Buy to let and HMO's

Dj_plasma

Hi All,

Hoping someone can help me. I'm looking into buying a 2nd home (to move into myself) with 2 current lodgers and then let my current house out on a room by room basis to pay off a new mortgage by itself and earn an income on top.

Details.
Current house: Value £240,000 with £106,000 left on mortgage over 29 years (3 more years on fixed rate).
New house: £230,000 and I have £150,000 ready as a deposit to put down on it.
I earn £26,000 + benefits and am permanently employed, same job for last 3 years.

Now when I look at most buy-to-let mortgages they all seem to not offer for HMO's, my house is 3 Storey town house so I think would be an HMO if I let room by room (could be 4 rooms let otherwise, but if HMO I could let 6).

I spoke to my current lender and they couldn't seem to grasp that I do not want to sell my current home and want to let, they wouldn't could potential rental income or that from my lodgers I already have (covers my current mortgage in full pays council tax and utilities). So seems a no go with them.

Should it be possible to get a buy-to-let mortgage for an HMO? Does anyone know any providers? Is my salary and current mortgage the real issue stopping them lending to me?

Any advice would be very welcomed.

ACG

Its a HMO Mortgage you need which is an offshoot from a normal BTL Mortgage. There are not many on the market, maybe a handful of lenders - which is probably why your current lender did not understand.

Depending on the council you fall under and how many rooms you intend to let out, you may need a license from the council.

I would suggest speaking to a broker as there are a lot of pitfalls when it comes to HMOs and added to that, I can only think of 2 lenders who deal directly with the public on HMOs, the rest are through brokers only, so you will open yourself up to more options. Some lenders are fussier than others when it comes to paperwork.

Thrugelmir

Dj_plasma wrote: »

they wouldn't could potential rental income or that from my lodgers I already have (covers my current mortgage in full pays council tax and utilities).

Property has to be unencumbered for rental income to be taken into account. Nor will lodgers income be taken into account either when assessing affordability for mortgages. .

amnblog

As ACG says, very tricky. Also, Lenders do not like HMO first time landlords.

You need a broker.