Rental mortgages

Craig_Donny

Hi there guys,


I will cut to the chase, I am wanting to get into room rentals, a friend in the area does this, so that legal side I have all the help I need.


But I am unsure on how to raise the funds. The property I want is 100K. My personal home is up for re mortgage (if that's the word, out of 2 year fixed term) at the end of next month.


In the property I currently own I had it valued and got two valuations, one of £130000, and one of £140000. My mortgage is for £65000.


So I can get some equity out of it, but of course not enough. So wondering how, if at all, I can raise the funds.


Thanks in advance, and I apologise if I have missed out any key information you need.


Craig

Mortgage_Mark_2

What you're looking for is an 'HMO' (homes in multiple occupation) mortgage. Perfectly reasonable, many people do the same, particularly in student areas etc.

Speak with a broker as a lot of lenders of this type will be intermediary only. Be aware though that they may demand as much as a 35% deposit for this type of purchase. A decent broker will talk you through this.

Make sure you've got your licenses etc all sorted for an HMO too, if required.

Good luck.

ACG

It could be possible to do this on a normal BTL mortgage. You may not need to pay the HMO rates but it will come down to how you have your tenancy agreement set up and how many people are in the property.

If you have a friend doing this already it could be worth seeing if they use a broker. The last thing you want is a broker without a clue on this as I remember the first one I did - thankfully the client was an architect and he told me everything with links to the councils website to back it all up.

Craig_Donny

Problem being the guy the I know that does it is wealthy, and owns the two property's out right. Also not 100% sure he does the whole process correct so will have to investigate more.


For whatever the deposit may be required I could re mortgage my personal house and use that for the deposit couldn't I?


Also any ideas of the rates id be looking at for HMO mortgage or BTL.


Thanks


Craig

Mortgage_Mark_2

ACG wrote: »

It could be possible to do this on a normal BTL mortgage. You may not need to pay the HMO rates but it will come down to how you have your tenancy agreement set up and how many people are in the property.

If you have a friend doing this already it could be worth seeing if they use a broker. The last thing you want is a broker without a clue on this as I remember the first one I did - thankfully the client was an architect and he told me everything with links to the councils website to back it all up.

I'm not sure any 'normal' BTL mortgage would allow for individual rooms to be rented out separately, as the OP said?

ACG

If they are on one tenancy agreement?
I have put a couple of these through on normal BTL products after discussing with BDMs.

Mortgage_Mark_2

ACG wrote: »

If they are on one tenancy agreement?
I have put a couple of these through on normal BTL products after discussing with BDMs.

The OP certainly doesn't read like one tenancy is the aim....?

ACG

Thats why I said it could be possible.

As hes new to it, using a broker with some experience would presumably discuss the different options through in terms of whether each tenant would have their own tenancy agreement or one agreement with however many names on it. You would also expect they go through the whole locks on doors issue/student let etc etc.

It could be an 8 bedroom property in which case its a HMO product with all of the relevant licenses that come with it. But I think doing that as a first HMO is probably unlikely and its more likely to be a 3-4 bedroom property.

Theres not enough information either way but I wouldnt discount getting this through on a normal BTL mortgage at this stage as it could save a fair bit in interest and fees.

Craig_Donny

Thanks for the help so far.
The property I am looking at is a 6 bedroom.
Seeing as though it seems that the best way to go is to get a broker, is there any way of getting any recommendations for one in Doncaster area, or just book to see a few? Thanks

ACG

This will fall into a licensed HMO.
Your sure you are aware of all of the licenses/health and safety issues that come with it? This will be a HMO product you need and not a BTL.

Does your friend not use a broker?
I dont think you should book to see a few but just call up 1 or 2 for a quick chat see if you can get o with them and if they sound like they know what they are talking about.

Booking in a few is a waste of their time and yours and might cause issues down the line.

dimbo61

We own a 6 bed student property which is not a licensed HMO ( only two storey)
All the tenants are on one tenancy agreement !
We used a good broker and went with a lender who deals in HMO,s and lends in student areas.
We had a 25% deposit and paid fees on top.