HMO Remortgages

Everything you need to know about HMO remortgages, including the benefits of choosing
the best HMO remortgage, and how to find the right one for you.

Written by

Michelle B

Updated

18 May, 2024
Fact checked
HMO Remortgages

What is an HMO remortgage?

An HMO remortgage is a process of refinancing a mortgage on an HMO property.

This process allows the borrower to change their mortgage lender or the terms of their mortgage to get a better deal or to access the equity in their property.

What is an HMO property?

An HMO property, or House in Multiple Occupation, is a type of residential property rented out to at least three people who are not from one ‘household’ (like a family), but share facilities like the bathroom and kitchen.

Reasons to Remortgage your HMO

Equity Release

This allows property owners to access the financial value that has been built up in the property over time. Equity release through remortgaging can provide a significant lump sum that can be used for diverse purposes, such as investing in additional properties, funding major renovations, or even pursuing personal financial goals.

Reduced Monthly Mortgage Payments

By remortgaging, you might secure a lower interest rate than your current mortgage, which can lead to a reduction in your monthly payments. This change can free up cash flow, lessen the financial strain, and provide more flexibility in your monthly budgeting.

Flexible Mortgage Terms

Remortgaging offers the opportunity to reevaluate and adjust the length of your mortgage term. Shortening the term can lead to quicker property ownership and less interest paid over time, while lengthening it can reduce monthly payments, making them more manageable, albeit over a longer period.

Switch Between Mortgage Types

You have the choice to switch from a variable-rate to a fixed-rate mortgage, offering predictability and protection against rising interest rates. Alternatively, switching to an adjustable-rate mortgage can be advantageous if lower interest rates are anticipated, potentially resulting in reduced payments.

HMO remortgages can also be used to raise cash for other purposes such as investing in another property, making home improvements, or consolidating debt. An HMO remortgage is similar to the traditional residential remortgage process but with specific criteria for HMO properties.

Requirements & Lending Criteria

HMO remortgages have different requirements and lending criteria compared to traditional mortgages due to the added risk involved in lending for an HMO property.

Common HMO remortgage requirements include:

Lower Loan to Value: HMO remortgages may require a lower loan to value compared to traditional mortgages, as lenders want to ensure that the borrower has a financial stake in the property.

Strong credit score: A strong credit score is typically required for an HMO remortgage, as it demonstrates the borrower’s ability to manage their finances and make timely payments.

Proof of income: Lenders will typically require proof of the borrower’s income, including tax returns and payslips, to determine their ability to make mortgage payments.

Property appraisal: An appraisal of the property is typically required as part of the remortgage application process, to determine the value of the property and ensure that it is sufficient to secure the remortgage.

Property inspection: An inspection of the property may also be required to ensure that it meets the lender’s standards and is in good condition.

Experienced HMO landlord: Some lenders may require the borrower to have experience as an HMO landlord to qualify for an HMO remortgage. This is because lenders want to ensure that the borrower has the knowledge and skills needed to successfully manage an HMO property.

Highlights of HMO Remortgages

Rates from 3% APR

Up to 85% LTV

Loans with no minimum income requirements
Loans with zero product/lender fees upfront
Loans from £50,000 to £10 million
Interest-only or repayment options

Best HMO Remortgage Rates

HMO mortgage rates can vary depending on the lender and the specific terms of the mortgage. It is important to shop around and compare different lenders to find the best deal. 

Some lenders may offer lower rates for HMO properties, while others may have higher rates. Factors that can affect the HMO mortgage rate include the overall state of the economy, the lender’s risk appetite, and the creditworthiness of the borrower.

We’re working on this data as we speak.

