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HMO Mortgage Fees & Costs
Complete guide to all fees and costs associated with HMO mortgages, from arrangement fees to legal costs. Understand what you'll pay and when.
Understanding HMO Mortgage Fees
When securing an HMO mortgage, you'll encounter various fees throughout the process. Some are one-time charges, while others are ongoing. Understanding these fees helps you budget effectively and compare different mortgage products.
Commission disclosure: The HMO Mortgage Broker receives a commission from the lender when we successfully arrange a mortgage for you. This commission is paid by the lender and does not affect the rate or fee you pay. We will always disclose the amount of commission before you proceed.
Sometimes charged separately from booking or arrangement fees. Non-refundable and covers initial processing.
The main fee for setting up your HMO mortgage. Can often be added to the loan. Some lenders offer fee-free products but with higher interest rates.
Charged if you fall behind on payments. Can add up if not resolved quickly.
Non-refundable fee to secure a mortgage product. Sometimes included in the arrangement fee. May be waived for certain products or clients.
Fee for finding and arranging your mortgage. Many brokers don't charge this as they receive commission from lenders. Always check if this is included.
A contingency buffer required for development projects, typically 5–10% of total build costs.
Fee for transferring funds via CHAPS or similar bank transfer. Sometimes listed separately from telegraphic transfer.
If you change the use of the property (e.g., from residential to HMO), some lenders charge this fee.
Sometimes listed separately from exit/admin fee. Charged for releasing the legal charge on the property.
For missed payments or collections. Covers lender's costs in pursuing arrears.
Covers the cost of monitoring the progress of a development project. Applies to development finance.
Fee charged each time funds are released during a development project. Applies to development finance.
Penalty for repaying the mortgage early. Varies by lender and product. Usually applies during fixed-rate periods. Some products have no ERC.
Admin fee for closing the loan. Sometimes called a 'deed release fee'. Not all lenders charge this. Can be negotiated in some cases.
May apply if borrowing more than 75% of property value. Acts as insurance for the lender. Can often be added to the loan amount.
If the lender arranges insurance on your behalf, a fee may apply.
Legal work for the mortgage. Higher for complex HMO properties. Includes property checks, title verification, and mortgage deed preparation.
Annual fee for managing your mortgage account. Not all lenders charge this. Sometimes included in the interest rate.
If you switch to a new product with the same lender, a fee may apply.
Specific to HMO properties. Covers the cost of inspecting the property to ensure it meets HMO standards and lender requirements.
If using a property manager for your HMO. Covers tenant management, maintenance coordination, and rent collection. Optional but recommended for HMOs.
Charged if a property needs to be re-inspected after works or to release retention.
If the lender holds back part of the loan until works are completed. Applies to some bridging and dev finance.
If the property is in a remote location, additional travel costs may be charged.
Fee for transferring mortgage funds to your solicitor. Some lenders include this in other fees. Always check if this is included.
Sometimes required for legal/title issues. Protects against specific title defects.
Covers the cost of valuing your HMO property. Higher for larger properties. Some lenders offer free basic valuations but charge for detailed ones.
Tips for Managing HMO Mortgage Fees
- Always ask if fees can be added to the loan amount
- Compare total costs, not just individual fees
- Check if any fees can be waived or reduced
- Consider fee-free products if available
- Budget for both upfront and ongoing fees
- Read our HMO property guide for a full overview of costs involved in HMO investment