Head of Content
Mortgage Advisor & Director
What is an HMO?
In England and Wales, a property let to three or more people from more than one household is classed as an HMO.
For five or more people, this is classed as a 'large' HMO and requires specific licenses and inspection from the local council. HMO properties have more than one tenancy agreement in place.
As a niche category of property, the number of available mortgage providers is lower than for standard properties.
How is an HMO mortgage different?
HMO mortgages are a relatively new mortgage designed for landlords.
This follows a reclassification of some shared properties to HMO. To respond to this change in legislation, lenders have launched HMO mortgages with a Loan to Value of 60-75%. These mortgages are not generally available on the open market, but as a whole-of-market mortgage broker, Teito can help. Complete our quick and easy online form today to start the process.
What should I know?
- HMO mortgages can be more expensive than traditional buy-to-let mortgages, are typically assessed based on the potential rental income as a whole, rather than to each individual.
- HMO mortgages tend to be linked to LIBOR rates rather than the Bank of England base rate.
- Lenders will need to go through a specialist valuation process which adds cost.
- The minimum property value is generally £100,000.
- You must demonstrate experience in being a landlord; at least two years or one year as an HMO landlord.
- The property must have a communal seating area.
- No more than four habitable storeys and no more than one kitchen are allowed.
How can I learn more?
Our advisors have helped landlords like you to get the best deal possible on their mortgage. Complete our online form to start the process today.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.