Specialist

Interest Only HMO Mortgages

For Remortgaging & Buying Investment Property In The UK

Clifton private finance

We can source interest-only mortgage finance for houses in multiple occupation in the UK: from £150,000

Expert advice on your finance options if you own houses in multiple occupation.
Our HMO mortgage service provides:
  • Exclusive rates from 2.79% APR
  • Advice on finance products available for HMO lending
  • HMO mortgage finance from £150,000
  • First-time landlords welcome
  • Licensed and unlicensed HMOs
  • Funding solutions for portfolios with no limit on number of properties
  • Interest-only lending terms available
  • Refurbishment & short term finance options up to 100% LTV with additional security

Buy To Let

Up to £750k

5.4% APR

2 Year Tracker (Remortgage)

Subsequent rate 5.55%

LTV - 75%

APRC 8.9%*

Product fee 3% 

Free Valuation

Early redemption charges

As at 11th January 2024

Buy To Let

Up to £1m

4.51% APR

5 Year Fixed (Purchase)

Subsequent rate 9.59%

LTV - 65%

APRC 8.1%*

Product Fee £3,999

£300 Cashback

Early redemption charges

As at 11th January 2024

Buy & Refurb

1 to 12 Months

0.55% pm

1 to 12 months

Purchase & refurb

LTV - 60%

Buying & Renovating

Conversions

Auction Purchase

As at 11th January 2024

Contact Us

Thank You for your interest - please complete the form below and a member of our team will be in contact.


Through our specialist market knowledge we can deliver enhanced, bespoke or exclusive terms based on your requirements.  
Call our HMO mortgage team on 0117 959 5094 to discuss your requirements.

FOR MORE DETAILS ABOUT HMOs, SCROLL DOWN...

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Interest Only HMO Mortgages

First-time investors and experienced single-tenant landlords may be attracted by the attractive returns offered by a property with multiple tenants (also known as multi-lets, or houses in multiple occupancy - HMOs).

HMOs range from a house-share arranged by a group of friends, to a house or flat provided for a group of students sharing, to high-spec accommodation for young professionals or low-cost housing for shift-workers or housing benefit recipients.

The projected annual returns of 4-5% for a straightforward buy-to-let (BTL) can be more doubled for a multiple-occupancy letting. But the finance issues are more complex, and require specialist advice. Investors looking for interest-only mortgage finance will need to access specialist financial products. 

What is an HMO?

A house in multiple occupation (HMO) is any rental property with shared facilities (such as bathrooms and kitchens) which is rented out to three or more people who aren’t part of a single "household" (usually a family). They’re what’s often known as a "house share".

What many people refer to as an HMO is actually a Large HMO, which is a rental property with five or more tenants, where the tenants share toilet, bathroom or kitchen facilities.  

How to finance an HMO

There are nearly 40 lenders operating in the buy to let mortgage market, offering approximately 1,500 different mortgage products. Many of them can only be accessed by a broker engaged to act on your behalf.

What kind of finance do you need?

Lenders will have different criteria for the number of rooms in an HMO they will consider, and how the calculate the value of the property (usually as a combination of Bricks & Mortar and Investment value).

Interest-only HMO mortgage

Your personal investment strategy will determine whether you're looking for an interest-only or a repayment (capital and interest) HMO mortgage.

Repayment finance is often most suitable for investors who are using property as a store of wealth: as an alternative pension plan or to build a small property portfolio. With monthly capital and interest repayments, the investor can be sure they will be able to repay the loans at the end of the mortgage terms.

Professional landlords and property investors may be more likely to opt for interest-only finance - for two main reasons.

Firstly, your long-term strategy may be to continue building a sizeable portfolio of investment properties. By keeping your mortgage repayments to a minimum you will have the cashflow to re-gear your capital and make further purchases. At the end of the mortgage terms, you will be happy to sell properties to repay the initial advances.

Secondly, you may want to take advantage of the tax benefits: interest on buy to let mortgages can be off-set against tax. We recommend that you seek professional advice from a qualified accountant regarding the tax incentives available to you.

Most lenders favour HMO mortgages on a capital repayment with interest basis, so you'll be looking for a specialist product. There are lenders willing to offer interest-only mortgages up to 10 or 15 years: an experienced broker will be able to access them for you. 

HMO borrowing stress test calculation

Lenders commonly apply a slightly higher "interest coverage ratio" (currently around 1.7%) to HMO mortgages, compared with standard BTL mortgages (usually 1.25%), to cover the perceived high risk of a multi-tenanted property.

An experienced broker will be able to identify the most appropriate – and cheapest – finance for you in this specialised area of the buy to let market, and will package your application to make sure it meets the lender's criteria. 

How profitable is an HMO?

Prospective landlords may see HMO properties advertised for sale offering "100%+ gross yields," but you’ll need to be aware that the costs of setting up and running HMO properties are considerable, so the key figure is net yield.

HMO landlord costs include:

Profits may be maximised by running the property through a limited company structure: you’ll need to take advice from an accountant / financial adviser.

Call Clifton Private Finance

One of our specialist HMO mortgage advisors will be happy to discuss your specific financing requirements with you:

0117 959 5094

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