What is a Holding Deposit?

An HMO mortgage is a specialist buy-to-let loan for a house in multiple occupation, where three or more people from more than one household share facilities. Lenders underwrite the combined room rents, licence position and valuation method rather than a single tenancy. Most high-street buy-to-let products do not cover this, so the case usually goes to a specialist lender.

Many specialist lenders offer up to 75% LTV on a small, licensed HMO, which means a deposit of around 25% of the valuation or purchase price. Larger HMOs, first-time landlords and pending-licence cases are often asked for more. The deposit is only one test: the rental stress test still has to pass on the room rents.