1.    Introduction

An HMO mortgage is a good investment to get more profits with a single property. Rather than renting out the property to a single tenant, you can rent it out to two to three tenants with separate bedrooms, but a common kitchen, bathroom, and reception room. But the location and condition of the property matter a lot to skyrocket the profits. If you want to be a first-time landlord, you can get a mortgage for an HMO. Get an HMO license to rent your property to multiple tenants.

2.    Eligibility Criteria To Get First-Time HMO Mortgages

Do you know about the eligibility criteria to be a first-time HMO landlord? If you don’t know, no need to worry about that when there is a complete guide has been provided to you regarding eligibility criteria for the first-time ownership of HMO mortgage property.

The following are some requirements to be a first-time HMO landlord:

●       Personal Credit History:

The mortgage providers always look for the customer’s credit history. A good credit history has a better chance of your approval as a first-time HMO landlord.

●       Deposit:

As compared to residential mortgages, HMO mortgages require more deposits. These deposits can be 25% to 30% of the actual cost of the property. It may vary according to the mortgage providers.

●       Property Type and Location:

If the property is located in high-standard areas, there are strict requirements for eligibility. Those properties are expensive and require a good credit history.

●       Income and Employment:

Stable income or employment is necessary to get a mortgage for an HMO. It gives a sense of satisfaction to the mortgage provider. Some lenders require a minimum amount in the form of income. The income from other landlords is not considered valid for HMO mortgages.

3.    Factors To Consider Before HMO Mortgages

Have you ever wondered why some factors have a great effect on your HMO mortgage investment? Do you know what those factors are? If you don’t know, no problem. Here is the right guide for you.

The following are some factors to consider before mortgages for HMOs:

●       Location of the Property:

Ensure to choose the right location for the property before acquiring mortgages for HMOs. The location of the property has a great impact on the profitability. Different properties, like those near a university, a hospital, or a city centre, have different rental yields. If there are many HMOs present in that area, there will be low demand for the new ones. So, choose the right location to invest in HMOs with mortgages.

●       Condition of the Property:

The new condition of the property is a great attraction for the tenants. If it is new and has cleaning and waste disposal facilities, it is a good option to invest in for HMOs. The separate bedrooms are also a great source of attracting tenants.

●       Repair Funds:

It is a must to keep funds on the side for instant repairs. If you don’t have funds after HMO investments, that can be a headache for you. Keep funds for a dishwasher repair, a boiler repair, or any HVAC repair.

4.    Conclusion:

To sum up, if you want to enter in HMO business, a mortgage for HMO is a good option to lessen the burden on your budget. You can get mortgages from lenders based on certain conditions, like having a good credit history, permanent income, and deposits. But don’t forget to keep in mind the location, condition, and repair funds for the HMO property.

5.    FAQs

What are the HMOs?

The HMOs (Houses in Multiple Occupation) are rented properties shared by two or more people with separate bedrooms, but a common kitchen, a bathroom, and a reception room.

Why is there a need for a mortgage for an HMO?

HMO properties have a higher risk of wear and tear than single-owner family apartments. So, HMO mortgages provide special policies to handle the property carefully.

What are the eligibility criteria for an HMO mortgage?

For an HMO mortgage, a person must have a good credit history, a permanent income source, and some deposit in the bank.

What are the factors to keep in mind before mortgages for HMOs?

Before HMO mortgages, ensure to choose the right location, have some deposits for emergency repairs, and condition of the property.

Can I get a mortgage for HMOs for myself?

Yes, if you have a good credit history, you can get mortgages for HMOs from the lenders operating in your area.