HMO Mortgage

M635

Hi All,

I'm looking to purchase an HMO, and was just looking for some advise re finance and which broker/lender to go to or whether I'm living in a dream world and need a kick back to reality.

The HMO purchase price is around £270k, I have a £30k deposit, so equates to around 90% LTV, the HMO income is around £32k, Are there any lenders that would take this on, or is the deposit or income too low ?

Also myself and brother (we would both be on the mortgage) have a combined income of £52k, do they take this into account, or are our wages immaterial when lending on an HMO ?

Any advise is greatly appreciated.

Thanks

Senior_Paper_Monitor

The HMO will (almost certainly) be a commercial mortgage and 90% LTV won't happen either way.

HMOs can be very attractive financially if run properly BUT they are really for professional investors.

Salary (or income outside of the deal) comes into acceptability as a borrower but not the justification of the loan itself.

With £30K deposit you are just entering the point where a modest BTL may be a sensible option.

M635

Thanks for the reply, I forgot to say but I would possibly be living in the flat below ( semi det, arranged as ground floor flat, then 1st/2nd floor as 6 beds/baths etc)

If I'm living in the flat which is part of the house, would I be able to get a residential mortgage as its also my home, or would I have to get buy to let or something else ?

dimbo61

is the property already a HMO and does it comply with all the fire regulations required with a 3 storey property ?
I know somone who has just spent £120K on doing up a 4 storey HMO to comply with fire regs and other needs to rent out the rooms 3 bathrooms huge kitchen, 2 ovens, 2 washing machines, 2 dryers etc

M635

yes the property is already an HMO and let on short term agreements.
i'm trying to devise a why of purchasing it, as its an ideal layout for a b&b further down the line once the tenents have left, but at the same time offers an instant addition to my salary income from date of purchase.
basically I need a 90 ltv loan, i have considered trying for a resisdential loan to purchase it but then i'm not sure whether it'd be an easy job getting the mortgage to allow me to let the rooms.

Senior_Paper_Monitor

Its comparatively academic, as there is no way to finance this property at 90% LTV, but it has just become more difficult because your own residence plans mean it will become a regulated commercial mortgage (therefore less lenders available).

I hope you prove me wrong, but in my view it simply can't be done.

Trollfever

Have you prepared a business plan and cashflow forecasts to indicate the viability of the proposed venture?

Wh05apk

Trollfever wrote: »

Have you prepared a business plan and cashflow forecasts to indicate the viability of the proposed venture?

??????

how will that help to find a 90% deal when lenders would be unlikely to go over about 70%?

GMS

If the house has been correctly set up as a HMO then I would suspect there is no way a valuer would value it for a residential mortgage on the basis it is clearly not.

90% mortgages are difficult enough to obtain for a standard residential property so you have virtually no chance for a commercial mortgage. Residing in it complicates things further, not make it easier.

You are most likely going to need a deposit of 35% to make this happen. Trying to go for a standard BTL will have the same issues as going for a residential mortgage in it is clearly not.

If you cannot find a much bigger deposit then you need to forget about it and move on.