The data displayed is for display purposes only & not accurate. 
For live rate information, get a free quote

LTV

85%

Monthly
£621
APR
2.09%
APRC
3.09%
Fees

£10,000

LTV

85%

Monthly
£621
APR
2.09%
APRC
3.09%
Fees

£10,000

LTV

85%

Monthly
£621
APR
2.09%
APRC
3.09%
Fees

£10,000

LTV

85%

Monthly
£621
APR
2.09%
APRC
3.09%
Fees

£10,000

LTV

85%

Monthly
£621
APR
2.09%
APRC
3.09%
Fees

£10,000

See all the HMO ReMortgages products available

Check all HMO mortgages products by Max LTV

HMO Remortgage Process

The process of remortgaging an HMO is similar to the process of obtaining a traditional mortgage. You will need to submit an application, provide financial information, and have your property assessed. However, some lenders may have specific requirements for HMO mortgages, so it is important to be aware of these when applying.
01 Define Objective

Start by reassessing your investment objectives for the HMO remortgage. Are you aiming to reduce monthly payments, get a better interest rate, or release equity? Identifying your primary goal is essential to selecting the right remortgage product.

0-4 weeks

Research and compare various HMO remortgage products available in the market. Focus on products that offer terms more favourable than your current mortgage, such as lower interest rates or better repayment options. Consider consulting with a mortgage advisor for expert guidance.

0-4 weeks

Apply for a Decision in Principle (DIP) with a chosen lender. This involves a financial assessment to determine your eligibility for the new mortgage terms. A DIP will give you a clearer understanding of what you can borrow and under what terms.

0-4 weeks

Gather all necessary documentation, including current mortgage details, proof of income, property valuation, and any other relevant financial information. Ensure all documents are up-to-date and accurately reflect your current financial situation.

0-4 weeks

Proceed with the full remortgage application. Provide detailed information and be transparent about your financial status and the reasons for remortgaging. Thorough and honest applications are processed more efficiently.

0-4 weeks

The lender may require a new valuation of your HMO property, even if you’re staying with your current lender. This step is to assess the property’s current market value, which can affect the loan terms.

0-4 weeks

Once the remortgage is approved, and the valuation is satisfactory, finalize the remortgage process. This step involves signing new mortgage agreements and possibly paying any associated fees. Upon completion, your new mortgage terms will be in effect.

0-4 weeks

HMO Remortgage Fees & Costs

In addition to rates, borrowers also need to consider HMO mortgage fees when shopping for a mortgage. These fees can include closing costs, origination fees, and other charges that are associated with obtaining a mortgage. Lenders may charge different fees for HMO mortgages, so it is important to compare the fees of different lenders to find the best deal. Some lenders may charge higher fees for HMO mortgages, while others may have lower or no fees at all.

Arrangement Fee

Charged by the lender for setting up the mortgage.

Cost: From free to £3,000

For property valuation to assess worth and rental potential.

Cost: From free to £3,000

Paid to solicitors for handling legal aspects of the mortgage.

Cost: From free to £3,000

Charged by mortgage brokers for finding the mortgage.

Cost: From free to £3,000

To secure a particular mortgage deal.

Cost: From free to £3,000

For borrowing a high percentage of the property’s value.

Cost: From free to £3,000

If you pay off the mortgage early or overpay beyond the limit.

Cost: From free to £3,000

For closing your mortgage account.

Cost: From free to £3,000
For detailed property surveys.
Cost: From free to £3,000
Similar to the arrangement fee, for the mortgage product offered.
Cost: From free to £3,000
Charged for applying for a mortgage.
Cost: From free to £3,000
For setting up, maintaining, and closing the mortgage account.
Cost: From free to £3,000
For transferring funds from the lender to the solicitor.
Cost: From free to £3,000
If a mortgage payment is missed.
Cost: From free to £3,000
Charged when a payment is late.
Cost: From free to £3,000
If exceeding the overpayment limit.
Cost: From free to £3,000

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HMO Remortgage Lenders

HMO remortgage lenders in the UK specialize in providing financial solutions to property owners seeking to refinance their existing Houses in Multiple Occupation (HMO). These lenders understand the unique characteristics and requirements of HMO properties, which are typically larger than standard residential properties and divided into individual rooms or units for renting out to multiple tenants. They offer tailored remortgage options for HMO owners who aim to secure better mortgage terms, release equity, or enhance their property investment portfolio.

34

No of HMO lenders

700

No of HMO Products

£237,000

Average HMO Loan

£25.3B

UK HMO Market Size

On average the HMO mortgage process takes from 4 to 6 weeks but can depend on a number of factors, like your personal situation, or the mortgage product you’re applying for. The illustration below gives an example of how a typical HMO mortgage process could go.

