Looking for a HMO mortgage?
At Yomo Finance, we understand the unique challenges and opportunities that come with investing in Houses in Multiple Occupation (HMOs). Our HMO mortgage range is designed to cater to the specific needs of landlords and property investors looking to capitalise on this lucrative market. Contact our team in Aylesford to start your application.
What is a HMO?
A House in Multiple Occupation (HMO) is a property rented out by at least three people who are not from the same household (family) but share facilities like the bathroom and kitchen. HMOs are a popular investment option for landlords as they can generate higher rental yields compared to traditional single-let properties.
Key features of our HMO mortgages
Our HMO Mortgage products are tailored to meet the diverse needs of HMO investors, offering a range of features and benefits:
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Competitive interest rates: We search for competitive interest rates for HMO mortgages..
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Flexible loan-to-value (LTV) ratios: We understand that HMO properties often require higher LTV ratios, and mortgages can accommodate up to 75% LTV, subject to meeting our lending criteria.
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Experienced underwriters: Our underwriters have extensive knowledge and experience in assessing HMO properties, ensuring a smooth and efficient application process.
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Portfolio lending: If you have an existing portfolio of HMO properties, we can consider lending against your entire portfolio, subject to meeting our criteria.
Eligibility and lending criteria
To qualify for a HMO mortgages, you'll need to meet the following criteria:
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Minimum property valuation of £100,000 (£250,000 in London)
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The property must be classified as an HMO by the local authority
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Compliance with all relevant HMO licensing and safety regulations
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Sufficient rental income to meet our affordability assessments
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How much can I borrow?A typical mortgage applicant can expect to borrow four and half times their annual income. This should not be affected by your employment type unless your income is low or you have a poor credit score.
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What deposit will I need?There is no specific deposit requirement needed by self-employed applicants and the minimum deposit usually needed for a standard residential mortgage is 10%. That being said, with a short trading history, you will increase your chances of securing a mortgage if you are able to offer more than the minimum deposit requirement. This can also give you access to more competitive mortgage rates.
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Do I have access to the Help to Buy scheme if I’m self-employed with one years’ accounts?All of the government home ownership schemes were created to help those applicants who would struggle to get a mortgage under normal circumstances. This extends to self-employed applicants and, although there will certainly be less availability if you have fewer years of accounts available, Yomo Finance will be able to help you. All of the government home ownership schemes were created to help those applicants who would struggle to get a mortgage under normal circumstances. This extends to self-employed applicants and, although there will certainly be less availability if you have fewer years of accounts available, Yomo Finance will be able to help you.
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What documentation is needed for a self-employed mortgage application?Tax returns, business accounts and possibly a reference from an accountant. This all depends on whether you are a sole trader, a director of a Limited Company or are in a partnership.
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How many years of accounts do I need to provide?Usually, two to three years of accounts. However, you can get a mortgage with one year's books.
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Can I get a mortgage if I am a contractor or freelancer?Yes, but you may need to provide more evidence of income stability. Typically you would need 12 months history.
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How do lenders assess self-employed income?They typically look at your average income over the past two to three years.
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What can I do to improve my chances of getting a mortgage as a self-employed individual?Keep thorough records, pay your taxes on time and maintain a good credit score. You should also limit the amount of expenses you put through in order to maximise your income.
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Are there specific lenders that specialise in self-employed mortgages?Yes, some lenders are more flexible with self-employed applicants.
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How does fluctuating income affect my mortgage application?Lenders prefer stable and predictable income but may consider averages.
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What is the impact of a limited company structure on getting a mortgage?Your income may be assessed differently, focusing on salary and dividends.
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Are interest rates higher for self-employed mortgages?They can be, depending on the perceived risk by the lender but most do not charge higher interest rates for self-employed applicants.
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