In
this day and age getting HMO funding can be a problem,
the reason for this is that the traditional funders,
in general are not taking on any new business and the
high street banks are shying away from this type of
commercial deal.
We at Investment Solutions have been working hard to
get a funder that will look at HMO lending and feel
that we have come up with a number of solutions to help
our clients that want to purchase or refinance away
from their current lenders.
There
are still lenders within the buy to let mortgage market
that will look at houses of multi let, however their
criteria is strict and the maximum number of rooms they
will do is 6. The property must not be licensed as an
HMO. It will be down to your local authority to determine
if the property needs to be licensed or not. The lender
would also expect the property to be let out already
to show an income coming from it. This lender will not
deal with individuals that have their main income from
property. They will only allow 25% of income coming
from property.
On
a commercial basis, the mortgage lenders would look
favourably at HMO’s, but generally only when you
are looking to place a portfolio with them. As an example
if you had 3 standard buy to let properties and a large
HMO, they would look to re-finance all these onto a
commercial portfolio product. As this is a commercial
deal the rental yield is all important here. If your
portfolio, with the HMO is generating a yield of 7%+
then there could be a product available at 70% Loan
to value. Please remember that commercial deals all
stand on their own merit and rates will be determined
on a case by case basis. Most commercial lender will
also insist on the repayment vehicle being capital repayments.
We
also have a Bank that have an appetite for lending on
HMO’s on a part commercial, part buy to let basis.
This means that they use a rental multiplier to determine
the maximum lending. As an example if you take the monthly
rental and multiply it by 123 it will give you the maximum
borrowing up to 70% of the market value. At this time
the lender would want you to use a capital repayment
vehicle if you wish to borrow 70%. There are options
for interest only initial periods if the borrowing is
less than 70%.
Why
not talk to Ian about your mortgage requirements. Contact
him now.
www.isbuytoletmortgages.co.uk
Investment Solutions, 23 Market Square, Sheffield,Yorkshire
S13 7JX
08456180420
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