House in multiple occupation (HMO) mortgages

Got an experienced client investing in HMOs? We’re here to make it happen with tailored mortgages for properties from 3 to 20 bedrooms.

Key highlights

Loans from £500,000 to £3 million (maximum aggregate exposure £10 million)
Loan to value up to 75%
Fixed rates
Loan terms from 5 to 25 years
Capital and interest, part and part and interest only.

HMO mortgage rates

HMO mortgage criteria

Lending criteria

Type of borrower

Professional HMO landlords who:
have 12 months experience managing HMOs
have good understanding of their target market
can evidence the income their HMO generates
comply with relevant licencing and planning requirements.

Eligibility

Company registered in England and Wales. 
All the shareholders and directors must be UK residents. 
The company does not need to have a business account with us.

Capital raising purposes

Purchasing another property.
BTL operational purposes.
Property improvements (not including structural or development).

Loan to value

Small HMOs up to 6 bedrooms: up to 75% LTV based on the lower of market value or market value with vacant possession (plus fees).  

 

Large HMOs from 7 to 20 bedrooms: up to 70% LTV based on market value (plus fees).

Affordability

Limited company: Net rental Interest Cover Ratio (ICR) of 130% at pay rate.
Professional landlords: Net rental ICR of 150% at pay rate plus 0.5%.

Maximum loan per block or property

£3 million.

Maximum committed term

Small HMOs up to 6 bedrooms:
up to £2 million: 25 years
£2 million to £5 million: 10 years
£5 million or more: 5 years.
Large HMOs from 7 to 20 bedrooms: 5 years.

Asset criteria

Type of property

Must meet Decent Home Standards and have 3 to 20 bedrooms.

Minimum value per property or unit:

£135,000.

EPC rating

A to C (or D/E with plan to get to C).

Tenancies

At least 3 people from spearate households sharing facilities like a bathroom or kitchen.
Furnished.

Tenure

Freehold or leasehold with at least 85 years remaining at the end of the mortgage term.

Legal charge

A first legal charge is required.

Valuation

To be completed by a YBS panel valuer and lending based on the lower of:
purchase price
open market vacant possession
investment valuation.

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