatory licensing in England, while smaller HMOs may also need a licence locally.
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What are the advantages of a buy-to-let mortgage?
“From the property layout to its rental income and licensing position, the details matter. We’ll help you find a lender whose criteria fit your HMO plans.”
Rex Dunn (MRICS) - Property Finance Broker
1. Finance a specialist property
Access lenders that consider houses in multiple occupation and their particular lending requirements.
2. Use rental income in the assessment
Lenders can review the expected or established income from the property when assessing affordability, subject to their criteria.
3. Refinance an existing HMO
Review your current mortgage terms or explore whether refinancing could release equity for another project.
4. Plan your portfolio’s next step
Find a mortgage structure that fits your ownership plans, cash flow and longer-term investment goals.
How we can help you
What can an HMO mortgage be used for?
Whether you’re buying an established house share or reviewing finance on a property you already let, we’ll help you explore the available route.
Application Process
Your HMO Mortgage, Step by Step
Tell us about the property and what you want to achieve. We’ll explain your options, the information lenders need and what happens at each stage.
Tell us about your plans
Let us know whether you’re buying, refinancing or expanding your portfolio, along with the property’s location, room count and rental position.
Review the property and documents
We’ll discuss your ownership structure, landlord experience, rental income and any relevant tenancy, licensing or planning information.
Compare suitable lenders
We’ll look for lenders whose HMO criteria match the property and present the available terms and costs for you to consider.
Valuation and lender assessment
The lender will assess your application and arrange a property valuation where required. Further information may be requested before an offer is made.
Complete your mortgage
Once the offer and legal work are complete, the mortgage funds can be used for the agreed purchase or refinance.
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FAQ
Your most common questions answered...
Got questions? We've got the answers... See below the our most commonly asked questions! If you still need help then be sure to get in contact and we'll be happy to help.
What is the difference between an HMO mortgage and a standard buy-to-let mortgage?
Both are used for rental property, but an HMO mortgage is intended for a property let to multiple households sharing facilities. HMO lenders may apply different criteria to occupancy, room numbers, rental income, landlord experience and property requirements.
How much deposit do I need for an HMO mortgage?
The deposit depends on the lender, the property and the application. Rather than assuming a set percentage, we’ll review the available loan-to-value options for your circumstances and explain the deposit and other costs involved.
Can I get an HMO mortgage as a first-time landlord?
Potentially. Some lenders consider first-time landlords, while others require previous letting experience, particularly for more complex HMOs. The property and your wider financial position also matter.
Can I refinance an existing HMO?
Yes, refinancing may be possible if the property and application meet a lender’s criteria. You might refinance to review your current terms or explore releasing equity, subject to the property valuation and affordability assessment.
Do I need an HMO licence before applying?
Your licensing position is important to establish early. In England, an HMO occupied by five or more people from more than one household generally requires a mandatory licence. Local councils may also license smaller HMOs. Check the requirements for the property’s location and discuss the position with your broker before applying.
Will I need planning permission to turn a property into an HMO?
That depends on the property, the intended number of occupiers and local planning controls. In some areas an Article 4 direction removes the usual permitted development route for a change to a small HMO. Larger HMOs can have different planning requirements. Check with the local planning authority before committing to a conversion.
How do lenders value an HMO?
Valuation approaches can differ between lenders and properties. Some lenders may consider a property’s investment income, while others may use a different basis. The valuation can affect the amount available to borrow, so it is worth discussing your property and proposed lender before relying on an estimated value.
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Laurie Baugh
Property Finance Director
Approved Business Finance Ltd is an independent asset finance brokerage and a credit broker, not a lender. We work with a panel of lenders to find suitable finance options for your needs. If you enter into an agreement with a lender, typically we will receive commission for introducing you to them. We are committed to delivering high standards of service and handling any concerns promptly. Approved Business Finance Ltd is authorised and regulated by the Financial Conduct Authority, FRN 1020031. ICO Registration Number: ZB424677. Registered in England and Wales (Company No. 11914104). Registered office: Seebeck House, Seebeck Place, Milton Keynes, MK5 8FR.
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