What is a multiple occupancy mortgage?

1. What is a multiple occupancy mortgage? HMOs, or houses under multiple occupancies, can yield greater returns than conventional buy-to-let investments. The number of landlords applying for HMO mortgages has also increased, but is an HMO mortgage really necessary or would a conventional buy-to-let mortgage be adequate? When compared to conventional buy-to-let, a house in many occupations can be more profitable. In the UK, there is a huge demand for rentals, and thanks to low mortgage rates, landlords can increase their rental returns. The key to maximising the profits from your rental income is having the correct mortgage i.e. buy-to-let mortgage for multiple occupancies. What is HMO? A house with three or more tenants who are not related to one another and who may share amenities like the kitchen or bathroom is referred to as an HMO. An HMO gives landlords the option of renting out a space to numerous households rather than just one. Then, landlords can charge by the room, by the flat, or by the area of the property, typically generating a higher rental income. Unless the home was converted into flats and has separate title deeds through the land registration, it's typical for HMO landlords to pay the utility bills for the property. Which type of mortgage will I require for an HMO? An HMO mortgage is required if you are renting to more than three tenants from different homes. This is because your property will not be eligible for a typical buy-to-let mortgage. After all, those are only intended for single-household tenants. You would be violating the terms and conditions of the mortgage if you took a buy-to-let mortgage for multiple occupancies on an HMO home, the lender might take legal action as a result. Do I require an HMO licence? HMO properties are more difficult to set up, even though they often produce higher yields. Landlords could need an HMO licence depending on the type of HMO. If accepted, local councils issue HMO licences with a five-year expiration date. Each property, not each landlord, is given an HMO licence. It's crucial to remember that depending on the size and type of the property, not every HMO will need a licence. HMO Loan Requirements Most HMO mortgage lenders will demand that landlords have rental property management expertise. Only a small number of lenders will consider first-time landlords without any prior experience, although the rates they provide can be higher than usual. Some lenders might also prefer that the HMO be managed by a letting agent rather than by the borrower themselves. HMO mortgages are still regarded as a specialised mortgage type despite their widespread use. The mortgage application procedure is fairly thorough. As a result, licenced mortgage brokers rather than landlords directly tend to offer HMO mortgages. Lenders may ask for details on any or all of the following: • Previous landlord experience • Mortgages for individuals or small businesses • The HMO's location • The number of available rooms

2. • Management category (landlord or letting agency) • Is a licence required or does the HMO have one? • Is there a separate AST agreement for each room? • Rental revenue (proposed or actual) • Various tenant types (students, professionals, housing association) Lenders will also do normal mortgage assessments in addition to the aforementioned. This will involve evaluations of your credit score, desired borrowing amount, and affordability. Finding a Reputable HMO Mortgage Lenders It's important to get the ideal HMO mortgage for your home. Those excellent yields may soon begin to be diminished by an HMO mortgage with excessive rates or fees. You will require a buy-to-let mortgage with multiple occupancies if you plan to rent the house as an HMO. Hence, you’ll need an expert who can help you find the right lender. With Kevin Sewell, you’ll have access to the best mortgage consultancy, a classified network of top lenders, and a streamlined approach for smoother and faster approval. Get in touch with them and you may get your hands on some of the best HMO mortgage or expat mortgages offers.