HMO Remortgage FAQs

What are Acceptable Reasons for HMO Remortgaging?
Common reasons include raising funds for new investments, debt consolidation, property improvements, buying out a partner, or securing better interest rates.
Answered by
Marisa G.
Updated 30 Nov
Typically, the maximum LTV is 80%, but this can vary based on property type and tenant profile.
Answered by
Marisa G.
Updated 30 Nov
Valuation may be based on bricks and mortar value for smaller HMOs or investment value (property value plus income generation) for larger HMOs.
Answered by
Marisa G.
Updated 30 Nov
Interest rates can range from around 2% to 9%. Fees may include lender arrangement fees, valuation fees, legal fees, and sometimes broker fees.
Answered by
Marisa G.
Updated 30 Nov
Factors include tenant profile, property type, property size, and the applicant’s credit history.
Answered by
Marisa G.
Updated 30 Nov
It’s based on rental income, with lenders typically requiring the annual rental income to be a certain percentage higher than the annual mortgage payments.
Answered by
Marisa G.
Updated 30 Nov
Yes, personal income can be considered, especially if the rental income falls short.
Answered by
Marisa G.
Updated 30 Nov
Working with a specialist HMO mortgage broker is often more beneficial for navigating various products and finding the best rates and terms.
Answered by
Marisa G.
Updated 30 Nov
You’ll need your HMO license, copies of ASTs, your latest tax returns or payslips, and details of any other properties you own.
Answered by
Marisa G.
Updated 30 Nov

Ensure your property is tidy and accessible, and consider minor decorations, especially in common areas.

Answered by
Marisa G.
Updated 30 Nov
Options include fixed-rate, interest-only, limited company remortgages, repayment remortgages, tracker rate remortgages, and variable rate remortgages.
Answered by
Marisa G.
Updated 30 Nov
Necessary paperwork includes an HMO License Certificate, HMO Planning Certificate, Building Regulations Certificate, floor plan, copies of ASTs, and the latest tax return or payslips.
Answered by
Marisa G.
Updated 30 Nov
The tenant profile is significant in a lender’s decision. Young professionals and healthcare workers are generally more acceptable.
Answered by
Marisa G.
Updated 30 Nov
Converted houses are popular among lenders, especially those with fewer bedrooms.
Answered by
Marisa G.
Updated 30 Nov
Features include various LTV ratios, interest rates, repayment types, and terms. Criteria encompass loans from £25,000 with no maximum size, available to a wide range of applicants, including those with adverse credit.
Answered by
Marisa G.
Updated 30 Nov

Research online or work with a specialist HMO mortgage broker for tailored advice and access to the best deals.

Answered by
Marisa G.
Updated 30 Nov

Including fixed-rate, interest-only, LTD, LLP, no minimum income, repayment, tracker rate, and variable rate remortgages.

Answered by
Marisa G.
Updated 30 Nov

HMO Remortgage News

Advertiser Disclosure

Please note that the mortgage rates and information displayed on our website are for informational purposes only and may not be accurate or up-to-date.

It is important to verify the rates with a licensed mortgage broker, lender, or financial institution before making any financial decisions. Rates can vary based on various factors including creditworthiness, loan amount, and market conditions.

We do not guarantee the accuracy or availability of the rates displayed on our website. We encourage you to consult with a qualified professional to obtain personalised mortgage advice tailored to your specific needs and circumstances.

Advertiser Disclosure

Please note that the mortgage rates and information displayed on our website are for informational purposes only and may not be accurate or up-to-date.

It is important to verify the rates with a licensed mortgage broker, lender, or financial institution before making any financial decisions. Rates can vary based on various factors including creditworthiness, loan amount, and market conditions.

We do not guarantee the accuracy or availability of the rates displayed on our website. We encourage you to consult with a qualified professional to obtain personalised mortgage advice tailored to your specific needs and circumstances.

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FAQs

Do I need an HMO Mortgage?

If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options.

If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options.
If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options.
If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options.
If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options.
If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options. If the answer is yes then go for it. If not, then reconsider the options.