What is an HMO Property? - 454
Buying a home can be a complicated process. These days, even finding an apartment can be daunting - and we rarely get what we pay for. So, people are often getting creative with their living arrangements: nanny homes, tiny homes or RVing around the country and avoiding homes altogether. One option comes to us as HMO, or houses in multiple occupation.
What is an HMO Property? Defined, an HMO is a property that is owned by at least three people not sharing one a single family but sharing facilities. Facilities include a kitchen and a bathroom, and sometimes a situation like an HMO is called a house share. It is much like having roommates and has recently been a popular, and affordable choice for tenants and landlords alike. For landlords, especially, they are able to see a higher yield on their investment than a typical rental property. However, for landlords and tenants alike, it can change the nature of the property's mortgage.
Typically, a buy-to-let mortgage does not allow for a property to be let under multiple tenants. Under the terms and conditions, the tenants may be subject to severe consequences and even breach of contract. However, therein lies the importance of working with an HMO Mortgage Broker - someone specifically designed for this type of property. An HMO mortgage is a type of mortgage is designed around multi-let properties and allows for the letting of multiple tenants under the terms and conditions of the HMO mortgage.
There are three primary types of HMO mortgages available through such lenders as
. The type you work with will depend on the stage at which the HMO property is at the time you seek an HMO mortgage. HMO Development Loans are sought for significant building and construction projects. For homes or property that is being renovated, you may see an HMO Refurbishment Mortgage. When you are financing an existing or multi-let property, you may pursue an HMO Mortgage and ReMortgage.
Lender types include individuals, first-time landlords, those seeking no minimum income requirements, LLP, LTD, and SPV. Because an HMO mortgage is a specific situation that may only get more specific, a borrower must have their situation and financials understood before approaching a lender. Applying for a typical home loan or mortgage can be a difficult or stressful situation, and asking for an HMO mortgage becomes even more so. It is best for those seeking to finance a business or multi-letting property to have everything as situated as possible to help the situation run as smoothly as possible. Lastly, HMO mortgages can take much longer to be approved than a typical home loan or mortgage so patience, as much as knowledge, is vital.